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Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2020
INSERT 1 hour 30 minutes
INFORMATION
• This Insert contains the case study.
*5592801272-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Blank pages are indicated.
06_0986_21_2020_1.2
© UCLES 2020 [Turn over
2
Freshfruit Juicebar (FJ)
Simon set up FJ in country Z. It makes fresh fruit drinks. Simon had a well paid job with a large
food and drinks company but he wanted to create his own business. He left his job 6 months ago
to set up FJ. Simon wants to provide people with a healthy alternative to the mass produced drinks
that are available in most shops.
Simon is willing to work hard to make FJ a success. He has lots of ideas for new drinks. He has
been making the drinks at his house and selling them at a market stall. He does not have enough
space to produce a higher output on his own. The first drinks FJ produced were made from just 2
types of fruit to keep costs down. The business has been profitable. Simon now wants to expand
the business rapidly and he needs to raise $100 000 to open a factory. He will need to recruit
production workers. He is considering using crowd-funding instead of a bank loan to raise the
necessary finance.
Simon wants to produce a new type of drink. He has carried out market research using three
methods to help him decide which fruit drink to produce and what price to charge. He has estimated
demand, costs and prices for two possible new drinks, as outlined in Appendix 3. He must decide
which one FJ should produce.
Simon plans to open more fruit drink market stalls in busy areas of the city. He needs to recruit a
manager to operate all of FJ’s drink stalls. This person will need to be reliable and able to make
their own decisions. Simon may have to pay to train the new manager. If these market stalls are
successful, Simon can start opening market stalls in other cities.
Appendix 1
Main News - 12 May 2020
The Government in country Z wants to promote healthy eating and drinking to make people more
productive at work and also live longer. The Government plans to spend more money on providing
information about healthy food and drinks. It hopes that this will encourage people to think about
what they are eating and drinking.
The Government is also worried about slow economic growth. It has recently increased government
spending on improving public transport and paying higher wages to public sector employees.
© UCLES 2020 06_0986_21_2020_1.2
3
Appendix 2
Three applicants for the position of manager of the fruit drink market stalls
Joe Zabeen Jim
Expected wage
$6 per hour $15 per hour $10 per hour
rate
4 years part-time work in a 15 years as an 6 years working as a
Experience café when studying for a assistant manager of a manager in a restaurant in
degree large shop in a mall the city centre
3 A levels, Degree 5 IGCSEs
Qualifications Hygiene certificate (required No qualifications Hygiene certificate (required
if working with food and if working with food and
drinks) drinks)
Reason for Long hours of work with few Wants to gain a Wants more of a challenge
changing job holidays promotion at work
Appendix 3
Information on two possible new fruit drinks.
Drink A Drink B
Forecast weekly demand 2 000 5 000
Average variable cost of fruit $4.00 $1.00
Fixed costs per week $500 $500
Selling price $5.00 $2.00
Number of types of fruit used 6 2
Likely market segment High income consumers Low income consumers
© UCLES 2020 06_0986_21_2020_1.2
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 06_0986_21_2020_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2020
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*2265153034-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Blank pages are indicated.
06_0986_22_2020_1.1
© UCLES 2020 [Turn over
2
Eco Scooters (ES)
ES makes scooters (small motorcycles) which are sold in country Z. ES is a public limited company
which was founded 40 years ago. It has grown by taking over other smaller scooter manufacturers.
This meant that ES could use the factories and skilled employees of these other businesses. ES
is now planning to take over another scooter manufacturing business based in country Z, either
company ABC or company FGH. Financial information about these companies is shown in Appendix
1.
Currently ES uses a flow production method with many workers and only a few machines. The
work is boring and employees have to work long hours doing the same job. However, wages are
calculated by using time rate and this is higher than the legal minimum wage. There are no other
financial rewards for the workers.
ES currently has 30% market share in country Z. It is planning to export its products and has drawn
up a business plan for this expansion. This plan includes the promotion methods ES is considering
for its scooters in export markets. To start exporting, ES will have to increase production. It needs
to recruit 100 additional production workers and invest $10m in new technology production
machinery. This should ensure higher output as well as higher productivity.
Appendix 1
Financial information (2019) for the two companies ES is planning to take over.
ABC Company FGH Company
Revenue $100m $400m
Cost of sales $50m $160m
Expenses $40m $210m
Return on Capital Employed
20% 25%
(ROCE)
Current ratio 2 3
Acid test ratio 1 1.5
© UCLES 2020 06_0986_22_2020_1.1
3
Appendix 2
Article in the national newspaper
Main News 10 April 2020
The economy of country Z has grown rapidly over the last 5 years and incomes are high. This has
resulted in inflation. The Government is now taking action to stop inflation rising any further.
Unemployment has now started to increase. This has been welcomed by some businesses but not
all. The demand for luxury products is likely to fall if unemployment continues to rise.
Appendix 3
Email to Managing Director
To: Managing Director
From: Finance Director
Date: 20 April 2020
Re: New laws
The Government has introduced many new laws that will have an impact on ES. These legal controls
include those affecting consumer protection, location decisions and environmental protection. We
will have to consider how each of these new laws will affect our costs and operations.
Please make sure you have carried out a full analysis of what these changes will mean for ES.
© UCLES 2020 06_0986_22_2020_1.1
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 06_0986_22_2020_1.1
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer/Structured Response May/June 2020
MARK SCHEME
Maximum Mark: 80
Published
Students did not sit exam papers in the June 2020 series due to the Covid-19 global pandemic.
This mark scheme is published to support teachers and students and should be read together with the
question paper. It shows the requirements of the exam. The answer column of the mark scheme shows the
proposed basis on which Examiners would award marks for this exam. Where appropriate, this column also
provides the most likely acceptable alternative responses expected from students. Examiners usually review
the mark scheme after they have seen student responses and update the mark scheme if appropriate. In the
June series, Examiners were unable to consider the acceptability of alternative responses, as there were no
student responses to consider.
Mark schemes should usually be read together with the Principal Examiner Report for Teachers. However,
because students did not sit exam papers, there is no Principal Examiner Report for Teachers for the June
2020 series.
Cambridge International will not enter into discussions about these mark schemes.
Cambridge International is publishing the mark schemes for the June 2020 series for most Cambridge
IGCSE™ and Cambridge International A & AS Level components, and some Cambridge O Level
components.
This document consists of 10 printed pages.
© UCLES 2020 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
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 descriptors
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.
© UCLES 2020 Page 2 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
1(a) Define ‘crowd-funding’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Asking a large number of people each for a small amount of money to raise
finance for a project [2]
Partial definition: asking general public/people to give money [1]
1(b) State two economies of scale. 2
Award 1 mark per economy of scale.
Two from:
• Purchasing/bulk buying
• Marketing
• Technical
• Financial
• Risk bearing
• Managerial
1(c) Outline two reasons why a bank might want Kara to produce a 4
business plan before agreeing to give a loan.
Award 1 mark for each relevant reason.
Award 1 mark for each relevant reference to this business.
Points might include:
• Supports request for finance/shows ability to repay [k] increasing chance
of getting finance for her candle business [app]
• Shows planning/thought seriously about issues [k] such as recognising
that cash-flow is a problem [app]
• Provide (important) information about business [k] such as demand is
increasing [app]
• Shows what security/assets the business has which can be used to
support any loan [k]
Other appropriate responses should also be credited.
Note: The focus of the question is from the viewpoint of the bank and not the
business.
© UCLES 2020 Page 3 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
1(d) Explain two factors Kara should consider when deciding whether to 6
increase prices.
Award 1 mark for identification of each relevant factor (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
• Level of competition/selling price of competitors [k] for candles [app] as
a higher price could mean fewer customers [an]
• Cost of production [k] as a higher price should improve her profit margin
[an] especially as she does not benefit from economies of scale [app]
• Price elasticity of demand [k] as if price elastic a higher price will result
in a greater fall in demand [an] so revenue this year may not be $50 000
[app]
• Brand image/reputation [k] as higher price might suggest better quality
[an]
Other appropriate responses should also be credited.
1(e) Do you think delaying payments to suppliers is the best way for a 6
small business to improve its cash-flow? Justify your answer.
Award up to 2 marks for identification of relevant points or alternative ways.
Award up to 2 marks for relevant development.
Award 2 marks for justified decision as to whether delaying payments to
suppliers is the best way for a small business to improve its cash-flow.
Points might include:
• Delaying payment will allow them to delay cash outflow [k]
• Suppliers may be unwilling to supply materials [k] and without the
necessary materials would not be able to generate any cash inflows [an]
Other options might include:
• Ask customers to pay more quickly [k] but could result in fewer
customers leading to lower cash inflows [an]
• Arrange an overdraft/short-term loan [k] but could be charged interest
which would increase cash outflows [an]
• Sell unwanted non-current assets [k] which would free up cash currently
tied up in the business [an]
• Buy cheaper materials [k] which would reduce cash outflows [an]
Justification might include:
• As the business is small suppliers may not be willing to offer credit as
they are seen as too high a risk so this may not be an option for a small
business. [eval] [eval]
Other appropriate responses should also be credited.
© UCLES 2020 Page 4 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
2(a) Define ‘multinational company’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
A business with factories, production or service operations in more than one
country [2]
A business with production or service operation in another country outside
its normal area of operation [2]
Partial definition e.g. works/operates in more than one country [1]
2(b) State two ways of motivating employees. 2
Award 1 mark per way.
Points might include:
• financial bonuses
• performance related pay
• fringe benefits (or examples but allow only once)
• profit share
• provide opportunities for promotion
• job rotation
• job enrichment
• job enlargement
• training opportunities
• increase rate of pay
• employee of the month/award schemes
• praise
Other appropriate responses should also be credited.
2(c) State four factors that might affect the leadership style used by a 4
manager.
Award 1 mark for each relevant factor.
Points may include:
• Personality of leader/manager
• Skills of leader
• Skills of employees
• Work to be done
• Size of business
• Organisational structure
Other appropriate responses should also be credited.
© UCLES 2020 Page 5 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
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Question Answer Marks
2(d) Explain two ways BCK could contribute to sustainable development. 6
Award 1 mark for identification of each relevant way (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
• Reduce output [k] of gold [app] so only extract amount required (to meet
demand) [an]
• Use renewable energy [k] so need to use fewer natural resources [an]
when operating its mines [app]
• Restore land to nature when finished [k] so land can be reused for other
purposes [an]
• Increase efficiency [k] of its 10 000 employees [app] so waste fewer
resources [an]
• Change methods of working [k]
Other appropriate responses should also be credited.
2(e) Do you think using communication methods based on information 6
technology (IT) is the best way for a large business to communicate
with its suppliers? Justify your answer.
Award up to 2 marks for identification of relevant issues. Award up to 2
marks for relevant development of points.
Award 2 marks for justified decision as to whether using communication
methods based on information technology (IT) is the best way for a large
business to communicate with its suppliers.
Points might include:
• Phone call as can obtain immediate feedback [k] but may not be able to
contact the person when needed [an]
• Emails allow the receiver to read the message when it’s convenient to [k]
but may not read it/see it as junk mail [an] but could contain lots of
detailed information [an]
• Choice could depend on location of supplier e.g. local or in another
country/how much information need to include [k]
Other methods
• Meetings [k] allows for feedback [an] but can be difficult to arrange a
suitable time when everyone can attend [an]
• Letter [k] have a copy that can refer back to [an] but language used may
not be clear if use technical language [an]
Justification might include:
• Yes, especially if its urgent as electronic methods are usually quicker –
so action/changes can be made sooner so that operations are not delayed
– which could be very costly especially for large business. [eval] [eval]
Other appropriate responses should also be credited.
© UCLES 2020 Page 6 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
3(a) Define ‘brand image’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Unique name of a product that distinguishes it from other products or brands
[2]
Partial definition e.g. something that makes the product easy to recognise
[1]
3(b) Calculate the break-even number of customers for a typical NWA 2
flight. Show your working.
Award 2 marks for correct calculation. Break-even: 125 [2]
Correct formula and incorrect answer e.g. 2000 / (40 – 24) [1]
OR fixed cost/selling price – variable cost per unit [1]
3(c) Outline two possible problems for NWA of having a high level of debt. 4
Award 1 mark for each relevant problem.
Award 1 mark for each relevant reference to this business.
Points might include:
• Difficult to arrange additional finance [k] especially as its main source of
finance are bank loans [app]
• High cost of repayment/high expenses [k] making it difficult to keep
prices at $40 [app]
• Increase financial risk [k] when buying planes [app]
• Cash flow/liquidity problems [k] despite business being profitable [app]
Other appropriate responses should also be credited.
© UCLES 2020 Page 7 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
3(d) Explain how two methods of sales promotion could increase sales for 6
NWA.
Award 1 mark for identification of each relevant method (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
• Sponsorship (of events or clubs) [k] can help boost its reputation [an]
thereby helping further improve its brand image [app]
• Short-term price discounts/special offers [k] aimed at tourists [app] as
more people are able to afford/willing to buy as its cheaper [an]
• Loyalty schemes [k] such as frequent flying programme [app] to
encourage customers to return many times [an]
• Competitions [k] as people may buy more to increase their chances of
winning the prize [an]
• Gifts [k]
• After sales service [k]
Other appropriate responses should also be credited.
3(e) Do you think that having many levels of hierarchy is the best type of 6
organisational structure for a large business? Justify your answer.
Award up to 2 marks for identification of relevant issues. Award up to 2
marks for relevant development of points.
Award 2 marks for justified decision as to whether having many levels of
hierarchy is the best type of organisational structure for a large business.
Points might include:
• Having levels of hierarchy (tall hierarchy) means a long chain of
command [k] which can slow down communication as messages have
to pass through many levels to reach the intended person [an] which
could slow down decision making [an]
• Senior managers are more remote from employees [k] which can
demotivate employees and lower efficiency/output [an]
• Managers have fewer employees to supervise [k] which could result in
fewer opportunities for delegation [an]
• Can provide more opportunities for promotion [k]
• Having a wider structure would lead to a short chain of command/each
manager having to be responsible for more people [k] which could mean
managers lose control [an]
Justification might include:
• No as it could depend on the leadership style of the manager – if they
have an autocratic style – a tall structure may be better as this will allow
them to have greater control over what all the employees in a large
organisation do [eval] [eval]
Other appropriate responses should also be credited.
© UCLES 2020 Page 8 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
4(a) Identify two reasons why a government might support business start- 2
ups.
Award 1 mark per reason.
Points might include:
• reduce unemployment
• increase competition
• increase output
• benefit society
• small businesses can grow
Other appropriate responses should also be credited.
4(b) State two types of business organisation (other than partnership). 2
Award 1 mark for each type of business organisation.
Points might include:
• sole trader
• private limited company
• public limited company
• franchise
• social enterprise
• charity
• public corporation
Other appropriate responses should also be credited.
4(c) Outline two disadvantages of BMT being a business partnership. 4
Award 1 mark for each relevant disadvantage.
Award 1 mark for each relevant reference to this business.
Points might include:
• Unlimited liability/ each responsible for debts of other [k] so if business
cannot pay its debts there is risk to the personal assets of each brother
[app]
• Fewer sources of finance (than limited company) [k] restricting plans to
expand the watch business [app]
• Possible disagreements/slower decision making [k] such as whether to
import parts [app]
• Have to share profits [k]
Other appropriate responses should also be credited.
© UCLES 2020 Page 9 of 10
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
4(d) Explain two ways BMT could achieve lean production. 6
Award 1 mark for identification of each relevant way (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
• Just in Time [k] ordering parts as and when needed for the watches
[app] which reduces storage costs [an]
• Kaizen [k] helps to eliminate mistakes and errors [an] when making
these high-quality products [app]
• Cell production/team working [k] of its 30 employees [app]
• Kanban [k]
Other appropriate responses should also be credited.
4(e) Do you think the exchange rate is the most important factor for a 6
business to consider when deciding whether to import parts for a high
quality product? Justify your answer.
Award up to 2 marks for identification of relevant issues. Award up to 2
marks for relevant development of points.
Award 2 marks for justified decision as to whether the exchange rate is the
most important factor for a business when deciding whether to import parts
for a high quality product.
Points might include:
Exchange rates
• Appreciation in own exchange rates would mean have to pay less to
import materials [k] which lowers costs [an] so may be able to lower
prices or improve profit margin [an]
• Changing rates are difficult to plan for [k] may result in having much
higher costs than budget [an]
• Exchange rate depreciate [k] lead to higher cost of imported materials [an]
could mean have to increase prices which could lower sales [an]
Other factors might include:
• The quality of parts/materials [k] as it may not be possible to obtain the
resources locally [an]
• Import tariffs [k] this would increase the price [an]
• Import quotas [k] this could limit the amount of parts that can be brought
into the country [an]
Justification might include:
• As it is for a high-quality product, exchange rate is not as important as
the materials because customers may be willing to pay the higher price
to get the right quality which could cover the financial impact of any
changes in the exchange rate. [eval] [eval]
Other appropriate responses should also be credited.
© UCLES 2020 Page 10 of 10
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/12
Paper 1 Short Answer/Structured Response May/June 2020
MARK SCHEME
Maximum Mark: 80
Published
Students did not sit exam papers in the June 2020 series due to the Covid-19 global pandemic.
This mark scheme is published to support teachers and students and should be read together with the
question paper. It shows the requirements of the exam. The answer column of the mark scheme shows the
proposed basis on which Examiners would award marks for this exam. Where appropriate, this column also
provides the most likely acceptable alternative responses expected from students. Examiners usually review
the mark scheme after they have seen student responses and update the mark scheme if appropriate. In the
June series, Examiners were unable to consider the acceptability of alternative responses, as there were no
student responses to consider.
Mark schemes should usually be read together with the Principal Examiner Report for Teachers. However,
because students did not sit exam papers, there is no Principal Examiner Report for Teachers for the June
2020 series.
Cambridge International will not enter into discussions about these mark schemes.
Cambridge International is publishing the mark schemes for the June 2020 series for most Cambridge
IGCSE™ and Cambridge International A & AS Level components, and some Cambridge O Level
components.
This document consists of 11 printed pages.
© UCLES 2020 [Turn over
0986/12 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
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 descriptors
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.
© UCLES 2020 Page 2 of 11
0986/12 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
1(a) Define ‘specialisation’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Way in which work is divided so each worker concentrates on a specific task
so become expert at it [2]
When people and businesses concentrate on what they are best at [2]
Partial definition e.g. workers do only one job [1]
1(b) Identify two reasons why a government might introduce import 2
controls.
Award 1 mark per reason.
Points might include:
• Protect jobs from cheap labour in other countries
• To improve trade deficit
• Protect newly started/infant industries
• To earn more revenue from tariffs
• Protect local businesses from low priced competition
• Protect important national or strategic industries
Other appropriate responses should also be credited.
1(c) Outline two ways DWT could try to ensure quality production. 4
Award 1 mark for each relevant way.
Award 1 mark for each relevant reference to this business.
Points might include:
• Quality control [k] so check products before they are exported [app]
• Quality assurance [k] when making solar panels [app]
• Training/recruit skilled employees [k] to make full use of specialisation
[app]
• Use better quality materials [k] which could afford to pay for as it is a low-
cost country [app]
• Use new technology/CAM/CAD [k]
Other appropriate responses should also be credited.
© UCLES 2020 Page 3 of 11
0986/12 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
1(d) Explain one objective of each of the following stakeholder groups of 6
DWT.
Award 1 mark for identifying the objective of each stakeholder group (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
Customers
• would want high quality products [k] to achieve value for money [an]
which is why quality production is important [app]
• may want affordable prices [k]
Pressure groups
• encourage the use of sustainable methods [k] such as solar panels
[app] to protect the environment [an]
• reduce/limit amount of pollution/environmental damage [k]
Other appropriate responses should also be credited.
1(e) Do you think that all businesses will benefit from operating in a country 6
which is experiencing rapid economic growth? Justify your answer.
Award up to 2 marks for identification of relevant issues.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to whether all businesses will benefit
from operating in a country which is experiencing rapid economic growth.
Points might include:
• Economic growth increases consumer incomes [k] which increases
demand for most goods [an]
• Rapid economic growth can lead to higher rate of inflation [k] which
raises firms’ costs/reduces profit margin [an]
• Patterns of consumer demand might change [k] reducing revenue for
some businesses [an]
• Could lead to shortage of skilled workers [k] so have to offer pay to
attract/retain employees leading to higher costs [an]
Justification might include:
• No - unlikely all businesses will benefit as it depends on what they sell as
if they sell basic goods, customers may switch to more expensive items
as their incomes increase leading to fewer sales for some businesses
and higher sales for others. [eval] [eval]
Other appropriate responses should also be credited.
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Question Answer Marks
2(a) Define ‘trade union’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Group of workers who join together to ensure their interests/rights are
protected [2]
Organisation which represents the workers and fights for improvements to pay
and conditions [2]
Partial definition e.g. A group who fight for workers’ rights [1]
2(b) Calculate the average cost of one motorcycle. Show your working. 2
Award 2 marks for a correct calculation: 400
Award 1 mark for correct method e.g. 1 200 000/3000
OR total cost / total output
2(c) State four features of an income statement. 4
Award 1 mark for each relevant feature.
Points might include:
• Revenue
• Cost of sales
• Gross Profit
• Profit (for the year)
• Retained Profit
• Expenses
Other appropriate responses should also be credited.
2(d) Explain two possible problems for MLC of relocating its operations to 6
another country.
Award 1 mark for identification of each relevant problem (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
• Access to suitable employees/not easy to find employees [k] as at new
site will need 150 new employees [app] increasing recruitment/training
costs [an]
• Access to/cost of suitable land [k] as will need a big space[an] to make
motorcycles [app]
• Different legal controls/standards [k] in the new factory [app] which may
mean have to change how/where operate [an]
• Could be further away from market/suppliers/need to find new suppliers
[k] which increases transport costs [an]
• Communication problems [k] as may need to learn a new language [an]
so takes longer to complete on-the-job training [app]
Other appropriate responses should also be credited.
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Question Answer Marks
2(e) Do you think on-the-job training is a better method of training for a 6
manufacturing business to use than off-the-job training? Justify your
answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to whether on-the-job training is a
better method of training for a manufacturing business to use than
off-the-job training.
Points might include:
Off-the-job training:
• Not necessarily tailored to individual business [k]
• Have to pay more/high cost for specialists [k] which increases costs [an]
• Skills might not be available in the business [k] so benefit from new
techniques/ideas [an]
• Allows for mistakes to be made when learning [k] so less likely to waste
resources when working/lower risk of damaging business reputation [an]
On-the-job training:
• Can reinforce errors/bad habits of trainer [k] reducing sales/damage
reputation [an]
• Fewer new ideas/skills will be taught [k]
• Control what is taught/employees learn exact way business wants things
done [k] so workers only learn skills needed [an]
• Employees can carry on working [k] so some output is still produced [an]
• Cheaper (than off-the-job) [k]
Justification may include:
• No, as it depends what the training is for – if using new techniques/
machines the business may not have a suitable person to train others
so on-the-job is not an option so it would have no choice and would
have to use off-the-job training. [eval] [eval]
Other appropriate responses should also be credited.
Question Answer Marks
3(a) Define ‘business plan’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
A document containing the business aims/objectives and important details
about the operations, finance and owners of a business [2]
States aim and/or objectives and shows how business aims to achieve them
[2]
Partial definition e.g. a document showing what the business intends to do
[1]
Other appropriate responses should also be credited.
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Question Answer Marks
3(b) Identify two reasons why a business might downsize its workforce. 2
Award one mark per reason (max 2).
Points might include:
• Economic crisis
• Factory/shop/office closure
• Merger or takeover
• Need to reduce costs
• Changes in management/strategy
• Automation or replaced by machinery
• Excess workforce
• Relocation
Other appropriate responses should also be credited.
3(c) Outline two reasons why Kala’s business might need finance. 4
Award 1 mark for each relevant reason (max 2).
Award 1 mark for each relevant reference to this business. (max 2).
Points might include:
• Increase working capital/examples such as buy inventory or
materials/pay day to day costs [k] so prevent cash flow problems [app]
• To expand/buy more non-current assets [k] so she can enter different
market segments [app]
• To pay for market research and advertising [k] of her sportswear [app]
Other appropriate responses should also be credited.
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Question Answer Marks
3(d) Explain one advantage and one disadvantage to Kala of using e- 6
commerce to sell her products.
Award 1 mark for identification of each relevant advantage and
disadvantage (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
Advantages:
• Able to target customers [k] who are mainly women [app] so better able
to attract attention of people most likely to buy her products [an]
• Less rent/fewer employees needed [k] which can help reduce costs [an]
for her sportswear [app]
• Easy to update [k] so keep customers informed [an] about the ways the
products can be customised [app]
• Widen market/more potential customers [k] which can increase revenue
[an]
Disadvantages:
• Difficult to stand out from competition [k] at a time when she is worried
about increased competition [app] leading to lower sales [an]
• Not everyone has access to internet [k]
• No passing trade [k] so could mean fewer sales [an]
• Increased costs of postage/distribution [k] as need to arrange for
delivery/vans [an]
• Need to pay for pop-ups to advertise on popular sites [k]
• Lack of personal service [k]
• Customers may want to try before buy [k]
Other appropriate responses should also be credited.
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Question Answer Marks
3(e) Do you think selling to different market segments is the best way for a 6
small business to respond to increased competition? Justify your
answer.
Award up to 2 marks for identification of relevant issues. Award up to 2
marks for relevant development of points.
Award 2 marks for justified decision as to whether selling to different market
segments is the best way for a small business to respond to increased
competition.
Points might include:
Targeting a new segment:
• Wider market base [k] could increase sales revenue [an]
• Spreads risk [k] as not reliant on one market for sales [an]
• Need to know reaction/current level of competition [k] as customers
may be loyal to other businesses so not easy to obtain sales [an]
• High cost and time involved developing new products [k]
• Cost of promotion [k] as need to attract customer’s attention [an]
Other issues or ways could be discussed such as:
• Could change prices e.g. lower prices could lead to lower profit
margin/seen as lower quality [k] which could lower sales [an]
• Size of market could be a factor as if niche market [k] this will limit number of
possible sales [an]
Justification might include:
• Yes, selling to other segments means spreading risk [k] as not reliant
on one market for sales [an]. This is much better than charging lower
prices [k] could reduce revenue [an] if they cannot generate enough
extra sales to cover the price reduction which could be a major issue for
especially for a small business who not have the sufficient funds to be
keep lower prices [eval] so could struggle to remain competitive [eval]
Other appropriate responses should also be credited.
Question Answer Marks
4(a) Define ‘profit’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Profit is the amount of money that a business makes once costs have been
subtracted from the revenue [2]
Total revenue minus total costs [2].
Partial definition e.g. money left after costs paid [1]
Note: For both marks must have idea that there is both sales and cost
element to profit.
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Question Answer Marks
4(b) State two problems of using the number of employees to measure the 2
size of a business.
Award 1 mark per problem.
Points might include:
• Might use a lot of machines,
• Difficult to count part-time employees
Other appropriate responses should also be credited.
4(c) Outline two possible ways ALB can try to reduce its costs. 4
Award 1 mark for each relevant way.
Award 1 mark for each relevant reference to this business.
Points might include:
• Reduce number of employees [k] by making some of the 5000
employees redundant [app]
• Close number of branches [k] from 300 [app]
• Reduce amount of wastage [k] by using less paper when dealing with
business customers [app]
Other appropriate responses should also be credited.
4(d) Explain two ways ALB could improve customer loyalty. 6
Award 1 mark for identification of each relevant method (max 2).
Award 1 mark for each relevant reference made to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
• Communicate with customers e.g. newsletters, social media [k] so that
they remember your business [an] when they next need financial
services/help from bank [app]
• Offer good quality service [k] so customers want to return [an] to the 300
branches [app]
• Train staff [k] so all 5000 employees [app] are able to offer a good
quality service [an]
• Ask for feedback e.g. surveys [k] to find out how/what they need to do to
improve [an]
• Resolve complaints quickly [k] so that customers don’t change to
another bank [an] as it is a competitive market [app]
• Offer rewards/ loyalty programs [k] such as discounts for business
customers who also use them for its personal banking [an]
• Offer extra services such as online/mobile phone app [k]
Other appropriate responses should also be credited.
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Question Answer Marks
4(e) Do you think changes in legal controls over employment issues will 6
always reduce business profits? Justify your answer.
Award up to 2 marks for identification of relevant issues.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to whether changes in legal
controls over employment issues will always reduce business profits.
Points might include:
• Health and safety changes could mean needing to provide more training
[k] increasing costs [an] but leading to more motivated/more efficient
employees [an]
• Can depend on how much the minimum wage increases [k] as may
already pay above the new rate so may not affect them [an]
• Can depend on the type of business [k] as health and safety may be
more of an issue if it is a manufacturing business [an]
Justification might include:
• Yes, because any changes in legal control are likely to result in the
business at least having to do something even if it is only to check they
are compliant, which will cost time and money to do. [eval] [eval]
Other appropriate responses should also be credited.
© UCLES 2020 Page 11 of 11
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2020
MARK SCHEME
Maximum Mark: 80
Published
Students did not sit exam papers in the June 2020 series due to the Covid-19 global pandemic.
This mark scheme is published to support teachers and students and should be read together with the
question paper. It shows the requirements of the exam. The answer column of the mark scheme shows the
proposed basis on which Examiners would award marks for this exam. Where appropriate, this column also
provides the most likely acceptable alternative responses expected from students. Examiners usually review
the mark scheme after they have seen student responses and update the mark scheme if appropriate. In the
June series, Examiners were unable to consider the acceptability of alternative responses, as there were no
student responses to consider.
Mark schemes should usually be read together with the Principal Examiner Report for Teachers. However,
because students did not sit exam papers, there is no Principal Examiner Report for Teachers for the June
2020 series.
Cambridge International will not enter into discussions about these mark schemes.
Cambridge International is publishing the mark schemes for the June 2020 series for most Cambridge
IGCSE™ and Cambridge International A & AS Level components, and some Cambridge O Level
components.
This document consists of 14 printed pages.
© UCLES 2020 [Turn over
0986/21 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
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 descriptors
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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Question Answer Marks
1(a) Explain four characteristics that make Simon a successful 8
entrepreneur.
Award 1 mark for each relevant characteristic (maximum of four):
Relevant characteristics might include:
• Self-confident – decision to leave full-time job 6 months ago
• Creative – created new drinks to attract additional customers
• Independent – willing to go with own ideas to produce new types of
drinks
• Hard worker – prepared to do all the work himself by making all the
drinks at his home and selling them at a market stall
• Risk taker – gave up a well-paid job and risked losing personal assets
• Effective communicator – persuades others to buy his new drinks when
he is selling them on a market stall
• Optimistic – think positively about new business and wants to rapidly
expand it
• Innovative – creating a healthy alternative to mass produced drinks
Award a maximum of one additional mark for each application of the
characteristic to the context.
Indicative response:
Simon is a risk taker (1) as he risked giving up his well-paid job to start his
own business (app).
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Question Answer Marks
1(b) Explain the three main methods of production FJ could use to produce 12
its products in the factory. Which method should FJ use? Justify your
answer.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of two or more methods.
3 Well-justified recommendation. 9–12
Candidates discussing three methods in detail, in context
and with well-justified recommendation including why the
alternative methods were rejected should be rewarded
with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of at least one method.
2 Judgement with some justification/some evaluation of 5–8
choice made.
Candidates discussing of two or more methods in detail
and applying it to the case should be rewarded with the
top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the methods with little/no
explanation.
1 1–4
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining three methods 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:
Advantages Disadvantages
• Suitable for one-off • Skilled labour may
drinks be required – higher
• Needs exact wages – higher
requirements of costs
customers • Costs higher as
Job • Higher price charged labour intensive and
for product specially ordered
fruits used
• Production takes
longer than other
two methods
• Flexible way of • Can be expensive if
working – can easily semi-finished drinks
change to produce need moving around
different drinks the factory
• Still some variety for • Machines have to be
workers in their jobs reset between
• More variety of batches
products produced – – delay in
Batch
consumers will have production
more choice – lower
productivity
• Warehouse space
needed for fruits
and finished batches
of drinks – cost of
space
• High output of • Can be boring for
standardised drinks workers – less
• Cost to make each motivated
drink is low • Storage costs may
• Easier for capital be high unless use
intensive production JIT
methods to be used • Capital costs of
• May use lower setting up production
Flow skilled workers as line are high
machines can be • If one machine
used in the breaks down, then
production line the whole production
• May benefit from line may have to be
economies of scale halted with no fruit
as may buy the 2 drinks produced
types of fruit
ingredients in bulk
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Question Answer Marks
1(b)
Justification might include:
• Batch will be the best as different types of
healthy drinks will be produced but not in large
enough quantities to make flow production
viable until the business has grown significantly.
Recommendation
• Flow production will allow more automated
machinery to be installed in the factory which will
reduce unit costs than if job or batch production
is used. Lower prices for the fruit drinks may
then be charged leading to higher demand. Also
supply to the additional market stalls can easily
be met and the business can expand quickly.
Question Answer Marks
2(a) Explain one advantage and one disadvantage to Simon of using 8
crowd-funding as a source of finance for FJ.
Award 1 mark for each relevant advantage/disadvantage (maximum of two):
Relevant advantages might include:
• May have no initial fees to be paid to the crowd-funding platform
• Allows public reaction to the new business venture to be tested
• Can be a fast way to raise substantial sums of money
• May be used when other more ‘traditional’ sources are not available
Relevant disadvantages might include:
• Crowd-funding platforms may reject Simon’s proposal if it is not well
thought through
• If total amount required is not raised, then the finance promised will
have to be repaid
• Interest from the public will need to be generated to increase the chance
of successfully raising the amount required
• May allow competitors to steal the idea and reach the market first
Award a maximum of 3 additional marks for each explanation of the
advantage and disadvantage of using crowd-funding. – one of which must
be applied to this context.
For example:
Crowd-funding will allow large amounts of capital to be raised (1) so Simon can
start producing a large output of fruit drinks quickly (app). This will allow
Simon to enter the new market before competitors can copy his drinks (1)
and he will not have to pay back the money, unlike a bank loan. (1)
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Question Answer Marks
2(b) Consider the following three methods of market research Simon used. 12
Which do you think is the best method to use when deciding which
product to produce? Justify your answer.
• Online questionnaire
• Accessing government population data
• Focus group
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more methods of market
research.
3 9–12
Well-justified conclusion.
Candidates discussing the three methods in detail, in
context and with well-justified conclusion including why
the alternative methods were rejected should be rewarded
with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one method.
2 5–8
Judgement with some justification/some evaluation of
choice made.
Candidates discussing two or more methods in detail and
applying it to the case should be rewarded with the top
marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the methods of market research
with little/no explanation.
1 1–4
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining the three methods of market
research 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:
• Faster with quicker replies than other forms of
survey
• Cheaper to collect quantitative data about
customer purchases of drinks than interviews
Online • Can collate results about customer consumption
questionnaire of healthy drinks saving Simon time
• But with no interviewer questions may not be
understood and answers less valid
• May not gain a wide range of views if people do
not have the internet
• Quicker to collect than primary sources
• Gives an idea of age groups in the local area and
total size of the market for fruit drinks
Accessing
• But this does tell Simon which fruit juices
government
people will like
population data
• May be out of date
• Data is available to all drink’s businesses
including competitors
• Qualitative data so opinions on different fresh fruit
drinks can be gathered
• Questions can be explained so opinions on which
fruits to include in drinks is more reliable
• Quicker and cheaper than individual interviews
Focus group
• Primary research is up to date and relevant
• But expensive and time consuming to collect
• Discussion could be biased if some of panel
members have strong opinions on which fruits
to include in drinks
Justification might include:
• If opinions are required, then focus group or
online questionnaire may be better as gain this
data directly from potential customers. Also, if the
budget for market research is high then a focus
group will gather more qualitative data that may be
more useful in developing the most successful
new fruit drinks.
• If only data on the total market is required, then
accessing government population data might be
Conclusion
best as it is cheap to collect and readily available
giving details of the total size of the market for
fruit drinks. It also does not take much time to
collect unlike a focus group that will need to be set
up, participants selected and invited to attend.
Then the focus group will need to be led by an
experienced market researcher or the data may
be less accurate. An online questionnaire will still
also need to have a suitable sample of
respondents for it to be useful.
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Question Answer Marks
3(a) Explain four ways an increase in government spending may affect a 8
business.
Award 1 mark for each relevant way (maximum of four ways).
Relevant ways might include:
• Government may increase purchases from other businesses –
increasing demands for its products
• May lead to higher inflation - increase business costs
• May reduce unemployment - increase consumer spending
• May lead to a need to increase taxes - reducing consumer spending
Award a maximum of 1 additional mark for explanation of how an increase in
government spending may affect a business.
For example:
Government may increase purchases from other businesses (1) increasing the
revenue of these businesses (1).
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Question Answer Marks
3(b) Referring to Appendix 2, consider the suitability of the three applicants 12
for the position of manager. Which applicant should Simon select?
Justify your answer.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of two or more applicants.
3 Well-justified recommendation. 9–12
Candidates discussing all three applicants in detail, in
context and with well-justified recommendation including
why the alternative applicants were rejected should be
rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of at least one applicant.
2 Judgement with some justification/some evaluation of 5–8
choice made.
Candidates discussing two or more applicants in detail
and applying it to the case should be rewarded with the
top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the applicants with little/no
explanation.
1 1–4
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining all three applicants 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:
• Inexperienced as only worked part-time
• Doesn’t want to work long hours so may not
work hard for Simon
• Has experience of the food and drink industry
Joe
and already trained in hygiene regulations so
saving time and money
• But cheapest at $6 hourly wage of the three so
costs will be lower
• Experience of management – may be skilled to
manage the market stalls without training
• No qualifications so may not have much ability
to learn – training less effective
• Ambitious so may be keen to do well and impress
Zabeen
Simon
• But the most expensive at $15 per hour to
employ so costs will be higher
• May leave if better job comes along to higher
costs of recruitment as need to replace her
• Has experience of the food industry and
already trained in hygiene regulations so
saving time and money
• Enthusiastic and wants to do more
Jim challenging work – will work hard to impress
Simon
• Has already worked as a manager so no need
to train him in what to do – do the job quicker and
cheaper
Justification might include:
• Joe is probably youngest and cheapest (at $6
per hour) of the three applicants to employ but
has the least experience and Simon needs
someone reliable to make the stall successful.
• Zabeen most experience but not on a food or
drinks stall. Also has no formal qualifications and
is the most expensive of the three applicants to
Recommendation
employ. As FJ is a new business it will need to
keep costs down.
• Jim has hygiene certificate and so lower costs
than Zabeen as training not required. Has more
experience than Joe of working in a food and
drinks establishment. He is ambitious so will try
hard and more likely to help make the market
stall successful.
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PUBLISHED
Question Answer Marks
4(a) Explain two reasons why profit is important to FJ. 8
Award 1 mark for each relevant reason (maximum of 2).
Relevant reasons might include:
• Return on investment
• Source of retained profit for investment
• Attracts business partners
• Enables Simon to pay a bonus to employees
Award a maximum of 3 additional marks for each explanation of why profit is
important to FJ – one of which must be applied to this context.
For example:
As a return on his investment (1) as Simon gave up his job and risked his
own money in starting FJ (app). If no profit is made, then Simon could have
put his money elsewhere and gained a return on it (1) and he may decide to
close down FJ and start up another business. (1)
© UCLES 2020 Page 12 of 14
0986/21 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
4(b) Consider the two products outlined in Appendix 3. Which product 12
should FJ produce? Justify your answer using relevant calculations.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of both products.
3 9–12
Well-justified recommendation.
Candidates discussing both products in detail, in
context and with well-justified recommendation
including why the alternative product was rejected
should be rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one product.
2 5–8
Judgement with some justification/some evaluation of
choice made.
Candidates discussing both products in detail and
applying it to the case should be rewarded with the top
marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss each product with little/no
explanation.
1 1–4
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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PUBLISHED
Question Answer Marks
4(b) Relevant reasons might include:
• Selling price is $3.00 higher than Drink B
• Targeted at higher income consumers so
may be willing to pay the higher price
• Revenue = $10 000
• Total cost = $8500
• Profit = $1500 per week
• Gross Profit $2000
Drink A
• Gross profit per drink = $1.00
• GPM = 20%
• PM = 15%
• Average cost = $4.25
• Highest quality with more fruits in the drink
• More variety of drinks available as uses 6
different fruits
• Revenue = $10 000 same as Drink A
• Total cost = $5500
• Profit = $4500 per week
• Gross profit = $5000
• Gross profit per drink = $1.00
• GPM = 50%
• PM = 45%
Drink B
• Average cost = $1.10
• Only two fruits in each drink will make the
drink lower quality
• Highest sales - forecast demand is 3000
higher than Drink A
• Break-even = 500 same as break-even for
Drink A = 500
Justification might include:
• Choose Drink A as although Drink B will give
the highest profit of the two drinks it is the
lowest quality of drink with only two fruits. As
incomes increase customers may prefer the
higher quality drinks and so drink A may
become more popular and drink B lose sales.
The sales figures are only predictions anyway
and may be different.
Recommendation • Drink B may be best to choose as it has the
highest gross and profit margins and also
makes the highest profit per week. Even though
incomes are rising, and it targets lower
income customers, they may still have high
sales as customers may just buy more of these
drinks. Also, more likely to have higher sales
than Drink A which will make it easier to
expand and sell the drinks after opening more
fruit drink market stalls.
© UCLES 2020 Page 14 of 14
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2020
MARK SCHEME
Maximum Mark: 80
Published
Students did not sit exam papers in the June 2020 series due to the Covid-19 global pandemic.
This mark scheme is published to support teachers and students and should be read together with the
question paper. It shows the requirements of the exam. The answer column of the mark scheme shows the
proposed basis on which Examiners would award marks for this exam. Where appropriate, this column also
provides the most likely acceptable alternative responses expected from students. Examiners usually review
the mark scheme after they have seen student responses and update the mark scheme if appropriate. In the
June series, Examiners were unable to consider the acceptability of alternative responses, as there were no
student responses to consider.
Mark schemes should usually be read together with the Principal Examiner Report for Teachers. However,
because students did not sit exam papers, there is no Principal Examiner Report for Teachers for the June
2020 series.
Cambridge International will not enter into discussions about these mark schemes.
Cambridge International is publishing the mark schemes for the June 2020 series for most Cambridge
IGCSE™ and Cambridge International A & AS Level components, and some Cambridge O Level
components.
This document consists of 14 printed pages.
© UCLES 2020 [Turn over
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
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 descriptors
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.
© UCLES 2020 Page 2 of 14
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
1(a) Explain one benefit and one problem for ES of taking over other 8
businesses.
Award 1 mark for each relevant benefit/problem (maximum of two):
Relevant benefits might include:
• Assets already set up for use – can use existing scooter factories and
skilled employees
• Makes it quicker to grow – as the existing production facilities can be
used to increase the output of scooters – faster than setting up own
factories
• Have access to ready trained/skilled staff
Relevant problems might include:
• High cost of buying other business – may need to sell additional shares
on the stock exchange
• May be difficult integrating the two companies – as the way of working
may be very different in the smaller scooter businesses – and
employees may not like the changes – leading to less efficiency
• More difficult to control larger business – many more skilled employees
in the business – possible diseconomies of scale
Award a maximum of 3 additional marks for each explanation of the benefits
and problems of growing by taking over other businesses – one of which
must be applied to this context.
For example:
The cost of buying other companies is high (1) and ES will have to raise large
amounts of funds to allow them to do this (1). As a public limited company
(app), it could sell additional shares to raise the finance, but this may lead to
the existing shareholders losing some control over the business (1).
© UCLES 2020 Page 3 of 14
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
1(b) Consider the financial information in Appendix 1. Which company 12
should ES take over? Justify your answer using appropriate ratios.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of both companies.
3 9–12
Well-justified recommendation.
Candidates discussing both companies in detail, in
context and with well-justified recommendation including
why the alternative company was rejected should be
rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one company.
2 5–8
Judgement with some justification/some evaluation of
choice made.
Candidates discussing both companies in detail and
applying it to the case should be rewarded with the top
marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss each company with little/no
explanation.
1 1–4
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining both companies 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 reasons might include:
• Revenue $300m lower than FGH ($400m for
FGH company - $100m for ABC company)
• Gross profit = $50m
• GPM = 50%
• Profit = $10m
ABC company • Profit Margin = 10%
• ROCE is 5% lower than FGH but still good
return on investment (25% for FGH – 20% for
ABC)
• Liquidity is good and shows that ABC can easily
pay any short-term liabilities
• Gross profit = $240m (Revenue $400m – Cost
of sales $160m)
• GPM = 60%
• Profit = $30m
• PM = 7.5%
FGH company • Profit $20m higher than ABC
• Current ratio is higher than ABC (ABC current
ratio of 2 while FGH current ratio is 3)
• Liquidity is too high and is not making good use
of its current assets. There may be too much
cash being held in the business.
Justification might include:
• ABC as profitability higher than FGH even
though GPM is lower overall profitability is
higher. Liquidity is also better for ABC as FGH
has too high an amount of current assets to
Recommendation
current liabilities with a current ratio of 3.
• FGH as the actual profit is higher than for ABC
and GPM higher showing if improve control of
expenses then profitability will be higher as well.
ROCE is 25%, higher than ABC by 5%.
© UCLES 2020 Page 5 of 14
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Question Answer Marks
2(a) Explain four ways a business plan can be useful. 8
Award 1 mark for each relevant way (maximum of four ways):
Relevant ways might include:
• Helps gain a bank loan – shows the business is likely to be profitable
and repay the loan
• Organises thoughts about resources needed – identify types of workers
need to recruit
• Can plan and budget for resources needed- e.g. to budget for new
production machinery
• Financial documents will help to show expected returns – to see if it will
bring the return expected by shareholders
Award a maximum of 1 additional mark for each explanation of the way a
business plan can be used.
For example:
Forecast financial documents will show potential profit to be made (1) can
see if it will give a satisfactory return on the investment. (1)
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Question Answer Marks
2(b) ES has been considering the following three methods of promotion for 12
its products in export markets. Which method should ES choose?
Justify your answer.
• Advertise on national television
• Advertise on ES website
• Display its products in shopping malls
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more methods to promote
ES’ products.
3 9–12
Well-justified recommendation.
Candidates discussing the three methods in detail, in
context and with well-justified recommendation including
why the alternative methods were rejected should be
rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one method.
2 5–8
Judgement with some justification/some evaluation of
choice made.
Candidates discussing two or more methods in detail
and applying it to the case should be rewarded with the
top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the methods to promote the
products with little/no explanation.
1 1–4
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining the three methods to promote the
products in context should be rewarded with the top
marks in the band.
0 No creditable response. 0
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0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2020
PUBLISHED
Question Answer Marks
2(b) Relevant points might include:
• Advert for scooters will go out to millions of
people
• Scooters can be shown in very favourable way
• Can reach a target audience for scooters if
shown during programmes likely to be watched
Advertise on
by these target customers e.g. sports
national television
programmes
• Very expensive form of advertising
• Younger consumers may not watch as much TV
as older people so may not reach these
consumers
• Large amount of information can be posted
• Cheap way to advertise
• Can include videos of the scooters
Advertise on ES • Internet searches may not highlight the website
website at the start of the search list and therefore it is
missed
• Internet access may be limited in some
countries where scooters are being exported
• Provides a lot of information
Display its • Can also be persuasive with scooter to look at
products in and sit on
shopping malls • Restricted to a relatively small number of
consumers in the mall
Justification might include:
• National TV as the scooters will be seen by the
mass market and will not be seen by many
people in shopping mall displays.
• Website useful for advertising when other forms
of advertising have raised awareness of the
scooters such as after the scooter has been
Recommendation
seen in a mall display.
• Displays in shopping malls will be most useful as
potential customers can sit on the scooters and
see how comfortable they are. This may make
people who have not even thought about buying a
scooter consider them whereas advertisements in
television and on websites may be ignored.
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Question Answer Marks
3(a) Explain two benefits to ES of higher productivity. 8
Award 1 mark for each relevant benefit (maximum 2).
Relevant benefits might include:
• Lower unit costs – increasing gross profit margin - higher profit
• Lower prices – as each scooter costs less to produce – prices are more
competitive with other manufacturers - increased sales
• Increased output – more scooters available to export – increased
revenue
• Output per worker higher – able to increase wages/offer financial
rewards – which could increase motivation – lower labour turnover
Award a maximum of 3 additional marks for each explanation of the benefits
of higher productivity – one of which must be applied to this context.
For example:
Output per worker is higher (1) so ES may be able to offer financial rewards
than just time wage rate payments (app) which can result in more highly
motivated production workers (1) making them less likely to leave and
consequently ES will have lower recruitment costs. (1)
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Question Answer Marks
3(b) Consider three methods of motivation ES could use for its production 12
workers. Which is the best method for ES to choose? Justify your
answer.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more methods.
3 9–12
Well-justified conclusion.
Candidates discussing three methods in detail, in
context and with well-justified conclusion including why
the alternative methods were rejected should be
rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one method.
2 5–8
Judgement with some justification/some evaluation of
choice made.
Candidates discussing two or more methods in detail
and applying it to the case should be rewarded with the
top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the methods with little/no
explanation.
1 1–4
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining three methods 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:
• Job rotation – moves workers around the production line to carry out
different tasks so makes the job less boring – but the actual tasks
may still be monotonous.
• Job enlargement – adds tasks to the job and therefore the job becomes
more interesting – worker may feel more important as trained to carry out
additional tasks – but worker may not feel able to carry out the additional
task – may not want extra responsibility.
• Increased wage rates – even higher than the legal minimum wage
than they are at present - Taylor states that increased wages will
increase motivation as ‘money is the main motivator’ – however,
Herzberg would argue it is only a temporary motivator and increased
motivation will not last.
• Introduce piece rate – wages paid will increase the higher the output, so
workers will be motivated to increase their output – however, if work is
rushed quality might suffer leading to a poor reputation for the company.
• Pay a bonus – may be paid individually or as a team – higher pay if the
production team increase output – may cause disagreements if only
some of the team are working hard – may be seen as unfair.
Judgement might include:
• Higher pay will only motivate production workers for a short time as the
job is still boring on the flow production line. It might be better to use
job enlargement to add tasks to the job the job of making scooters to
make it more interesting and maintain increased motivation for a longer
period of time. It may also cost less as may only need additional training
and not higher wages to be paid
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Question Answer Marks
4(a) Explain how the following four legal controls may affect ES. 8
• Control over misleading promotion
• Control over faulty products
• Control over location decisions
• Control over pollution
Award one mark for each effect (maximum of four).
Relevant legal controls might include:
• Misleading promotion: restrictions on claims in adverts about the
speed scooters can go or fuel consumption
• Faulty products: consumers have the right to return them to have
your money back if the scooter engine has a fault
• Location – restrictions on where to expand the scooter factory
• Pollution – emissions from scooters may mean production has to
change
Award a maximum of 1 additional mark for each effect applied to this
context.
For example:
Environmental laws may restrict pollution from exhaust fumes (1) this may
mean ES has to change the engines of its scooters which may increase
costs (app).
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Question Answer Marks
4(b) Consider the effect on ES of the following two economic changes in 12
country Z. Which change is likely to have the biggest effect on ES’s
profit? Justify your answer.
• Increasing unemployment
• Increasing inflation
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of both economic changes.
3 9–12
Well-justified conclusion.
Candidates discussing both economic changes in detail,
in context and with well-justified conclusion including
why the alternative change was rejected should be
rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one economic change.
2 5–8
Judgement with some justification/some evaluation of
choice made.
Candidates discussing both economic changes in detail
and applying it to the case should be rewarded with the
top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the economic changes with
little/no explanation.
1 1–4
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining both economic changes in context
should be rewarded with the top marks in the band.
0 No creditable response. 0
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PUBLISHED
Question Answer Marks
4(b) Relevant points might include:
• Lower incomes
• Lower sales on expensive items such as
scooters
• However, if scooters are bought instead of cars
Increasing then sales may be higher
unemployment • Easier to recruit employees as larger pool of
unemployed workers available to select the
additional 100 production workers
• Less pressure on wage rate increases to be well
above the legal minimum wage rate
• Higher supplier costs of components for
scooters
• Price of scooter may have to increase –
reducing sales
• Less competitive if imported scooters do not
Increasing
have higher prices
inflation
• Pressure for wage to be increased to much
higher than the legal minimum wage rate –
increasing costs
• But all domestic manufacturers face the same
problems to so may not be less competitive
Justification might include:
• Increasing unemployment may lead to lower
wage costs and if revenue from the sale of
scooters also rises then profit will increase.
• Increasing inflation may make it easier for ES to
Conclusion increase prices on its scooters as consumers
expect prices to rise, so revenue increases.
Some of its costs will rise as inflation increases
but if ES does not increase wages, as
unemployment has now started to increase,
then profit may still increase.
© UCLES 2020 Page 14 of 14
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*5187411902*
Paper 1 Short Answer and Data Response May/June 2020
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Blank pages are indicated.
06_0986_11_2020_1.2
© UCLES 2020 [Turn over
2
1 Kara’s business makes wax candles. She sells them to retailers at low prices. She gives retailers
60 days to pay. Kara has to pay her suppliers when raw materials are delivered. Kara used
crowd-funding to set up her business. The bank would not give Kara a loan as she did not have a
business plan. Last year revenue was $50 000. Demand is increasing but Kara is not yet able to
benefit from economies of scale. She said: ‘Cash-flow is a problem. All cash inflows are used to
buy inventory.’
(a) Define ‘crowd-funding’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) State two economies of scale.
Economy of scale 1...........................................................................................................
...........................................................................................................................................
Economy of scale 2...........................................................................................................
........................................................................................................................................... [2]
(c) Outline two reasons why a bank might want Kara to produce a business plan before agreeing
to give a loan.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_11_2020_1.2
3
(d) Explain two factors Kara should consider when deciding whether to increase prices.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think delaying payments to suppliers is the best way for a small business to improve
its cash-flow? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_11_2020_1.2 [Turn over
4
2 BCK is a multinational company which operates many gold mines. One of BCK’s objectives is to
contribute to sustainable development. The Managing Director said: ‘We value all of our stakeholders.
With 10 000 employees it is important to have the right leadership style. BCK needs well-motivated
employees.’ The Managing Director also thinks that effective communication with suppliers is very
important.
(a) Define ‘multinational company’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) State two ways of motivating employees.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(c) State four factors that might affect the leadership style used by a manager.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Factor 3: ...........................................................................................................................
...........................................................................................................................................
Factor 4: ...........................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_11_2020_1.2
5
(d) Explain two ways BCK could contribute to sustainable development.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think using communication methods based on information technology (IT) is the best
way for a large business to communicate with its suppliers? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_11_2020_1.2 [Turn over
6
3 NWA is a large and profitable airline business. It has grown quickly over the past 10 years and new
aeroplanes have helped to improve its brand image. NWA offers low priced flights for tourists to
50 countries. Sales promotion is an important part of NWA’s marketing mix. The Finance Director
is worried that NWA has a high level of debt as its main source of finance is bank loans. The
organisational chart of NWA has many levels of hierarchy with narrow spans of control.
Table 3.1
Cost and price data for a typical NWA flight (2019)
Price per customer $40
Fixed costs $2 000
Variable cost per customer $24
Maximum number of customers 200
(a) Define ‘brand image’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the break-even number of customers for a typical NWA flight. Show your working.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible problems for NWA of having a high level of debt.
Problem 1: ........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem 2: ........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_11_2020_1.2
7
(d) Explain how two methods of sales promotion could increase sales for NWA.
Method 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think that having many levels of hierarchy is the best type of organisational structure
for a large business? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_11_2020_1.2 [Turn over
8
4 BMT is a business partnership owned by 2 brothers. The brothers received government support
when they started BMT 6 years ago. BMT now has 30 employees who make high quality watches.
The business tries to achieve lean production. Demand has increased each year and in 2019 BMT
sold 8000 watches. BMT makes some parts for watches and all the other parts are imported. BMT
had to consider a number of factors, including exchange rates, when deciding whether to import
parts for watches.
(a) Identify two reasons why a government might support business start-ups.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) State two types of business organisation (other than partnership).
Type 1: ..............................................................................................................................
...........................................................................................................................................
Type 2: ..............................................................................................................................
........................................................................................................................................... [2]
(c) Outline two disadvantages of BMT being a business partnership.
Disadvantage 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_11_2020_1.2
9
(d) Explain two ways BMT could achieve lean production.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think the exchange rate is the most important factor for a business to consider when
deciding whether to import parts for a high quality product? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_11_2020_1.2
10
BLANK PAGE
© UCLES 2020 06_0986_11_2020_1.2
11
BLANK PAGE
© UCLES 2020 06_0986_11_2020_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 06_0986_11_2020_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/12
*4197934463*
Paper 1 Short Answer and Data Response May/June 2020
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Blank pages are indicated.
06_0986_12_2020_1.7
© UCLES 2020 [Turn over
2
1 DWT makes solar panels in country Y. This is a low-cost country which is experiencing rapid
economic growth. DWT’s production method makes use of specialisation. All 120 of DWT’s
employees know that ensuring quality production is important. DWT imports some of its raw materials.
The Government of country Y plans to introduce import tariffs of 50%. DWT’s Managing Director
said: ‘This decision will affect all of our stakeholders. Why do governments introduce trade restrictions
such as import controls?’
(a) Define ‘specialisation’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two reasons why a government might introduce import controls.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two ways DWT could try to ensure quality production.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_12_2020_1.7
3
(d) Explain one objective of each of the following stakeholder groups of DWT.
Customers: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Pressure groups: ..............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think that all businesses will benefit from operating in a country which is experiencing
rapid economic growth? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_12_2020_1.7 [Turn over
4
2 MLC makes motorcycles. The Managing Director has been analysing MLC’s costs. An extract of
this information is shown in Table 2.1. To reduce average costs, MLC plans to close its factory and
relocate production to another country. Only 50 of the existing employees will be offered jobs at
the new location. The trade union has been informed. All the new employees will be given either
on-the-job training or off-the-job training. This planned relocation will have an impact on MLC’s
income statement.
Table 2.1
Cost and other information for MLC’s current factory (2019)
Total output (units) 3 000
Total cost $1 200 000
Number of employees 200
(a) Define ‘trade union’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the average cost of one motorcycle. Show your working.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) State four features of an income statement.
Feature 1: .........................................................................................................................
...........................................................................................................................................
Feature 2: .........................................................................................................................
...........................................................................................................................................
Feature 3: .........................................................................................................................
...........................................................................................................................................
Feature 4: .........................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_12_2020_1.7
5
(d) Explain two possible problems for MLC of relocating its operations to another country.
Problem 1: ........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem 2: ........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think on-the-job training is a better method of training for a manufacturing business to
use than off-the-job training? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_12_2020_1.7 [Turn over
6
3 Kala always wanted to be an entrepreneur. She used to work for a business which downsized its
workforce 5 years ago. She then decided to start up CHL. She produced a business plan which
helped her obtain finance. Kala now designs customised sports clothes for women. Kala sells these
products directly to customers using e-commerce. She has a loyal customer base of 25-40 year
olds. However, Kala is worried about increased competition in this niche market. One idea she has
is to target different market segments.
(a) Define ‘business plan’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two reasons why a business might downsize its workforce.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two reasons why Kala’s business might need finance.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_12_2020_1.7
7
(d) Explain one advantage and one disadvantage to Kala of using e-commerce to sell her products.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think selling to different market segments is the best way for a small business to respond
to increased competition? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_12_2020_1.7 [Turn over
8
4 ALB is a large bank. It has 300 branches and 5 000 employees. ALB provides a range of financial
services to its business customers. As it operates in a competitive market, ALB aims to maintain
customer loyalty. Last year ALB’s profit decreased to $3 000m. The Managing Director is analysing
ways to reduce ALB’s costs. She also has to decide how new legal controls over employment
issues might affect the business. The Government plans to improve protection of employees by
changing laws on the minimum wage and health and safety.
(a) Define ‘profit’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) State two problems of using the number of employees to measure the size of a business.
Problem 1: ........................................................................................................................
...........................................................................................................................................
Problem 2: ........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible ways ALB can try to reduce its costs.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 06_0986_12_2020_1.7
9
(d) Explain two ways ALB could improve customer loyalty.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think changes in legal controls over employment issues will always reduce business
profits? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2020 06_0986_12_2020_1.7
10
BLANK PAGE
© UCLES 2020 06_0986_12_2020_1.7
11
BLANK PAGE
© UCLES 2020 06_0986_12_2020_1.7
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 06_0986_12_2020_1.7
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*5592801272*
Paper 2 Case Study May/June 2020
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Blank pages are indicated.
06_0986_21_2020_1.2
© UCLES 2020 [Turn over
2
1 (a) Explain four characteristics that make Simon a successful entrepreneur.
Characteristic 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 3: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 4: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2020 06_0986_21_2020_1.2
3
(b) Explain the three main methods of production FJ could use to produce its products in the
factory. Which method should FJ use? Justify your answer.
Method 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 3: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2020 06_0986_21_2020_1.2 [Turn over
4
2 (a) Explain one advantage and one disadvantage to Simon of using crowd-funding as a source
of finance for FJ.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2020 06_0986_21_2020_1.2
5
(b) Consider the following three methods of market research Simon used. Which do you think is
the best method to use when deciding which product to produce? Justify your answer.
• Online questionnaire
• Accessing government population data
• Focus group
Online questionnaire: ........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Accessing government population data: ..........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Focus group: .....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2020 06_0986_21_2020_1.2 [Turn over
6
3 (a) Explain four ways an increase in government spending may affect a business.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 3:................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 4: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2020 06_0986_21_2020_1.2
7
(b) Referring to Appendix 2, consider the suitability of the three applicants for the position of
manager. Which applicant should Simon select? Justify your answer.
Joe: ...................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Zabeen:.............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Jim: ...................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2020 06_0986_21_2020_1.2 [Turn over
8
4 (a) Explain two reasons why profit is important to FJ.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2020 06_0986_21_2020_1.2
9
(b) Consider the two products outlined in Appendix 3. Which product should FJ produce? Justify
your answer using relevant calculations.
Drink A: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Drink B:..............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation:.............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2020 06_0986_21_2020_1.2
10
BLANK PAGE
© UCLES 2020 06_0986_21_2020_1.2
11
BLANK PAGE
© UCLES 2020 06_0986_21_2020_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 06_0986_21_2020_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
*3454689598*
Paper 2 Case Study May/June 2020
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Blank pages are indicated.
06_0986_22_2020_1.4
© UCLES 2020 [Turn over
2
1 (a) Explain one benefit and one problem for ES of taking over other businesses.
Benefit: .............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2020 06_0986_22_2020_1.4
3
(b) Consider the financial information in Appendix 1. Which company should ES take over? Justify
your answer using appropriate ratios.
ABC Company: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
FGH Company: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2020 06_0986_22_2020_1.4 [Turn over
4
2 (a) Explain four ways a business plan can be useful.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 3: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 4: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2020 06_0986_22_2020_1.4
5
(b) ES has been considering the following three methods of promotion for its products in export
markets. Which method should ES choose? Justify your answer.
• Advertise on national television
• Advertise on ES website
• Display its products in shopping malls
Advertise on national television:........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advertise on ES website:...................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Display its products in shopping malls:..............................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation:.............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2020 06_0986_22_2020_1.4 [Turn over
6
3 (a) Explain two benefits to ES of higher productivity.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Explanation:.......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2020 06_0986_22_2020_1.4
7
(b) Consider three methods of motivation ES could use for its production workers. Which is the
best method for ES to choose? Justify your answer.
Method 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
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4 (a) Explain how the following four legal controls may affect ES.
• Control over misleading promotion
• Control over faulty products
• Control over location decisions
• Control over pollution
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(b) Consider the effect on ES of the following two economic changes in country Z. Which change
is likely to have the biggest effect on ES’s profit? Justify your answer.
• Increasing unemployment
• Increasing inflation
Increasing unemployment: ...............................................................................................
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be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
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© UCLES 2020 06_0986_22_2020_1.4
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/11
Short Answer/Data Response
Key messages
• This is the second year for this new version of the syllabus. Small differences in the weighting of the
assessment objectives since 2020 have resulted in some changes in the mark scheme for some
parts of questions.
• Part (c) of each question continues to have 4 marks. However, one of the part (c) questions is a
generic question with 4 knowledge marks. The remaining part (c) questions continue to be applied
questions. Questions which require application refer to the business in the scenario by name.
• Candidates should be reminded to use information from the stem to help answer question parts (c)
and (d) when appropriate as this provides the basis for application.
• Part (e) of each question no longer includes any marks for application. These questions now have 2
knowledge, 2 analysis and 2 evaluation marks.
General comments
Questions requiring definitions and knowledge, such as parts (a) and (b) of each question were generally
well attempted. Many candidates needed to be more precise when defining business terms. This was a
particular issue in Questions 1(a), 1(b) and 4(a).
For most part (c) and all part (d) questions, candidates are required to link each point made to the context
outlined within the stem of the question. Candidates should be reminded to use a different point of
application and analysis for each point made as each point can be credited only once.
Effective evaluation is an area which requires development. Candidates should be reminded that evaluation
must include a justified decision that follows on from the points raised in the answer. A repetition of points
already explained in the answer will not gain evaluation marks. The mark scheme for each part (e) question
includes one example of how evaluation can be demonstrated in the answer.
Comments on specific questions
Question 1
(a) A significant proportion of candidates were unable to give a precise definition of this term. A
common error was to confuse the sector with an individual business.
(b) Candidates were generally unsure of the meaning of this term. The strongest responses often
provided the formula; total revenue minus total costs. Common mistakes were to define gross profit
or to confuse costs with expenses.
(c) Candidates clearly understood this topic. A common error was to identify measures of success,
such as profit, rather than size, or to repeat the same measure using slightly different wording. This
part (c) question did not require application to the business in the stem.
(d) This question produced a range of responses. The best answers clearly stated an objective for the
stakeholder in the question and then explained how this would impact upon the costs or revenue
for this insurance business. Some candidates lost the application marks available by not referring
to the business in the stem. These candidates often mentioned the cost of raw materials which
would not be a significant consideration for a service business. Weaker responses were often able
to identify stakeholder objectives but could not explain the link to profit.
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
(e) This was one of the most challenging questions on the paper for many candidates. The strongest
answers recognised that lower unit costs gained through economies of scale are one reason for
takeovers, but greater market power may provide an alternative motivation. Very few candidates
were able to provide effective evaluation for this question. Many candidates showed some
understanding of different economies of scale and therefore gained the two knowledge marks
available. A small, but significant, number of candidates did not answer this question.
Question 2
(a) Well answered by many candidates. A common error was to confuse the physical limit of a quota
with the financial limit of an import tax.
(b) Generally, a well answered question. Some candidates misread the figures and presented gross
profit as 3300 rather than 3330. A small but significant number of candidates did not attempt this
question.
(c) This part (c) question required application to the business in the question stem. Many candidates
were able to show good understanding of a benefit and limitation of developing new products. The
strongest responses explained how this fashion business could benefit from increased customer
loyalty or have raised costs. A common error was to explain the benefits to the consumer rather
than the business.
(d) Candidates found this to be one of the more challenging questions on the examination paper. The
strongest candidates were aware that ratio analysis could be used to measure performance. Even
the most able candidates struggled to develop their points sufficiently to gain analysis marks. A
common error was to describe profit or cash flow rather than profitability and liquidity. A significant
number of candidates did not attempt this question.
(e) This was the most challenging question for candidates. Although candidates were aware of the
issues surrounding multinationals many needed to address their answers correctly to the question
set, i.e. the benefit to a country of accepting multinationals. Frequently candidates discussed the
benefits to the multinational business. Many candidates applied their answers to the business
outlined in the question although no application marks are available in part (e) questions. The
strongest candidates discussed the benefits of job creation and increased tax revenue for the
government. Very few were able to make effective evaluative comments on this question.
Question 3
(a) Well answered by nearly all candidates.
(b) Candidates were confident in their understanding of this topic. The most frequent correct answers
included the level of demand and the number of competitors. Some candidates stated nearness to
suppliers, which would not be an important consideration for a service business.
(c) Candidates had good knowledge of this topic and a variety of different correct answers were
provided. A common error was to give imprecise answers such as ‘cheaper’. To gain credit for this
advantage the candidate would need to state that the method was cheaper than off-the-job training.
Some candidates lost the application marks available by providing detailed explanations of points
with no reference to the business in the stem.
(d) This question produced a range of responses. The strongest answers explained the motivational
benefits and costs in terms of slow decision-making for this small printing business. A mark of three
was common as candidates often developed both their points by explaining the impact upon
productivity which could only be credited once. Many candidates stated incorrectly that democratic
leadership would mean the owner loses all control over the business.
(e) Candidates did not always understand what was required in this question, many simply stated the
different methods of finance available to businesses. The strongest answers focused on the idea
that a sole trader would be most concerned about the cost of the finance and the time taken to
repay the funds. Even the most able candidates needed to sufficiently develop the points made to
gain full marks.
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
Question 4
(a) This term was not well understood by many candidates. Candidates frequently described signs of
economic growth, such as falling unemployment, rather than providing the precise definition
required.
(b) Most candidates provided clear and correct definitions of this term. Weaker candidates confused
this with quality control or simply restated the question by identifying this as ‘assuring quality’.
(c) Many candidates showed good knowledge of the reasons for building customer relationships. The
best responses were then able to link both answers to the scenario outlined in the stem of the
question. A small number of candidates provided two similar points, such as loyalty and customer
retention, which could only be rewarded once.
(d) There were many good answers to this question which made effective use of the information
provided in the question stem. Candidates who identified the disadvantage as ‘expensive’ needed
to develop the point sufficiently to gain the analysis and application marks available. A significant
number of candidates thought that the business in the scenario produced mobile phones (they
produce phone cases), this limited their ability to gain application marks.
(e) A small but significant number of candidates did not attempt this question. Those that did often
achieved two marks for demonstrating appropriate knowledge. The strongest candidates
recognised the importance of being in a niche market when choosing a pricing strategy. These
answers often considered the benefit of an alternative pricing strategy to this business. The
weakest responses described pricing methods but needed focus on why they may be the best
method in this situation.
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/12
Short Answer/Data Response
Key messages
• Most candidates would benefit from a more precise understanding of key business terminology when
answering questions requiring definitions.
• Candidates should be reminded to use information from the stem to help answer part (c) and part (d)
questions as this provides the basis for application. Candidates should not repeat the same application
for both points. The same analysis point should not be used twice in the same question.
• Effective evaluation is an area which requires attention. Candidates should be reminded that evaluation
must include a justified decision that follows from the points raised in the answer, not a repetition of
points already explained. An example of an answer which includes evaluation can be found in the mark
scheme for each part (e) question.
General comments
Overall candidates demonstrated good knowledge and understanding, but many struggled to access the
marks available for application, analysis and evaluation.
Questions requiring definitions and knowledge, such as part (a) and (b) of each question were generally well
attempted. However, most candidates lacked the necessary precision when defining concepts.
For most part (c) (excluding 2c which only assessed knowledge) and all part (d) questions, it is important
that each point made is linked to the context. To do this, candidates should use the information from the
scenario provided at the start of the question, to ensure that points raised are appropriate to the business
described. Candidates should use a different point of application for each answer given.
It is important to remind candidates that part (e) is a general question. Many candidates contextualised their
part (e) answers but there are no marks for application.
Part (e) questions assess evaluation. Candidates are required to make a supported judgement. This should
follow on from points raised in the answer but not simply repeat points already made. Of those candidates
who did attempt an evaluative statement, most were unable to provide reasoned statements to back up the
decision made. To access the evaluation marks, one approach that candidates could use is to make a
choice, provide a reason for this decision, and then explain why it is better than the alternative option or
viewpoint discussed.
Comments on specific questions
Question 1
(a) Most candidates understood that the ‘plus’ element of the cost-plus pricing related to profit. The
best responses provided a precise definition of the term. A common mistake was to reorder the
words by stating it was price based on cost, or simply that the price is higher than cost. Others
confused the concept of profit with price or extra cost.
(b) Most candidates were able to provide a partial definition as they understood that the marketing mix
involved price, product, promotion and place. A common mistake was to confuse the term with
market research, product development or incorrectly listing elements of the marketing mix.
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
(c) There were many good answers to this question. Candidates were familiar with reasons why being
able to offer a high-quality service might be important. Some candidates needed to apply their
answers to access the application marks. A small number of candidates misread the question and
incorrectly outlined reasons why customers might be interested in high-quality.
(d) Good knowledge was evident in most responses with ‘no need to share profit’ and ‘makes all
decisions’ being typical answers. Only the stronger candidates were able to develop the points
made in the context of this photography business. Instead of analysis, many repeated a knowledge
point or identified a different advantage. Others repeated the same application for both answers.
(e) This question provided a range of responses. Many candidates were able to identify at least one
relevant advantage or disadvantage of either a niche market or a mass market. Most candidates
then needed to develop their answers to gain the analysis marks. Weaker responses tended to
offer mirror arguments which could only be rewarded once. For example, many candidates stated
that a business is likely to have fewer customers in a niche market whereas there are more
potential customers in a mass market. Most candidates ignored the fact that this was a general
question about small businesses so lost valuable time trying to apply their answer to the case
study.
Question 2
(a) The best responses provided a full definition of ‘opening balance’. Many answers lacked precision
so used vague words such as ‘funds’ or ‘capital’ which are not the same as cash. Some simply
reordered the words ‘opening’ and ‘balance’ while others stated it was last month’s closing balance.
None of these answers were credited.
(b) There were many correct answers to this question. A common error was to repeat methods of
motivation instead of stating different ways. Others wrongly identified ways to increase output
rather than productivity.
(c) Most candidates were able to identify two sources of internal finance, with ‘retained profits’ and
‘sale of non-current assets’ being typical answers. A common error was to identify external sources
of finance which the question excluded.
(d) This question proved to be a good discriminator. Better answers recognised that buying new
technology would increase cash outflows. Most candidates struggled to identify an additional effect.
Some suggested that jobs would be lost but did not explain the financial impact of this on the cash
flow forecast. For example, it could mean less wages which would reduce cash outflows or
redundancy payments which in turn would increase cash outflows.
(e) This question was poorly answered by some candidates. Most candidates gained at least one
knowledge mark. The best responses were then able to develop their points, such as full-time
employees are likely to be more committed or that part-time employees offer greater flexibility in
terms of hours worked, to show how or why it might be beneficial for businesses. Evaluation was
rare. There were many vague answers about cost, motivation, skills and experience which needed
further clarification to be credited. Other candidates confused part-time workers with temporary
workers. A small number of candidates misread the question so wrongly focused on production
rather than employees in the tertiary sector. None of these answers were credited.
Question 3
(a) Most candidates understood that fixed costs do not change. Many were then able to provide a
precise definition as they recognised the relationship these costs had with sales or output. A
common error was to identify examples which were not rewarded.
(b) This question required candidates to calculate the margin of safety. Candidates either knew the
formula, so gained both marks, or they did not. A small number of candidates wrongly expressed
their answer in monetary terms. Other incorrect answers attempted to calculate profit or performed
complex calculations which did not answer the question.
(c) Most candidates understood that a short chain of command was likely to result in improved
communication. Better responses also gained application marks for linking their answer to the
scenario. A common point of application used was 600 employees. Only the best responses
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
identified two relevant advantages. There were two common mistakes. Some candidates repeated
the same knowledge point for both answers. Others made vague statements about easier to
control, higher standards of work or increased output.
(d) Good knowledge was evident in many responses. Having a flexible workforce and the ability to
replace others when someone is absent were correctly identified as an advantage of using job
rotation, but most candidates then needed to develop their point. The section on disadvantages
was better answered as candidates recognised that workers might not be skilled in all the tasks
which could result in lower quality or lower efficiency. Most candidates gained at least one
application mark for an appropriate reference to steel production or 600 employees. Some wrongly
focused on potential benefits to the employee such as the work might be less boring. Others
repeated the wording from the question by simply stating it would motivate or demotivate them. A
small number of candidates defined the term which did not answer the question. None of these
answers were credited.
(e) Candidates clearly understood this topic and showed strong knowledge of stakeholder groups.
Better responses were then able to explain why each stakeholder was important to a business. The
best responses built on their analysis and made a supported decision about why one stakeholder
group was likely to be more important to the success of the business than another. Instead of
evaluation, some candidates repeated earlier points made which had already been credited. Many
candidates applied their response to the case study. This was unnecessary and did not gain any
credit.
Question 4
(a) This question was well answered by most candidates. A common mistake was to identify examples
rather than define the term.
(b) Most candidates were able to identify at least one objective. A common wrong answer was to state
ways to achieve the objective rather than identifying the objective itself.
(c) Many answers identified either an external cost or benefit. Examples of pollution were the most
common response for external costs while job opportunities were recognised as an external
benefit. Most candidates who gained knowledge marks were able to link their answers to the
context. Incorrect answers tended to identify private costs or outlined benefits to Raul.
(d) Many candidates found this question challenging. The best responses recognised that selling
directly to a manufacturer meant there is no middleman or that it provided a more predictable
demand. They were then able to develop these points. Common errors included vague statements
about saving time, better communication and less storage. Some candidates suggested it would
increase sales which was incorrect as the business in question already sold all its products to a
single business.
(e) It was pleasing to see that many candidates understood the difference between an import tariff and
an import quota and were able to explain the effect of these different trade restrictions on an export
business. There were some excellent answers to this question and the best responses gained both
evaluation marks for a fully supported decision. For example, some concluded that it might be
possible for a business to find alternative markets which would reduce the effect of a quota, as it
would only limit sales in some markets compared to a situation where customers cannot afford to
buy the items as the result of higher tariffs resulting in fewer sales overall. Weaker answers
confused the two concepts so wrongly stated that quotas would increase price or defined the terms
instead of explaining how the two trade restrictions worked.
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/21
Case Study
Key messages
This is the first June paper sat by candidates for the new syllabus. The style of the question paper has
remained the same. However, differences in the weighting of the assessment objectives have resulted in
small changes to the mark scheme. The (a) questions have more analysis marks awarded and fewer
application marks. The (b) questions have had no change to the weighting of the assessment objectives but
had the level descriptors amended slightly. This has not changed the awarding of marks on the 12-mark
questions. These small changes have not made any significant difference to the marks achieved overall; in
fact, for some candidates, they may have raised their marks.
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is except for one of the
(a) questions which will now be generic. Applying answers to the case will ensure responses are appropriate
for each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a business that is a
manufacturer of wooden furniture. It is advisable for candidates to ask themselves about the size and
nature of the business, if it is a new or established business and what type of business organisation it is.
This may add to the quality of candidates’ answers.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without
repetition of the previous analysis, be applied to the case and make reference to why the other
alternative option(s) were rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of FO, a furniture manufacturer established twenty years ago, provided an accessible
scenario for candidates. Those who applied their answers to the context of FO were the most successful.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
that they are clear about the extent of developed explanation that is required for each answer. Many
candidates showed good knowledge and understanding of the full range of the syllabus that was assessed,
but in some instances it was clear that certain topics were not as well understood. The weakest
understanding was apparent in the topic areas of the relative importance of the sectors of an economy and
the management and control of growing businesses.
There were a few examples where candidates had continued an answer to a question in the extra space
provided on the blank pages at the end of the question paper. It would be helpful if candidates could indicate
that they have continued their response and where this answer can be found.
Overall, there were some good scripts seen as well as a number of weaker ones. Application marks were
often gained but candidates should make sure that different examples of application are included in the (a)
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
questions and the conclusion/recommendation in (b) questions should also be applied to the case.
Candidates should aim to consider the consequences / implications / long-term / short-term / balance issues
of their decisions to secure Level 2 or Level 3 marks in the conclusion/recommendation.
Comments on specific questions
Question 1
(a) Candidates who demonstrated sound knowledge of the changing sectors of the economy included
ideas such as industrialisation, increased use of technology and rising levels of economic growth.
However, a number of candidates overlooked the focus of the question, reasons for the changes,
and simply described the sectors of the economy. Better candidates were able to explain that the
depletion of natural resources in an economy resulted in a decline in the size of the primary sector.
Other strong answers identified economic growth as a cause of change resulting in higher levels of
disposable income bringing about an increase in the demand for services and therefore a growing
tertiary sector in a country.
(b) This question was only answered well by a minority of candidates. As a business grows it becomes
difficult to ensure close supervision of workers, communication across different sites is challenging
and workers may become inefficient. Application marks were easily achieved when answers
included reference to FO’s three factories being spread across different regions of the country.
However, weaker responses repeated that it was difficult to control the business with little or no
additional comment. Stronger candidates recognised that lack of finance was, in part, caused by
the fact that the business was a private limited company with a relatively small number of
shareholders. Weaker responses often confused a clash of business cultures with a clash of
regional cultures. The conclusion should have focused on an effective solution to the problems
associated with takeovers. Strong responses often suggested the easiest solution would have been
to raise additional finance for fixed assets by asking the bank for a loan. Since FO had been a
successful business for twenty years it would be likely that a loan of a significant amount would be
granted with an extended period of time for repayment. Application as part of this justification
raised marks still further for those candidates in the Level 3 mark band.
Question 2
(a) Generally, a well answered question with the most popular points including the importance of
minimising waste and the need to avoid underproduction. Good responses discussed managing
the inventory to avoid increased storage costs and potential damage to components or finished
wooden furniture. Some answers discussed managing labour resources to avoid inefficiency in
production. Weak responses often included simple statements which did not develop the chain of
reasoning linking insufficient ordering with production levels and meeting customer expectations for
delivery. Application marks were often gained when reference was made to ordering nails,
brackets, and paint.
(b) The majority of candidates were able to discuss the relevant advantages and disadvantages of the
three methods of communication successfully. Weaker responses did little more than identify the
expense of each communication method such as mobile phone calls can be expensive whilst
sending letters is a cheaper option. Often weaker responses discussed communication with the
customer rather than the supplier. Stronger responses discussed the effectiveness of each method
of communication such as emails and letters providing a hard copy of the details of the late order
whilst mobile phones allowed a direct two-way conversation with the possibility of direct
questioning. Recommendation of the most suitable method of communication usually focused on
the speed of the response necessary to resolve the problem of the late delivery. The best answers
chose the fastest communication so that the delivery of paint, nails and brackets could be speedily
organised to avoid delays in production of wooden furniture. This justification in the context of the
specific business earned Level 3 marks with additional reward for application.
Question 3
(a) This proved to be a straightforward question with a number of candidates identifying retained profit
as a suitable source of internal finance. Many responses indicated that as a successful business
running for twenty years there was likely to be a reasonable amount of retained profit at FO which
could be used for expansion. Further development of the answer pointed out that there would be
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
no interest to pay which would keep expenses down. Many candidates discussed taking a bank
loan as a suitable external source of finance. A specific sum could be requested from the bank to
purchase particular assets such as electric vehicles and the repayment of the loan could be spread
over several years.
(b) The majority of candidates demonstrated sound knowledge of channels of distribution. They were
able to discuss the advantages and disadvantages of wholesalers, retailers, and direct selling
effectively. The benefit of selling in bulk to a wholesaler was contrasted with the likely reduction in
profit margin for the wooden furniture. The experience of retailers in displaying and promoting
furniture was contrasted with the likelihood of competitors’ furniture being sold at the same shop.
Weaker responses showed some confusion by stating that FO might set up their own retail
operation and that direct selling requires the customer to go to the factory to collect the tables and
chairs. Better responses offered a range of advantages and disadvantages rather than repeating
that one channel of distribution was cheaper and another more expensive. The conclusion was
often a repetition of earlier statements and did not add anything new. Only the best candidates
made a clear decision and explained why the other channels of distribution were less suitable. For
example, some chose direct selling because it ensured a stronger relationship between FO and its
customers whereas the other two distribution methods would mean a lower profit margin for FO
and less direct customer feedback about its tables and chairs. Additional reference to the context of
wooden furniture in the conclusion enabled candidates to access the higher marks within the
Level 3 band.
Question 4
(a) (i) This question provided candidates with an opportunity to use their numeracy skills. Those who had
learned the formula to calculate break-even were able to earn maximum marks with relative ease.
A small number of responses stated incorrectly that the unit of measurement was dollars when in
fact it was a measurement of tables.
(ii) Fewer candidates were successful in calculating the margin of safety per month for tables but
those who did this accurately achieved both available marks. It has been mentioned before that
candidates need to develop their numeracy skills and practise calculations regularly so that they
can maximise their overall mark.
(iii) Only a few candidates had sound knowledge of the uses of break-even analysis. It is important that
an understanding of the limitations of such analysis can be properly explained. Weak responses
simply mentioned that break-even was not always accurate. A more specific answer was needed.
Those candidates who mentioned that break-even was based on assumptions such as all products
were sold, or no inventories were held offered the correct level of detail and were rewarded
accordingly.
(b) This question required candidates to use information from the insert to assess the profitability of the
three sustainable development options. There were many general answers referring to the impact
of each option on the environment whilst other responses simply repeated statements or data from
Appendices 2 and 3. To earn higher level marks it was necessary to offer a detailed discussion of
the advantages and disadvantages of each option. Some candidates explained that using
packaging that can be recycled might attract more sales from ethical consumers, but such
packaging may not be suitable for large items such as tables. Level 2 credit was given to answers
which used the data in Appendices 2 and 3 to calculate the potential rise in variable costs for option
1, the rise in selling price for option 2 and the fall in variable costs for option 3. To gain the highest
marks in the Level 3 band, the conclusion needed to justify why one way to contribute to
sustainable development would be likely to maximise profit more than the other two options.
Candidates who made reference to specific calculations to support their decision were able to
make meaningful judgements. The conclusion also needed to be in the context of FO to move a
Level 3 answer higher up the mark band.
© 2021
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/22
Case Study
Key messages
This is the first June paper sat by candidates for the new syllabus. The style of the question paper has
remained the same. However, differences in the weighting of the assessment objectives have resulted in
small changes to the mark scheme. The (a) questions have more analysis marks awarded and fewer
application marks. The (b) questions have had no change to the weighting of the assessment objectives but
had the level descriptors amended slightly. This has not changed the awarding of marks on the 12-mark
questions. These small changes have not made any significant difference to the marks achieved overall; in
fact, for some candidates, they may have raised their marks.
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is except for one of the
(a) questions which will now be generic. Applying answers to the case will ensure responses are appropriate
for each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a business that is about
to open as a toy shop. It is advisable for candidates to ask themselves about the size of the business,
consider whether it is a service business or manufacturer and what type of business organisation it is.
This may add to the quality of candidates’ answers.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without
repetition of the previous analysis, be applied to the case and make reference to why the other
alternative option(s) were rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of TT, a new toy shop, provided an accessible scenario for candidates. Those who applied
their answers to the context of TT were the most successful.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Many candidates
showed good knowledge and understanding of the full range of the syllabus that was assessed, but in some
cases it was clear that certain topics were not as well understood. The weakest understanding was seen in
the following topic areas; the importance of a cash-flow forecast and the stages in the recruitment process.
There were a few examples where candidates had continued an answer to a (b) question underneath the
facing page with the (a) question answer. Questions should be answered in the answer space provided or on
the blank pages at the end of the question paper, with a clear reference to where the answer has been
continued.
© 2021
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
Overall, there were some good scripts seen as well as a number of weaker ones. Application marks were
often gained but candidates should make sure that different examples of application are included in the (a)
questions. The conclusion/recommendation in (b) questions should also be applied to the case. Candidates
should aim to consider the consequences / implications / long-term / short-term / balance issues of their
decisions to secure Level 2 or Level 3 marks in the conclusion/recommendation.
Comments on specific questions
Question 1
(a) Many candidates demonstrated sound knowledge of the advantages and disadvantages of setting
up a business as a private limited company. The most popular answers were related to limited
liability and selling shares to family and friends, rather than the public and the legal formalities
required to set up as a private limited company. Stronger candidates were able to explain that a
private limited company is unlikely to be taken over without the consent of shareholders. Weaker
candidates thought governments were involved in running companies, confused limited with
unlimited liability or gave vague answers regarding profit and employees.
(b) This question was well answered by many candidates. They were able to use the information given
in Appendix 1 to help them consider the factors that could affect the location of the new toy shop.
Application marks were easily achieved when answers included analysis of the information
provided in the appendix. However, weaker responses included information copied from Appendix
1 with little or no additional comment, or just stated opposite points as explanation, for example, in
A rent is expensive but in B rent is cheaper. Better candidates recognised the target market as high
income earners and that the shoppers in location B would be less likely to afford expensive toys.
High rent was justified by high sales of toys. High/low competition was a very popular answer for
nearby shops and that the facilities in the mall brought in potential customers. Many weaker
responses included a conclusion that was just a repeat of the statements already made and a
minority of candidates did not choose a location. Better responses included a conclusion that chose
one location and justified this choice but also included why the alternative location was rejected.
Application as part of this justification raised marks still further for those candidates in the Level 3
mark band.
Question 2
(a) Generally, a well answered question with the most popular advantages being that the pushchairs
are likely to be cheaper, a more varied range of pushchairs would be available or good quality
products can be purchased. Import restrictions such as tariffs and quotas, or increased transport
costs were the main disadvantages discussed. Weak answers often identified an advantage or
disadvantage but were unable to explain it in context. Some responses needed to understand
imports and treated the toy shop as being the exporter or simply answered the question ‘why TT
should sell pushchairs’. Vague comments, such as ‘high costs’, ‘increased sales’ or ‘profits
increasing’, were stated but without further explanation could not be rewarded. Application marks
were not often gained as candidates rarely went beyond discussing pushchairs and this was in the
question.
(b) The majority of candidates were able to discuss the relevant advantages and disadvantages of
each option and apply their answers by using the information about the two options provided in the
case study. Weaker responses did little more than repeat the information without including any
analysis of the points, such as the wholesaler is more expensive, and the manufacturer is cheaper.
Better responses said if buying from the wholesaler TT may have to charge higher prices and be
less competitive leading to lower sales, and if buying from the manufacturer although the price is
cheaper TT will have higher costs from storage of a large quantity and it may also have cash flow
problems from such a large payment. A wholesaler was the choice for the majority of candidates in
the recommendation as the quantities purchased were much smaller and could be purchased as
and when needed with only one day for delivery which was much more suitable for a new toy shop
with limited working capital.
© 2021
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2021
Principal Examiner Report for Teachers
Question 3
(a) This proved to be a difficult question with a number of candidates confusing a positive cash
balance on the cash flow forecast with profit. Many responses indicated that candidates thought it
showed what sales and costs had already been made rather than it being a forecast and therefore
not happened yet. Where candidates recognised that it could identify possible liquidity problems,
help with decision-making or help to apply for a bank loan, they needed to develop these reasons
further. Stronger candidates indicated that the forecast is forward-looking and helps the owner plan
ahead. Application opportunities were often missed by not using or referring to the information
provided in Appendix 3.
(b) The majority of candidates could offer some points worthy of credit but overall, this was a low
scoring question for many candidates. The majority of answers were generic and rarely made
reference to the recruitment being for a shop manager. Weaker responses were vague, such as a
job description explains what someone ‘needs to do’ or ‘describes the job’, rather than being more
specific and stating that it ‘gives details for the tasks and duties of the job’. Only a minority of
candidates were able to fully explain how the job description would help the business attract more
suitable applicants which could save time and make sure these applicants were clear about the
role and responsibilities of the position before they applied. Job specification was the best
understood out of the three recruitment processes and candidates often mentioned the ‘skills’,
‘experience’ and ‘qualifications’ required for the job. Stronger candidates developed their answers
to include the qualities of good leadership, selling skills or knowledge of the toy industry. Short-
listing was not well understood with many candidates confusing it with interviewing to select the
best applicant to offer the job to. Vague responses such as ‘it makes the list shorter’ were often
given. Better candidates referred to shortlisting being a pre-requisite to the interview process itself
and hence again saving time. The conclusion was often a repetition of earlier statements and did
not add anything new. Only the best responses gave a conclusion that answered the question and
also explained why the other stages in the recruitment process were less important for the
recruitment of the most suitable person to manage the new toy shop.
Question 4
(a) The majority of candidates could successfully identify at least some reasons why the level of
inventory is important to TT, but answers were often generic. Weaker responses repeated the
same point such as 'meeting customer demands' and hence reduced the number of reasons that
could be credited. Better candidates had a good grasp of the concept of inventory, such as how it is
important to keep track of inventory in order to meet demand, to avoid running out of certain
popular toys, the importance of a buffer for unexpected demand fluctuations and to minimise
storage costs. The main reason why marks were not gained was due to the answers not being
discussed in context. Only the best responses discussed these reasons in the context of TT as
stated in the question.
(b) In this question candidates were asked to consider the effect of three legal controls on TT. Weaker
candidates found this question quite challenging. There were many repetitions across the three
legal controls such as being sued if the legal controls were not followed. A minority of candidates
misunderstood the first legal control and thought that it referred to promotion for employees in their
job. The possible impact on sales from misleading promotion was often stated but very little was
usually discussed about the costs of having to redo the current promotion or that misleading
promotion may not apply to the branded toys TT intends to sell. Legal control two was the better
explained of the three and was usually in context. The majority of candidates could confidently
discuss ‘all goods must be safe for the consumer’ and relate their answers to children and the
likelihood of children being hurt if the products were unsafe. Better answers for the third legal
control referred to changing from plastic to environmentally friendly packaging and included the
increase in costs for doing so. However, weaker candidates referred to information provided on the
packaging rather than the type of packaging allowed. Weaker responses included a conclusion that
was simply a repeat of what had already been said in the earlier part of the answer. Better
candidates directly referred to the effects of the legal controls on TT, such as the impact on sales,
revenue, profit, or reputation. To gain the highest marks the conclusion needed to justify why one
legal control would have the greatest effect on TT and why the other two legal controls would have
less effect. The conclusion also needed to be in the context of TT to move a Level 3 answer higher
up the mark band.
© 2021
Grade thresholds – June 2021
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the June 2021 examination.
minimum raw mark required for grade:
maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 47 40 34 29 24 19 15 11 8
Component 12 80 47 40 34 29 24 19 15 11 8
Component 21 80 47 41 34 29 24 19 16 13 9
Component 22 80 47 41 34 29 24 19 16 13 9
The maximum total mark for this syllabus, after weighting has been applied, is 160.
The overall thresholds for the different grades were set as follows.
Combination of
Option 9 8 7 6 5 4 3 2 1
Components
X 11, 21 94 81 68 58 48 38 31 24 17
Y 12, 22 94 81 68 58 48 38 31 24 17
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email [email protected]
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2021
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*2492671442-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Any blank pages are indicated.
06_0986_21_2021_1.5
© UCLES 2021 [Turn over
2
Furniture Outdoors (FO)
FO has been a private limited company for 20 years. It is owned and run by the Chan family and
is located in country Z. In country Z the secondary sector has become relatively more important as
the country has developed. FO is a manufacturer of wooden furniture that is suitable for outdoor
use. Its products include tables, chairs and other outdoor furniture.
Customers order online from the FO website. The furniture is then delivered to customers in country
Z using FO’s own delivery vehicles. However, FO is considering changing to selling its furniture
through either wholesalers or large retailers in country Z.
The Chan family have the business objective of contributing to sustainable development. FO only
uses sustainably sourced wood when making furniture. This is from local forests in country Z and
the wood is more expensive than imported alternatives.
For many years FO shareholders have reinvested profits to provide the finance for growth. FO
recently took over 2 other furniture businesses in country Z and plans further takeovers. The Chan
family plan to continue to control and manage FO after this expansion. The leadership style of these
two companies is very different to that of FO and their factories are located several miles away
from FO in different regions of country Z.
FO need to manage all its resources effectively. It tries to use the same components such as nails,
brackets and paint for all its furniture designs. It is important to not run out of raw materials and so
orders to suppliers must be carefully planned to avoid late deliveries. FO want to keep wastage of
materials to a minimum. FO also need to consider how many employees are required to complete
each order.
Appendix 1 - FO website advertisement
FO - the only business to go to when you need new outdoor furniture for your garden.
FO produce a range of high quality furniture to meet all your needs for fashionable, well designed
outdoor furniture. Be reassured our furniture is only made from the highest quality wood from sustainable
forests.
Our furniture is only available online so order today and have your furniture delivered in the next few
weeks. Email any questions to us and we will reply quickly.
© UCLES 2021 06_0986_21_2021_1.5
3
Appendix 2
Extract of cost, selling price and sales data for one of FO’s products
Fixed cost per month $10 000
Variable cost per table $125
Selling price per table $250
Forecasts sales for tables per month 100
Appendix 3
Newspaper article from the Daily News April 2021
Sustainable production needed to save the planet
A report from the International Committee for the Planet states that manufacturers must find more
sustainable ways to produce their products as global warming is becoming more of an issue.
The report suggests three main ways manufacturers can change:
• Only use raw materials from sources that replace what they have used. This is estimated to
raise variable costs by 20%
• Only use packaging that can be recycled. Costs are estimated to increase but the selling price
may not rise by more than 10%
• Only use electric vehicles to deliver products. The cost of buying electric vehicles is more than
petrol or diesel vehicles. Using electric vehicles could enable variable costs to be reduced by
5%.
© UCLES 2021 06_0986_21_2021_1.5
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 06_0986_21_2021_1.5
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2021
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*2018653272-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Any blank pages are indicated.
06_0986_22_2021_1.3
© UCLES 2021 [Turn over
2
Tandeep Toys (TT)
Tandeep is planning to set up a toy shop in country Z. He worked for a toy manufacturer for 10
years. Tandeep thinks he has enough knowledge of toys and customer needs to start his own
business.
Tandeep plans to sell a large range of toys which will include products for all ages of children from
babies through to teenagers. The toys will all be well known brands and aimed at higher income
groups. The most popular product is likely to be toy cars. Tandeep also plans to sell a range of
accessories for babies such as pushchairs (strollers) which he may have to import. Making sure
there is inventory to always meet demand is very important to the success of TT.
Tandeep has a loan of $40 000 from his family to invest in the business. He wants to set up as a
private limited company. He knows that he will need working capital to run his business. He may
offer credit to some customers for more expensive items such as nursery furniture. Tandeep knows
that there are several legal controls to protect consumers.
Tandeep has been looking at locations for his toy shop. He has identified two locations to choose
between as outlined in Appendix 1.
Tandeep will need to recruit several employees to work in his shop. He plans to recruit a shop
manager and 5 sales assistants. Tandeep will carry out all the administration. As part of the
recruitment process he will need to produce job descriptions, job specifications and then shortlist
applicants.
Appendix 1
Two possible locations for Tandeep’s shop
Location A
The shop is located in a popular shopping mall in the city centre. Parking is expensive and the rent
is high. The mall is open from 8.00 to 22.00 every day. There are several other toy shops located
in the mall as well as banks, a cinema and children’s playground.
Location B
The shop is located on a busy street in a local town. There are many other shops and a street
market in the area. Local people frequently visit the shopping area to buy food. Parking is always
available and is free. The rent is low. There are no other toy shops in the town.
Appendix 2
Information on channels of distribution for toy cars
Wholesaler in country Z Manufacturer in country Z
Unit cost of toy car $15 $5
Delivery time for orders 1 day 4 weeks
Minimum quantity that must be ordered 10 units 1000 units
Trade credit 1 month 3 months
© UCLES 2021 06_0986_22_2021_1.3
3
Appendix 3
Cash-flow forecast for the first 6 months of trading for TT ($)
July Aug Sept Oct Nov Dec
Cash sales 600 1 000 1000 1 000 2 000 2 000
Rent and
500 500 500 500 500 500
wages
Purchases of
300 100 100 100 100 100
inventory
Shop
40 000
equipment
Net flow (40 200) 400 400 400 1 400 1 400
Opening
40 000 (200) 200 600 1000 2 400
balance
Closing
(200) 200 600 1 000 2 400 3 800
balance
© UCLES 2021 06_0986_22_2021_1.3
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 06_0986_22_2021_1.3
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer/Structured Response May/June 2021
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 2021 series for most Cambridge
IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.
This document consists of 21 printed pages.
© UCLES 2021 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2021
PUBLISHED
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 descriptors 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.
© UCLES 2021 Page 2 of 21
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2021
PUBLISHED
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.
© UCLES 2021 Page 3 of 21
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PUBLISHED
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).
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PUBLISHED
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.
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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Question Answer Marks Notes
1(a) Define ‘public sector’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Government or state-owned businesses/organisations [2]
OR Part of the economy controlled by state/government [2]
Partial definition e.g. not owned by individuals [1]
OR Provided/run by government [1]
1(b) Define ‘profit’ 2 Do not credit answers such as money made
by business. [TV]
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Amount of money left after all costs have been subtracted from revenue. [2]
OR Surplus after total costs deducted from sales revenue [2]
OR (Total) revenue – total cost [2]
OR Gross profit minus expenses [2]
Partial definition e.g. revenue minus costs [1]
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Question Answer Marks Notes
1(c) Identify four ways to measure the size of a business 4 Only award the first four responses given.
Award 1 mark per way. Do not credit measures of success such as
profit.
Points could include:
• Sales value / value of output / revenue
• Volume of output / amount of services / amount of sales / number of
customers
• (Value of) capital employed / value of statement of financial position /
market capitalisation
• Market share
• Number of employees
• Number of outlets
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(d) Explain one way each stakeholder’s objectives might conflict with 6 Note: To use words from the stem as
BKH’s objective to increase profit. application, the reference must be
appropriate (i.e. make sense) in relation to
Award 1 mark for identification of each relevant way (max 2). the point being made.
Award 1 mark for each relevant reference made to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2).
• Insurance (of house or car)
Points might include: • 18 (locations)
• 2000 (employees)
Customers • Public limited company
• Shareholders
• May want low prices / value for money [k] when buying insurance • Takeover or expand.
[app] which could reduce revenue [an]
• Desire high-quality customer service [k] which requires more than Other appropriate examples in context can
2000 staff [app] increasing costs/expenses [an] be credited.
• May want offices in more locations [k] than 18 [app] which could
increase costs [an]
Employees
• May want high/regular pay [k] for its 2000 employees [app] which
could lead to higher costs [an]
• May require job security / contract [k] after the takeover [app]
• Job satisfaction / motivation / training / promotion [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think economies of scale are the most important reason for 6 This is a general question so there are no
taking over another business? Justify your answer. marks for application.
Award up to 2 marks for identification of relevant issues. Two knowledge marks are available for
examples of economies of scale.
Award up to 2 marks for relevant development of points.
Lower average unit costs may be [k] or [an]
Award up to 2 marks for justified decision as to whether economies of scale but do not credit the same point twice.
are the most important reason for taking over another business.
Points might include:
• Possible purchasing economies of scale / bulk buying [k] leading to
lower average costs [an] which could allow for lower prices [an]
• Reduces competition [k] which could increase market share / sales [an]
and therefore increase revenue [an]
• Economies of scale may not be possible to achieve [k]
• A business can become too large and may experience diseconomies of
scale [k]
Other appropriate responses should also be credited.
Justification might include:
Possible purchasing economies of scale / bulk buying [k] leading to lower
costs [an] which could allow for lower prices [an]. Removing a competitor
maybe an alternative reason for the takeover [k]. It depends on the
business’ objectives [eval] if it is a direct competitor increased market share
maybe more important than possible economies of scale. [eval]
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Question Answer Marks Notes
2(a) Define ‘import quota’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Limit on the number of goods into a country [2]
Partial definition e.g. limit on number of imports [1]
2(b) Calculate PJA’s gross profit margin. Show your working. 2 0.45 alone = 0
Correct answer 45(%) [2]
Correct method but incorrect answer [1]
e.g. gross profit / revenue ×100 OR 3330 / 7400 *100
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Question Answer Marks Notes
2(c) Outline one benefit and one limitation to PJA of developing new 4 Note: To use words from the stem as
products. application, the reference must be
appropriate (i.e. make sense) in relation to
Award 1 mark for each relevant benefit/limitation. the point being made.
Award 1 mark for each relevant reference to this business. The following words are likely to be
appropriate for this question:
Points might include:
• Correct use of data from table 2.1
Benefit: • Clothes
• Fashion
• Attract new customers / sales / growth [k] for its clothes [app] • 16–25-year-olds / young customers
• Need to replace products in decline / keep up with changing customer • Local
tastes [k] of 16–25-year-olds [app] • Factory
• Retain customers / to maintain market share [k] • Multinational companies
• Spread risk / attract new markets / have other products to rely on for • 3 weeks / 21 days.
sales [k]
• Charge a higher price [k] Other appropriate examples in context can
• Improve reputation [k] still be credited.
• Can create a unique selling point [k]
Limitations:
• No guarantee customers will like the new product [k] as fashion
changes [app]
• Competitors might introduce rival products / reduce prices [k] as most of
competitors are multinational companies [app]
• High cost [k]
• Production issues, e.g. is there sufficient capacity [k] within factory [app]
• Having access to suitable materials [k] as trying to avoid import quotas
[app]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(d) Explain two ways PJA’s managers can use ratio analysis. 6 Note: To use words from the stem as
application, the reference must be
Award 1 mark for identification of each relevant way (max 2). appropriate (i.e. make sense) in relation to
the point being made.
Award 1 mark for each relevant reference made to this business (max 2).
The following words are likely to be
Award 1 mark for each relevant explanation (max 2). appropriate for this question:
Points might include: • Correct use of data from table 2.1
• Clothes
• Able to see trends over time [k] for its clothing [app] to see where / • Fashion
whether performance has improved or not [an] • 16-25-year-olds / young customers
• See trends between competitors [k] such as whether revenue is higher • Local or factory
than $7400m [app] to assess how / whether they are as competitive as • Multinational companies
they think [an] • Develop new products.
• Able to measure financial performance / profitability / success [k] as if
last year ROCE was lower than 8% [app] profitability has improved [an] Other appropriate examples in context can
• Help make investment/expansion decisions [k] such as developing new be credited.
products [app]
• Check / manage liquidity OR working capital [k] as if last year the
current ratio was higher than 1.5 [app] then they know liquidity has got
worse [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Do you think multinational companies always benefit the countries 6 This is a general question so there are no
they operate in? Justify your answer. marks for application.
Award up to 2 marks for identification of relevant issues. Analysis should focus on the impact on the
Award up to 2 marks for relevant development of points. country.
Award up to 2 marks for justified decision as to whether multinational
companies always benefit the countries, they operate in.
Points might include:
• Creates jobs / provides income [k] so improving living standards [an]
• Technical knowhow increased [k] which could help improve production
methods / efficiency / output [an]
• Orders for local suppliers [k] increasing local incomes / GDP [an]
• Improve international reputation of country [k]
• Increased investment / infrastructure development in country [k]
• Companies pay taxes [k] which increases government income [an]
• Competition for local businesses [k] leading to lower demand / lower
prices [an] which could lead to the closure of local businesses [an]
• Profits are often repatriated [k] limiting the countries growth [an]
• Offer higher wages [k] reducing supply of workers for local business
[an]
• Use up limited resources [k] so there is less available for other local
businesses [an]
• Jobs created may be unskilled [k]
Other appropriate responses should also be credited.
Justification might include:
Companies pay taxes [k] which increases government income [an].
However, reduced sales for local businesses [k] may lead to lower revenue
[an]. A multinational always benefits a country to some extent, because of
the money invested. [eval] The overall impact depends upon the effect on
local businesses. [eval]
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Question Answer Marks Notes
3(a) Define ‘job rotation’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Employees swapping around and doing each specific task for only a limited
time [2]
OR Process of switching an employee between jobs over a period of time
[2]
OR Increasing variety in the workplace by allowing workers to switch from
one task to another [2]
Partial definition e.g. workers do a variety of tasks [1]
3(b) State two factors that a service sector business should consider when 2 Only award the first two responses given.
deciding where to locate.
Do not award access to raw materials, as
Award 1 mark per factor. this is not appropriate for a service sector
business.
Points might include:
Do not award answers such as cost alone -
• Customers / level of demand must be explained.
• Cost of rent/taxes
• Availability of land/space/parking
• Government assistance
• Cost/availability of labour
• Legal controls
• Competitors / near to other business
• Transport / accessibility / technology / infrastructure or examples such
as electricity, water, gas
• Personal preference of owners
• Climate
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(c) Outline one advantage and one disadvantage to APB of using on-the- 4 Note: To use words from the stem as
job training. application, the reference must be
appropriate (i.e. make sense) in relation to
Award 1 mark for each relevant advantage/disadvantage. the point being made.
Award 1 mark for each relevant reference to this business. The following words are likely to be
appropriate for this question:
Points might include:
• Sole trader
Advantage: • Printing services / leaflets / brochures
• Printing / new machine
• Some output produced while training [k] so able to still print some • 6 employees
brochures [app]
• Costs less than off-the-job [k] and cost might be important issue as he Other appropriate examples in context can
is a sole trader [app] still be credited.
• Specific to business / control what is taught [k] using the printing
machines [app].
Disadvantage:
• Trainer may not produce as much output / potential disruption [k] when
teaching the 6 employees [app]
• Trainer may not have the necessary skills / may not know up-to- date
methods [k] for the new machine [app]
• Trainer may pass on bad habits / may be a poor-quality trainer [k]
• Employees make more mistakes when learning which increases waste
[k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(d) Explain one advantage and one disadvantage of Alex having a 6 Note: To use words from the stem as
democratic leadership style. application, the reference must be
appropriate (i.e. make sense) in relation to
Award 1 mark for identification of each relevant advantage/disadvantage the point being made.
(max 2).
Award 1 mark for each relevant reference made to this business (max 2). The following words are likely to be
Award 1 mark for each relevant explanation (max 2). appropriate for this question:
Points might include: • Sole trader
• Printing services / leaflets / brochures
Advantage: • 6 (employees)
• Improves motivation / sense of belonging [k] of his 6 employees [app] • Employees are motivated
leading to increased output / productivity [an] • Increased demand
• Help keep worker loyalty [k] employees are motivated [app], so less • Printing / new machine
time/money spent on recruiting new employees [an]
• Creates time for managers to do other work [k] leading to fewer Other appropriate examples in context can
mistakes [an] still be credited.
• Better decisions could be made as can use employees experience and
skills [k] such as deciding which is the best machine to buy [app] Award productivity changes only once as
• Positive work environment / better relations between manager and either an advantage or a disadvantage
workers [k] e.g. Improved motivation [k] increases
• More ideas / advice provided / better communication / encourages productivity [an] and
feedback [k]. Decision-making takes time [k]which
reduces productivity [an]
Disadvantages:
• Some employees may not want / be able to cope with being consulted
[k] slowing down the decision-making process [an] about what to print
[app]
• Unpopular decisions less likely to be made [k]
• Mistakes can be made if workers are not skilled / lack experience [k]
which can damage reputation [an] of this sole trader business [app]
• Time-consuming / disagreements may arise [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think the amount of money needed is the most important factor 6 This is a general question so there are no
for a sole trader to consider when deciding on an appropriate source marks for application.
of finance? Justify your answer.
To gain both evaluation marks response
Award up to 2 marks for identification of relevant points. must clearly relate to a sole trader.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to whether the amount of money Do not award answers which only identify
needed is the most important factor for a sole trader to consider when sources of finance.
deciding on an appropriate source of finance.
Points might include:
• The business might not have sufficient funds [k] so would need to
borrow [an]
• A sole trader is likely to have access to fewer sources of finance [k]
• Cost of finance / interest [k] would change expenses [an] altering profit
margin [an]
• Unlimited liability for sole traders [k] means that if the business cannot
pay its debts the owner’s personal assets would be at risk [an]
• Amount of debt [k] if a business already has a high level of borrowing
banks may not lend any more money [an]
• Purpose (why money is needed) [k] if buying a non-current asset then a
long-term source would be used [an] allowing sufficient time to repay
[an]
Other appropriate responses should also be credited.
Justification might include:
The amount is important because a business might not have sufficient funds
[k] so would need to borrow money [an]. This would involve interest [k]
which would increase business expenses [an]. Unlimited liability is probably
the most important factor for a sole trader because this reduces the finance
options available [eval]. They are probably also seen as higher risk so
whatever the amount finance is it is likely to be more expensive [eval].
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Question Answer Marks Notes
4(a) Define ‘economic growth’. 2 For 2 marks the answer must relate to a
country not individual business.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
High GDP [0]
When a country’s GDP increases / more goods and services are produced
than in the previous year [2]
Partial definition e.g. increases in a country’s spending/income/output [1]
OR Increase in GDP [1]
4(b) Define ‘quality assurance’. 2 Do not credit answers such as check at end
or check final product as this defines quality
Award 2 marks for a full definition. Award 1 mark for a partial definition. control.
Checking for quality standards throughout production process / at every Do not credit explanations of why it is done
stage [2] e.g. manufacturer wants product to be
perfect.
Partial definition e.g. checking work done [1]
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Question Answer Marks Notes
4(c) Outline two reasons why building customer relationships might be 4 Note: To use words from the stem as
important to TGH. application, the reference must be
appropriate (i.e. make sense) in relation to
Award 1 mark for each relevant reason. the point being made.
Award 1 mark for each relevant reference to this business. The following words are likely to be
appropriate for this question:
Points might include:
• Personalised
• Increase sales [k] of phone cases [app] • (Mobile/phone) cases
• Customer loyalty/retention [k] when using e-commerce [app] • New business/start-up
• Help build reputation / brand image / act as free advertising [k] for this • Economic growth
new business [app] • Niche market
• Opportunity for feedback / help identify customer needs [k] as operate • E-commerce
in a niche market [app] • 8 employees
• Provide a competitive advantage [k] as other businesses may also set
up because of economic growth [app] Other appropriate examples in context can
still be credited.
Other appropriate responses should also be credited.
Do not award phones as application as
business does not make them only the
covers.
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Question Answer Marks Notes
4(d) Explain one advantage and one disadvantage to TGH of using job 6 Note: To use words from the stem as
production. application, the reference must be
appropriate (i.e. make sense) in relation to
Award 1 mark for identification of each relevant advantage/disadvantage the point being made.
(max 2).
The following words are likely to be
Award 1 mark for each relevant reference made to this business (max 2). appropriate for this question:
Award 1 mark for each relevant explanation (max 2). • Personalised
• (Mobile/phone) cases
Points might include: • E-commerce
• New business
Advantages: • Niche market
• 8 employees
• Unique / meet exact customer needs [k] for its phone cases [app] can • Quality assurance
help brand loyalty [an]
• Workers likely to make fewer mistakes [k] which helps ensure quality Other appropriate examples in context can
assurance [app] so less need for rework [an] still be credited.
• More varied work (leads to higher motivation) [k] helping retention /
lower absenteeism [an] in this new business [app] Do not award phones as application as
• Can charge a higher price [k] in a niche market [app] business does not them only the covers.
• High quality products [k] which are personalised [app]
• Flexible [k]
Disadvantages:
• Skilled labour can cost more [k] for the 8 employees [app] which
increases labour costs [an]
• No economies of scale (likely) [k] leading to higher average cost [an]
• Production can take a long time [k] causing lower output / efficiency /
productivity [an]
• Costs are higher as it is labour intensive [k]
• Mistakes can be expensive to correct [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Do you think cost-plus is the best pricing method for a new business 6 This is a general question so there are no
to use when selling products to a niche market? Justify your answer. marks for application.
Award up to 2 marks for identification of relevant points. To gain both evaluation marks response
Award up to 2 marks for relevant development of points. must clearly relate to a new business
Award 2 marks for justified decision as to whether cost-plus pricing is the operating in a niche market.
best pricing method for a new business to use when selling products in a
niche market.
Points might include:
Cost-plus
• Know cost can be covered [k] and can make a profit per item [an]
• Simple and easy to calculate [k] so saves time when setting prices [an]
• Prices may be higher than competitors [k] leading to a fewer sales [an]
• Little incentive to control costs [k]
Other pricing methods might include:
• Penetration pricing [k] as setting a lower price than competitors should
attract customers [an]
• Competitive pricing [k] but the business will have limited or no control
over the price [an] so may not be able to recover its costs [an]
• Price skimming [k] customers may expect / be willing to pay more in a
niche market [an]
• Promotional pricing [k]
Other appropriate responses should also be credited.
Justification might include:
Cost plus pricing is simple and easy to calculate [k] so saves time when
setting prices [an]. Although penetration pricing [k] setting a lower price than
competitors should attract customers [an]. Cost plus pricing is the best
pricing method as covering costs is important for a new business [eval].
Although the price maybe slightly higher this is less important in a niche
market where there are likely to be fewer alternatives [eval].
© UCLES 2021 Page 21 of 21
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/12
Paper 1 Short Answer/Structured Response May/June 2021
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 2021 series for most Cambridge
IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.
This document consists of 25 printed pages.
© UCLES 2021 [Turn over
0986/12 Cambridge IGCSE (9–1) – Mark Scheme May/June 2021
PUBLISHED
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 descriptors 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.
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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).
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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.
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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Question Answer Marks Guidance
1(a) Define ‘cost-plus pricing’. 2 First mark is for explaining what the ‘plus’ is e.g. profit.
Second for reference to / description of mark-up.
Award 2 marks for a full definition. Award 1 mark for a
partial definition. Price is based on / related to cost of product [0] (reordering
only).
The price is based on the cost of making a product and the
addition of a fixed percentage for profit [2]
OR The cost of manufacturing the product plus a (profit)
mark-up [2]
OR Formula e.g. [total cost / total number of units] + % mark
up [2]
Partial definition e.g. profit added to the cost [1]
1(b) Define ‘marketing mix’. 2 For 2 marks candidates must understand that it involves
four elements AND what it is used for (e.g. help sell
Award 2 marks for a full definition. Award 1 mark for a products / attract customers / make marketing decisions /
partial definition. market a product).
All activities that go into the marketing of a product or Do not award answers such as 4P’s or 7P’s these do not
service. These activities are often summarised as the four define the term.
P’s – product, promotion, place and price [2]
OR Four marketing decisions needed for the effective
marketing of a product [2]
OR The combination of product, price, promotion and place
(distribution) that determines how a firm markets itself to its
customers and potential customers [2]
Partial definition e.g. (combine) price, product, promotion and
place [1]
OR Different strategies a business can use to help market /
sell its products [1]
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Question Answer Marks Guidance
1(c) Outline two reasons why offering a high quality service 4 Note: To use words from the stem as application, the
might be important for Pamela’s business. reference must be appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for each relevant reason.
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business. question:
Points might include: • Sole trader
• 30 years
• Increase sales / maintain sales / attract customers [k] of • Photography / posters / calendars / (fashion)
calendars / poster [app] magazines / pictures / camera
• Helps maintain / increase customer loyalty [k] for this sole • Niche market
trader business [app] • Cost-plus pricing
• Maintain reputation / improve brand image [k] built up • 2 employees
over 30 years [app] • Successful business
• Set/maintain high prices [k] which helps as use cost-
plus pricing [app] Other appropriate examples in context can still be credited.
• Way to add value [k] as operates in a niche market
[app] Do not award 2 employees as application where answer
• To reduce complaints [k] for the 2 employees [app] refers to sharing profit or using profit to pay wages.
• No need to replace faulty work [k]
• Gain competitive advantage [k] which can help her
business remain successful [app]
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
1(d) Explain two advantages to Pamela of operating as a 6 Note: To use words from the stem as application, the
sole trader. reference must be appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for identification of each relevant advantage
(max 2). The following words are likely to be appropriate for this
question:
Award 1 mark for each relevant reference to this business
(max 2). • 30 years
• Photography / posters / calendars / (fashion)
Award 1 mark for each relevant explanation (max 2). magazines / pictures / camera
• Niche market
Points might include: • Cost-plus pricing
• 2 employees
• Keeps all the profit [k] from photography business [app] • High-quality (service)
so has an incentive to (continue to) work hard [an] • Successful business
• Has complete control / makes all the decisions / does
not need to consult with anyone [k] such as the 2 Other appropriate examples in context can still be credited.
employees [app] so able to take decisions more quickly
[an] Do not award points about start-up as business has been
• Own boss [k] operating for 30 years e.g. quick/easy to set up [0],
• Freedom to choose her own holidays / schedule / work requires little capital [0], few legal requirements [tv]
time [k] so can choose time off when the business is
less busy so does not miss out on sales [an]
• Able to keep (financial) information private / do not
need to produce annual accounts [k] so competitors
cannot use information to take away her customers /
market share [an] which can help her stay successful
[app]
• Has close contact with customers / able to offer a more
personal service [k] as it’s a niche market [app] which
can help encourage customer loyalty [an]
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
1(e) Do you think operating in a niche market will help a 6 This is a general question so there are no marks for
small business have a better chance of success than application.
operating in a mass market? Justify your answer.
To access evaluation marks, candidates must identify
Award up to 2 marks for identification of relevant points. points for both types of markets.
Award up to 2 marks for relevant development of points. To gain both evaluation marks, answer must clearly relate
to a small business.
Award 2 marks for justified decision as to whether operating
in a niche market will help a small business have a better Do not award definitions of terms as this is NAQ.
chance of success than operating in a mass market.
Advantages of operating in one type of market can be
Points might include: presented as disadvantages of the other option but do not
award the same point twice as mirror answers are not
Niche market: accepted.
• Able to focus more closely on customer’s needs [k]
leading to customer loyalty / good customer relations
[an]
• Less competition [k] less pressure to lower prices /
easier to attract customers [an]
• May be able to set higher prices (for a high status,
exclusive product) [k] so able to have high / increase
profit margin [an]
• Can become expert in the segment [k]
• Small size of market means will not benefit from
economies of scale [k] leading to higher average costs
[an]
• Less potential for growth / low potential demand [k]
• Over dependence on single product / less able to
spread risk / vulnerable to changes in consumer
spending patterns [k]
• Likely to attract competition if successful [k]
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Question Answer Marks Guidance
1(e) Mass market
• More (potential) customers/sales [k] leading to higher
(potential) revenue [an]
• Increased /high level of competition [k] so might have
high level of customer loyalty [an]
Other appropriate responses should also be credited.
Justification might include:
In a niche market a business can focus more closely on
customer’s needs [k] leading to higher levels of customer
loyalty [an]. In a mass market, there are more potential
customers [k] which could mean higher revenue [an].
However, I do think a small business has a better chance of
success in a niche market because it can continue to
charge high prices [eval] as large companies will not see the
market as worthwhile because of potentially low sales. [eval]
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Question Answer Marks Guidance
2(a) Define ‘opening balance’. 2
Award 2 marks for a full definition. Award 1 mark for a
partial definition.
Amount of cash held by a business at the start of the month /
trading period [2]
Partial definition e.g. cash that a business has [1]
2(b) State two ways a business can increase productivity. 2 Only award the first two responses given.
Award 1 mark per way.
Points might include:
• Improve labour skills / (improve) training
• (Increase) motivation (or examples – max 1)
• Automation / replace workers with machines
• Use more automation
• (Introduce) new technology / (use) better machinery
• Improve quality of materials / improve quality control /
introduce quality assurance
• Improve/introduce inventory control / kaizen / JIT /
lean production
• Reorganise layout of factory / eliminate bottleneck.
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
2(c) Identify four sources of internal finance a business 4 Only award the first four responses given.
might use.
Award 1 mark per source.
Four from:
• (Retained) profit
• Sale of (existing) non-current assets
• Sale of inventories / reduce inventory levels / sell
current assets
• Owner’s savings
• Reduce trade receivables / ask customers to pay more
quickly / reduce time given for customers to pay
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
2(d) Explain two possible effects on NPX’s cash-flow 6 Note: To use words from the stem as application, the
forecast of introducing the new technology. reference must be appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for identification of each relevant effect (max
2). The following words are likely to be appropriate for this
question:
Award 1 mark for each relevant reference made to this
business (max 2). • $40 000
• 35 / 60 full-time (employees) / redundant
Award 1 mark for each relevant explanation (max 2.) • Correct use of data e.g. $110 000 cash outflow in
September
Points might include: • Online retailer
• Warehouse
• Higher repayment costs / initial cost to buy machinery [k] • Selecting and packing items
which increases cash outflow [an] as need to pay • To improve productivity
$40 000 [app]
• Internal/external source of finance
• Reduce wage costs [k] as need 35 fewer employees
[app] lowering cash outflow [an]
Other appropriate examples in context can still be credited.
• Increased training costs [k] increasing cash outflows
[an]
For analysis answers must focus on the impact on cash
• Possible redundancy payments [k] increasing cash-
outflow or cash inflow.
outflow [an]
• Sell old machinery / use an external source of finance
[k] which would generate a cash inflow [an]
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
2(e) Do you think it is better for a tertiary sector business to 6 This is a general question so there are no marks for
use full-time employees rather than part-time application.
employees? Justify your answer.
Do not award answers about manufacturing/production as
Award up to 2 marks for identification of relevant points. question about tertiary sector
Award up to 2 marks for relevant development of points. Do not award definitions or statements such as full-time
employees work longer hours.
Award 2 marks for justified decision as to whether it is better
for a tertiary sector business to employ full-time workers Do not award vague statements about skills, experience,
rather than part-time employees. tiredness.
Points might include: Advantages of one method can be presented as
disadvantages of the other method but do not award the
Full-time: same point twice as mirror answers are not accepted.
• Consistent service / more familiar with business [k] Some points could be awarded as [k] or [an] but do not
which helps build / maintain customer relationships / award same point twice.
better reputation [an]
• Workers likely to be loyal / more committed / less likely to To gain both evaluation marks, response must clearly
leave business [k] reducing recruitment costs [an] relate to a tertiary sector business.
• Easy to communicate / update (compared to part-time
employees) [k] leading to fewer errors /
misunderstandings [an]
• Need to recruit / train fewer employees [k] saving time
or cost of recruitment / training [an]
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Question Answer Marks Guidance
2(e) Part-time:
• Able to extend business hours [k] to maximise potential
sales [an]
• More flexible in hours of work [k] so able to cover
absent workers / cover busy times [an]
• Reduces labour costs (compared to full time) [k] as only
pay employees for hours worked / when needed [an]
• Provide different / more skills / increase the
experience / more ideas [k] which otherwise may not be
able to afford on a full-time basis [an]
• (Some employees may not want full-time jobs so) may
miss out on possible candidates if not offered part-time
option [k]
• Can attract well qualified employees who want to return
to work but need to have flexible hours [k]
Other appropriate responses should also be credited.
Justification might include:
A business only has to pay part-time employees for the
hours worked [k] reducing its wages costs [an]. However,
using full-time workers means they can provide a consistent
service [k] leading to customer loyalty [an]. Therefore, I think
full-time employees are better especially for a tertiary sector
business as quality of service is likely to be an important
way customers judge the business [eval] and therefore
more likely to return, ensuring sales. [eval]
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
3(a) Define ‘fixed cost’. 2 Do not accept examples.
Award 2 marks for a full definition. Award 1 mark for a Do not award also ‘known as overhead costs’ as this does
partial definition. not define the term.
Costs that do not change with the level of output/sales [2]
OR Costs that do not vary in the short run with the number
of items sold or produced. [2]
Partial definition e.g. costs that do not change [1]
3(b) Calculate the margin of safety for product X in 2020. 2 Award only 1 mark if 7500 is written as part of the answer
Show your working. but is not given as the final answer.
Award 2 marks for correct answer. Award 1 mark for correct Where candidates present their answer with a $ sign
method but incorrect answer. award only 1 mark as this is not a financial value.
Correct answer: 7500 (units) [2] If correct answer given with no working shown, award 2
marks.
Correct method but incorrect answer:
e.g. Current output – breakeven output [1]
OR 30 000 – 22 500 [1]
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Question Answer Marks Guidance
3(c) Outline two advantages to GHT of having a short chain 4 Note: To use words from the stem as application, the
of command. reference must be appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for each relevant advantage.
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business. question:
Points might include: • Steel / gates / garage doors
• 600 employees
• Communication is quicker / communication is more • Public limited company
accurate / quicker decision-making [k] within the public • Flat (organisational structure)
limited company [app] • Job rotation
• Easier to delegate tasks / more delegation [k] to its 600 • Improve employee motivation
employees [app] • 22 500 (break-even output)
• Workers feel more motivated [k]
• 30 000 (units sold)
• Lower costs as fewer managers/supervisors needed
• $100 (price per unit)
[k]
• $900 000 (fixed costs)
Other appropriate responses should also be credited. • $60 (variable cost per unit)
Other appropriate examples in context can still be credited.
Only award points about communication once.
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Question Answer Marks Guidance
3(d) Explain one advantage and one disadvantage to GHT of 6 To use words from the stem as application, the reference
using job rotation to improve employee motivation. must be appropriate (i.e. make sense) in relation to the
point being made.
Award 1 mark for identification of each relevant
advantage/disadvantage (max 2). The following words are likely to be appropriate for this
question:
Award 1 mark for each relevant reference made to this
business (max 2). • Steel / gates / garage doors
• 600 employees
Award 1 mark for each relevant explanation (max 2). • Public limited company
• 22 500 (break-even output)
Points might include: • 30 000 (units sold)
• $100 (price per unit)
Advantage: • $900 000 (fixed costs)
• $60 (variable cost per unit)
• (As work more varied) fewer workers might leave [k]
from its 600 employees [app] leading to lower Other appropriate examples in context can still be credited.
recruitment costs [an]
• Business has a more flexible / skilled workforce / Do not award motivate or demotivate employees as stated
multiskilling [k] leading to higher productivity / higher in the question.
output [an]
• Easier to cover / replace others when someone is
absent [k] so may be able to meet an order on time [an]
• Can help business identify where employees work best
[k]
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Question Answer Marks Guidance
3(d) Disadvantage:
• Increased training needed [k] increasing
costs/expenses [an] so may increase its break-even
output above 22 500 [app]
• Workers may not be familiar with each task / less
specialist in task / not good at all tasks [k] lowering
quality / increase waste / leads to mistakes [an]
increasing variable cost above $60 [app]
• Takes time to learn different tasks / switch between
jobs [k]
Other appropriate responses should also be credited.
3(e) Do you think the shareholders are the most important 6 This is a general question so there are no marks for
stakeholder group to the success of a limited application.
company? Justify your answer.
Candidates may focus on other stakeholders, but the
Award up to 2 marks for identification of relevant points. evaluation must focus on whether shareholders are the
most important stakeholder to the success of a limited
Award up to 2 marks for relevant development of points. company.
Award 2 marks for justified decision as to whether To gain both evaluation marks, response must clearly
shareholders are the most important stakeholder group to relate to a limited company.
the success of a limited company.
Points might include:
Shareholders/owners
• Provide finance / invest money / capital in business [k]
which can help the business expand / buy more equipment
[an] so can increase output [an]
• Influence the aims of the business [k]
• Have the power to vote out the directors [k]
• They have little / no influence over day-to-day decisions
[k]
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Question Answer Marks Guidance
3(e) Other stakeholders can include:
• Customers [k] as they buy the products [an] and if
ignores their needs the business will lose sales/revenue
[an]
• Directors/managers [k] are responsible for day-to-day
decision-making [an]
• Employees [k] make the products [an] so if they
become demotivated quality may fall [an]
• Suppliers [k] provide materials/inventory [an]
• Local community [k] provide the workers [an]
• Government [k] provide the legal framework in which
the business operates [an]
• Bank [k] provide finance/loans [an]
Other appropriate responses should also be credited.
Justification might include:
Shareholders are important as they invest money in the
business [k] which can help the business expand [an].
However, once the business is established, they have little /
no influence over day-to-day decisions. Customers [k]
matter as they buy the products [an]. While shareholders
provide important finance, without customers even a limited
company cannot generate income [eval] and without this
cannot cover its costs or make a profit, so the customer is
probably the most important stakeholder. [eval]
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Question Answer Marks Guidance
4(a) Define ‘primary sector’. 2 Do not award examples as this does not answer the
question.
Award 2 marks for a full definition. Award 1 mark for a
partial definition. For 2 marks need to understand extraction of raw
materials or they are raw materials / natural resources
Extracts and uses the natural resources of the earth to gathered for use by other businesses.
produce raw materials used by other businesses [2]
OR The sector that generates raw materials which the
secondary sector then uses to make a product [2]
Firms whose business activity involves the extraction of
raw materials [2]
Partial definition e.g. Involves natural resources [1]
Generate/produce raw materials [1]
4(b) Identify two government economic objectives. 2 Only award the first two responses given.
Award 1 mark per economic objective.
Two from:
• Low(er) unemployment / full employment / high(er) level
of employment
• Economic growth / increase in GDP / improve
standards of living
• Low inflation / price stability
• Improve balance of payments
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Question Answer Marks Guidance
4(c) Outline one external benefit and one external cost that 4 Note: To use words from the stem as application, the
Raul’s business activity might create. reference must be appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark per external benefit/external cost.
The following words are likely to be appropriate for this
Points might include: question:
External benefit: • (Small) farm / farming
• Oranges/fruit
• Jobs created [k] on the farm [app] • Primary sector
• Pay taxes [k] on the oranges [app] • 600 tonnes
• Other businesses move into area [k] • Export business / manufacturer in another country
• Trees release oxygen / planting trees improve air • (Sell direct to) drinks manufacturer
quality / trees absorb carbon dioxide [k]
Other appropriate examples in context can still be credited.
External cost:
Do not award manufacturer as [app] on own.
• Loss of space / land use [k] to produce 600 tonnes
[app] Do not award country Z or E as application.
• Pollution/congestion [k] caused by exporting [app]
• Deplete natural resources / use up water [k]
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
4(d) Explain two advantages to Raul’s business of selling 6 Note: To use words from the stem as application, the
direct to a manufacturer. reference must be appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for identification of each relevant advantage
(max 2). The following words are likely to be appropriate for this
question:
Award 1 mark for each relevant reference made to this
business (max 2). • (Small) farm
• Oranges
Award 1 mark for each relevant explanation (max 2). • Primary sector
• 600 tonnes
Points might include: • Export business / manufacturer in another country
• (Sell direct to) drinks manufacturer
• No need for intermediaries / middlemen [k] increasing • Quotas/tariffs
profit margin [an] for the farm [app]
• More predictable demand [k] which makes planning Other appropriate examples in context can still be credited.
easier [an]
• Better understand customer needs [k] such as which Do not award country Z or E as application.
type of oranges [app] which can help maintain customer
loyalty / sales [an] Do not award manufacturer as [app] as stated in question.
• Can sell in large quantity / does not need to deliver to
many businesses [k] as sell all to drinks manufacturer
[app] which can reduce distribution / transport cost [an]
• Less paperwork / saves time as have to deal with fewer
/ one customer [k] which reduces administration costs
[an]
• Less / no need for marketing [k] as does not need to
find retailers to buy his oranges [app] which reduces
cash outflows [an]
Other appropriate responses should also be credited.
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Question Answer Marks Guidance
4(e) Do you think the introduction of import tariffs is likely 6 This is a general question so there are no marks for
to have a greater effect than the introduction of import application.
quotas on an exporting business? Justify your answer.
To access evaluation marks must have at least identified
Award up to 2 marks for identification of relevant points. relevant points for both tariffs and quotas.
Award up to 2 marks for relevant development of points. To gain both evaluation marks, response must clearly
relate to an exporting business.
Award 2 marks for justified decision as to whether the
introduction of import tariffs is likely to have greater effect
than the introduction of import quotas on an exporting
business.
Points might include:
Tariffs
• May lead to an increase in the price of goods / makes
goods more expensive [k] which makes the products
less competitive [an] leading to fewer sales / less
revenue [an]
• Business may decide to maintain prices / not pass on
price increase to customers [k] reducing profit margin
[an]
Quotas
• Will limit the amount of goods that can be brought into a
country [k] which will reduce the supply [an] reducing
potential sales / revenue [an]
• May have to find new market for remaining products /
store leftover inventory [k] increasing storage costs [an]
increasing total cost [an]
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Question Answer Marks Guidance
4(e) Other appropriate responses should also be credited.
Justification might include:
Quotas will limit the amount of goods that can be brought
into a country [k] which reduces the supply [an]. Whereas
tariffs could increase the price of goods [k] leading to lower
demand [an]. I think tariffs are likely to have less effect as at
least you can still export the amount you want [eval] and
customers may still be prepared to pay the extra whereas
quotas could reduce or restrict the possibility of any sales.
[eval]
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Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2021
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 2021 series for most Cambridge
IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.
This document consists of 17 printed pages.
© UCLES 2021 [Turn over
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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 descriptors
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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Question Answer Marks
1(a) Explain four reasons for changes in the relative importance of the 8
primary, secondary and tertiary sectors in a country.
One mark for each reason for the change (maximum of 2).
Award a maximum of 1 additional mark for each explanation.
Note: There are no application marks for this question.
Relevant reasons might include:
• Change in the primary sector – increase due to new discovery of natural
resources / decreases due to depletion of natural resources
• Change in the secondary sector – increase due to industrialisation /
decreases due to deindustrialisation
• Change in the tertiary sector – increase due to increased consumer
incomes
• Increase in incomes / economic growth / increase in GDP – this could
lead to a change in the secondary or tertiary sector
• Increase in demand for manufactured goods – increase in the size of
secondary sector
• Increase in tertiary sector – as consumers have higher disposable income
to spend on services
• Increased mechanisation / increased technology – reduces number of
employees in the secondary sector
• People move into the tertiary sector to provide services – as demand for
services grows as a country develops e.g. tourism
• Increase in exported products – more need to be manufactured in
secondary sector
• Reduced employment in primary sector – as now primary products
produced using mechanisation / rural to urban migration
• Primary products are now processed in own country – increased
manufacturers / secondary sector to process the raw materials into
finished products
• Government policies to encourage development
• Increased globalisation
• Actions of environmental groups / pressure groups leading to sectoral
change – primary extraction or dirty manufacturing in the secondary
sector
For example: Incomes have increased (1) and consumers have more
purchasing power for manufactured goods increasing the importance of the
secondary sector (1).
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Question Answer Marks
1(b) Consider the following three problems for FO as it grows through 12
takeovers. Which problem will be the easiest for FO to overcome?
Justify your answer.
• More difficult to control the business
• Lack of finance
• Clash of business cultures
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of at least two problems.
Well-justified conclusion.
Candidates discussing all three problems in detail, in
context and with a well-justified conclusion including why
the alternative problems 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 problem.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing two or more problems 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 problems with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three problems 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:
More • Increased number of employees at the three factories
difficult to means managers may not be in direct contact with
control the employees
business • Need to employ more supervisors to control workers –
(as a result increases costs as more wages to pay
of growth by • May mean some workers are not supervised and may
takeovers) not work efficiently – less output from each worker
• Difficulty of communication with employees across the
three factories
Lack of • As the private limited company has grown by taking
finance over other two businesses then expansion costs have
(as a result been high / may be high for future takeovers
of growth by • Take out loans to finance the takeovers – increased
takeovers) interest payments for loans / increased costs – lower
profits
• Cannot sell shares to the public only family and friends
as they are a private limited company – so amount
raised may be limited
Clash of • If the other two businesses that have been taken over
business have very different cultures and ways of doing things –
cultures may have clashes between staff
(as a result • Employees not working effectively together as
of growth by leadership styles were different at the two
takeovers) companies – reduced efficiency as output per employee
drops
• Resistance by workers to do things differently – reduces
efficiency – workers demotivated after the takeover
Conclusion • Controlling the new business after the takeover is the
easiest to overcome by employing new supervisors who
can pass on important messages from managers to
employees in the three factories. As it is only a private
limited company share issue will raise only limited
capital. Cultures are embedded in businesses making
employees very resistant to change.
• Lack of finance may be the easiest to overcome as it
has been a successful business for over 20 years,
and this will give confidence to banks to make loans.
• The clash of cultures may be the easiest to overcome as
it involves ensuring different leadership styles in the
three original businesses are modified. Employee
participation could be used to make everyone accept
working in a new environment.
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Question Answer Marks
2(a) Explain two reasons why it is important for FO to manage all of its 8
resources effectively when manufacturing products.
One mark for each reason (maximum of 2).
Award a maximum of 3 additional marks for each explanation of the reason
why it is important to manage resources effectively when manufacturing
products – one of which must be applied to this context.
Relevant reasons might include:
• Better understand number of employees needed – so labour cost can be
better controlled – employees are fully employed / always busy
• To ensure the maximum output is produced from the least inputs –
maximises efficiency – increases profit
• Reduces waste / prevents over or under allocation of resources – not too
much inventory ordered – reduces costs
• Avoiding underproduction – equipment needs maintaining regularly –
prevents a lack of output to meet demand
• Avoiding overproduction – leads to increased storage required for
inventory – increases costs / may mean a chaotic working environment –
leading to employee demotivation or confusion
• Will not run out of raw materials – not a shortage of finished product –
improved consumer satisfaction
• Deliveries are made on time – leads to customer satisfaction – improved
reputation / repeat orders
For example: If FO manages its resources effectively then it should ensure
the maximum output is produced from the least inputs (1), which should keep
down the unit costs (1) and maximise profit (1) from manufacturing wooden
outdoor furniture. (app)
Application might include wooden furniture, outdoor furniture, nails, brackets,
paint, wood, local forests, tables, online ordering.
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Question Answer Marks
2(b) Consider the benefits and limitations of the following three methods of 12
communication FO could use. Which method of communication would
be most suitable when contacting suppliers about a late delivery?
Justify your answer.
• Email
• Mobile (cell) phone
• Letter
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of two or more methods.
Well-justified recommendation.
Candidates discussing all three methods in detail, in
context and with a well-justified recommendation including
why the alternative methods 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 method.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing of two or more methods 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 methods with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three methods 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
Email • Can be sent quickly to • No guarantee it has been
the suppliers of wood read by suppliers of
• Can be sent to many nails
people at once • Could have gone into
• Hard copy if email junk folder
printed out • May not be secure
• Can be saved for • If many emails are sent,
reference to later then it could be lost
amongst them
• Requires an internet
connection
Mobile • Know the message has • May take time to reach
(cell) been received the correct person
phone • Caller can ask questions • Time/language
about the brackets differences
• Feedback can be given • Can be expensive
• Receiver more likely to • Time consuming if need
have mobile phone on to contact many different
them so easier to reach suppliers of wood
• No hard copy for
reference
Letter • Hard copy • Slower than other two
• More formal for legal methods
documents • Can be more expensive
• A lot of detail can be than other two methods
included about the late • No guarantee the letter
delivery of nails and has been received by the
paint supplier of brackets
Recommendation • Email best choice if the order is urgent and if a
delivery of raw materials is late. FO may need to
know when the order will arrive, or manufacturing
of furniture may be delayed. A letter will be too
slow and using a mobile phone may not get
through to the correct person straight away if they
are busy, hence will need to keep ringing until they
can be contacted, so wasting time.
• Mobile phone call may be best as it will get instant
feedback about the order of wood and the
questions can be asked.
• Letter may be best if express delivery could be
arranged about the late delivery of nails and
paint. It is more formal that the other two methods
and they can be sure it has been received if signed
for.
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Question Answer Marks
3(a) Explain how one internal source and one external source of finance 8
could be used by FO as it expands.
One mark for each suitable method of internal/external source of finance.
Award a maximum of three additional marks for each explanation of the
example of internal/external source of finance one of which must be in
context.
Internal
• Retained profit – nothing to repay / no interest to pay – keeps expenses
down
• Sale of existing non-current assets – these might be unused equipment
and not affect existing production levels
• Sale of inventories to reduce inventory levels
External
• Bank loan – easier to obtain due to previous business success –
repayments can be spread out over several years
• New share issue – existing shareholders may be willing to increase their
investment due to business success – may be able to attract more family
and friends for investment in new capital
• Grants and subsidies from the government – funds may be available from
the government to support sustainable businesses – FO would qualify for
these grants – do not have to be repaid
• Debentures
• Crowd-funding
For example: Bank loan (1) is easier to obtain due to previous business
success (1) over the last 20 years (app). Repayments can be spread out over
several years (1).
Application might include: FO is a private limited company, FO has been
operating for 20 years, FO is a sustainable business, for many years’
shareholders have reinvested profits, FO recently took over two other furniture
businesses, FO plans further takeovers, FO is quite a large business.
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Question Answer Marks
3(b) Consider the advantages and disadvantages to FO of using a 12
wholesaler, retailer or selling direct to the customer when distributing
its products. Which channel of distribution should FO use? 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 two or more channels of
distribution.
Well-justified recommendation.
Candidates discussing all three channels of distribution in
detail, in context and with a well-justified recommendation
including why the alternative channels of distribution 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 channel of distribution.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing two or more channels of distribution
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 channels of distribution with
little/no explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining three channels of distribution 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:
Advantages Disadvantages
Wholesaler • Buys tables in large • Prices of chairs and
quantities – fewer tables may be higher as
deliveries needed – wholesaler needs to add
reducing distribution their mark up
costs • Wholesaler may not want
• Saves storage space for to buy the full range of
manufacturer products
• Lower administration • May also sell
costs as fewer orders to competitors’ products
process • Longer chain of
• May give advice to distribution – longer to
manufacturer on what reach the customer
furniture sells well
• May undertake some of
the marketing to
retailers/customers –
boost sales – reduce
marketing costs for FO
Retailer • Sell in large quantities of • No direct contact with
tables to retailers customers of wooden
• Reduced distribution furniture
costs • Price is often higher –
• Can promote the retailer will add their
furniture – reducing mark up
marketing costs for FO
Direct to • Lower price of furniture • May have increased
customer than if sold through other distribution costs for
intermediaries tables and chairs as
• Can use internet or mail selling to many
order to sell products customers rather than
• Have direct control over just a few with the other
marketing methods
• Develops a direct • Higher costs of
relationship between the administration
customer and the • Not all customers feel
producer – easier to confident or are able to
follow up with direct order online
marketing to customer
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Question Answer Marks
3(b)
Recommendation • Direct to customer should be chosen as FO sells
furniture that is not bought in large quantities by
customers and a higher price can be charged.
Wholesalers may not convey the sustainable
features of the furniture to smaller retailers so
fewer sales. Retailer may take part of the profit
margin reducing the profit for FO.
• If FO use a wholesaler or a retailer to sell its
furniture FO will need to discount the price so it
will make less profit from these methods of
distribution.
• Customers pay a high price for furniture if sold
direct to the customer so it will allow FO to make a
high profit margin on each item of furniture.
Question Answer Marks
4(a)(i) Using the information in Appendix 2: 2
Calculate the break-even level of output per month
(Break-even = fixed costs/contribution per unit)
Contribution (Selling price per unit $250 – Variable cost per unit $125) = $125
Fixed cost per month $10 000/ $125 (1)
Break-even level of sales = 80 (1)
4(a)(ii) Calculate the margin of safety per month for tables: 2
(Margin of safety = Actual sales – break-even level of sales)
Forecast sales per month 100 – 80 (1) = 20 (1)
4(a)(iii) Identify four limitations of using break-even analysis. 4
One mark for each limitation (maximum of 4).
Responses could include:
• Assumes no inventories
• ‘Straight line’ assumptions about costs and revenue
• Fixed costs are not always constant
• Assumes all products are actually sold / it is only an estimate/forecast
• Only focuses on break-even when there are many other factors to
consider when running a business
• Assumes single product
• Hard to split costs between fixed and variable
• May be hard to split fixed costs if produce several products
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Question Answer Marks
4(b) Refer to Appendix 2 and Appendix 3 and other information. Consider the 12
following three ways FO could use to contribute to sustainable
development:
• only use raw materials from sources that replace what they have
used
• only use packaging that can be recycled
• only use electric vehicles to deliver products.
Which way should FO choose to maximise profit? 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 two or more ways.
Well-justified conclusion.
Candidates discussing all three in detail, in context and
with a well-justified conclusion 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
choices made.
Candidates discussing two or more 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 choices made.
Candidates outlining 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
4(b) Relevant points might include:
Advantages Disadvantages
Only use raw • Gives FO a good • Variable costs will
materials from reputation for selling increase by 20% –
sources that wooden furniture $25 per item of
replace what they • Increase sales from furniture
have used ethically minded • At current sales level,
consumers profit would be zero
• Able to charge a so would need to
premium price for the increase the selling
furniture price or units sold
Only use • Makes product • Selling price may be
packaging that packaging more 10% expensive
can be recycled sustainable and is in which may lower
line with sustainable sales
objectives of FO • May not be suitable
• Reputation increased for large items of
amongst ethical furniture
consumers – more • Selling price may
sales increase by $25
Only use electric • Cheaper running • More expensive to
vehicles to deliver costs by 5% purchase initially then
products • USP for FO cheaper to run
• Variable costs may • Higher capital cost
fall by $6.25 for new vehicles
• Costs increase in than petrol or diesel
short run, but cost vehicles which
savings in long run requires higher
• Contributes to investment by FO
reduced air pollution –
meets FO’s objective
of sustainability
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Question Answer Marks
4(b)
Recommendation • Using wood from sustainable sources would
enhance the image of FO and make it more
attractive to ethical consumers leading to much
higher sales and revenue leading to maximising
profit. However, as furniture are large items then
packaging will be less important. Electric vehicles
will require too large a capital investment.
• Recycled packaging will have the greatest effect
on maximising profit as very little packaging is
used for furniture and this packaging can be
reused for future customers. The increase in costs
is likely to be less than the 20% increase from the
use of raw materials from sustainable sources.
• Electric vehicles is the only option which results in
a fall in variable costs – by 5% and therefore the
reduction in running costs delivering its furniture
to all parts of the country would be significant
hence reducing total costs and maximising profit.
© UCLES 2021 Page 17 of 17
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2021
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 2021 series for most Cambridge
IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.
This document consists of 17 printed pages.
© UCLES 2021 [Turn over
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2021
PUBLISHED
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 descriptors
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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Question Answer Marks
1(a) Explain two advantages and two disadvantages of setting up a 8
business as a private limited company.
Award 1 mark for each relevant advantage/disadvantage (maximum of two
advantages / two disadvantages).
Award a maximum of one additional mark for each explanation of the
advantage/disadvantage of setting up a private limited company.
Relevant answers might include:
Advantages
• Raise capital from the sale of shares – may raise more capital than if a
sole trader / partnership
• Limited liability – will not lose personal possessions if business fails
• Separate legal identity – company can be sued instead of the owners
• Continuity
• Cannot be taken over without the consent of the shareholders
Disadvantages
• Cannot sell shares to the public / cannot be sold on the stock exchange
– as can only be sold to family and friends so restricts the capital that
can be raised from share issue
• Legal formalities setting up the company – have to complete paperwork
to register the company which takes time and money
• Accounts / financial statements are available for the public to see
• Not easy to transfer shares – as must have the approval of the other
shareholders
• Financial statements need to be audited each year – increase in annual
expenses
For example: Capital can be raised from the sale of shares (1) and this may
provide more finance than if just owners’ savings are used if a sole trader.
(1)
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Question Answer Marks
1(b) Consider the following three factors that affect the location of TT’s 12
shop. Which of the locations in Appendix 1 should Tandeep choose?
Justify your answer.
• Customers in the area
• Rent
• Types of shops nearby
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of two or more factors.
Well-justified conclusion.
Candidates discussing the three factors in detail, in
context and with a well-justified conclusion including
why the alternative factors were rejected should be
rewarded with the top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one factor.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing two or more factors 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 1–4
of relevant business concepts.
Limited ability to discuss the factors with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining the three factors 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:
Customers • High footfall in the shopping mall in location A
in the area makes high sales more likely
• What types of shoppers are there – high or low-
income shoppers?
• If high-income customers in the mall then target
market uses the mall and higher number of sales of
nursery items likely in location A
• Location B seems to have lower-income customers
and may not be the target market for toys sales
• Do families visit the area – if so, then higher sales of
toys are more likely
Rent • If high rent as in location A then this increases fixed
costs – may lead to prices being higher – lower sales
• But if sales of toys are high then the rent per item
sold will be low – may not have much effect on prices
• Rent is low in location B giving lower costs – but
there may not be sufficient customers in the area to
provide higher revenue to make the profit higher in
this location
Types of • As there are several other toy shops in location A
shops then may lead to lower sales due to competition
nearby • However, several competitors in the area may lead to
more customers coming to the mall to look for toys –
may be a well-known area for toys and attract more
customers
• If banks and children’s playground are in the area
in location A then this may attract more customers to
the mall leading to higher sales
Conclusion • The number of shoppers in the area is most important
and so Location A is the best one to choose. Without
the area being busy and attracting a high number of
shoppers the toy shop will not have many customers.
Low rent at location B is less important because high
revenue from toy sales will more than compensate for
the higher rent in location A. Other shops nearby are
also less important as customers come to the shop
specifically to buy toys irrespective of the other shops
in the area so this will not affect the choice between
location A and B
• The rent is low in location B and this should be
chosen for the new toy shop. It will be more affordable
for a new business that will be short of funds and will
keep the expenses low during the time it gets
established and well-known by customers.
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Question Answer Marks
2(a) Explain one likely advantage and one likely disadvantage for Tandeep 8
if he decides to import the pushchairs (strollers) he sells.
Award 1 mark for each relevant advantage/disadvantage (max of 2).
Award a maximum of 3 additional marks for each explanation of the
advantage/disadvantage for Tandeep if he decides to import the pushchairs
he sells – one of which must be applied to this context.
Relevant advantages might include:
• Have a wider range of pushchairs in the shop / better quality – meet the
needs of more customers – sell more pushchairs – higher revenue
• Fill a gap in the market for foreign branded products – satisfy those
customer needs – higher-income customers may prefer these brands
• May be purchased at lower cost price – lower selling price in the shop –
increase demand/sales
• These pushchairs may not be manufactured locally
Relevant disadvantages might include:
• May have to pay higher prices if tariffs are imposed – raises the cost of
inventory for TT – may lead to higher prices in the shop
• May have quotas that limit the quantity imported – restricts the
supply/availability of products in the shop – may lead to higher prices as
a result of the shortages
• Increased costs of finding foreign suppliers – have to contact many
suppliers in other countries to order inventory – takes Tandeep time to
do this when he could be doing other tasks
• Increased delivery time – as the inventory has further to travel than if
produced in country Z – may delay goods ordered by customers
• Imported pushchairs may not meet the same standards as locally
produced pushchairs – may lead to pushchairs breaking – leading to a
poor reputation for TT – lose customers to competitors
• Possibly more damaged goods – higher costs as have to replace
damaged goods – reduces profit
• Risk of exchange rate fluctuations affecting cost price of inventories –
lower exchange rate will lead to higher import costs
For example: This may mean Tandeep will have a wider range of
pushchairs in the shop (1) and this may appeal to high income customers
who are their target market (app) meaning Tandeep will have higher sales
(1). Meeting these customer needs should ensure the business makes a
profit and is successful in the future (1).
Application might include: toys, nursery, toy shop, toy manufacturer, shop
manager, 5 sales assistants, administration tasks; higher income groups,
babies, accessories. ‘Pushchairs (strollers)’ is included in the question and
therefore cannot be rewarded as application.
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Question Answer Marks
2(b) Refer to Appendix 2 and other information. Consider the advantages 12
and disadvantages of TT purchasing toy cars either from a wholesaler
or manufacturer. Which channel of distribution should TT choose?
Justify your answer.
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of both channels of distribution.
Well-justified recommendation.
Candidates discussing both channels of distribution
in detail, in context and with a well-justified
recommendation including why the alternative
channel was rejected should be rewarded with the
top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one channel of
distribution.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing of at least one channel of
distribution 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 1–4
of relevant business concepts.
Limited ability to discuss channels of distribution with
little/no explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both channels of distribution in
context should be rewarded with the top marks in the
band.
0 No creditable response. 0
© UCLES 2021 Page 9 of 17
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2021
PUBLISHED
Question Answer Marks
2(b) Relevant points might include:
Advantages Disadvantages
Wholesaler in • Can buy toy cars in • Higher cost price
country Z smaller quantities of $15 each as
of 10 units wholesaler mark-up
• Reduced need for added to the price
storage – reduced of each toy car –
warehouse/storage may have to charge
costs a higher price than
• Less working capital competitors – lower
tied up in inventory sales
• Quicker to respond • Full range of toy
to changing cars may not be
customer demand available
• Provides advice on • No direct link to toy
which toy cars sell manufacturers –
well less advice / after
sales service
Manufacturer in • Cheaper cost price • Must buy in larger
country Z at $5 each – so quantities of at
lower costs least 1000 units
• Long time period for • May not have the
trade credit given storage space
at 3 months – so • Longer delivery
may improve cash time of 4 weeks
flow position • May not be able to
respond to
customer demand
quickly
Recommendation • Buy from the wholesaler as this means that a
large order of 1000 units does not have to be
made if he bought from the manufacturer. TT
may not be able to sell such a large quantity of
a particular toy car. Hence this does not tie up
working capital in inventory which does not sell
quickly. Also, the wholesaler can give advice
on which toy cars are selling well making it
more likely that the TT shop will satisfy
customer demand.
• Buy from manufacturer as the unit cost is
only $5 which is $10 cheaper and so Tandeep
can keep down the price of toy cars sold in his
shop leading to much higher sales.
© UCLES 2021 Page 10 of 17
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2021
PUBLISHED
Question Answer Marks
3(a) Explain two reasons why the cash-flow forecast in Appendix 3 is 8
important to TT.
Award 1 mark for each relevant reason (maximum 2).
Award a maximum of 3 additional marks for each explanation of the reason
why the cash-flow forecast is important to TT – one of which must be
applied to this context.
Relevant reasons might include:
• To see if there is a cash flow problem / liquidity problem – if so, he
needs to organise an overdraft – the cash-flow forecast will help support
Tandeep persuading the bank to give an overdraft / bank loan. (Other
ways of solving a cash flow problem might be given, e.g. apply for trade
credit)
• To see if there is sufficient cash / working capital to pay day-to-day
costs – so, TT can pay expenses – without the need for additional
working capital
• Whether the company is holding too much cash – perhaps there may
be better uses of the cash – that may yield a greater return on the
capital
• May help with decisions/planning about when to purchase
assets/equipment/inventory
• Help to sell shares to new investors
• Can be used to compare financial performance, against actual
performance over time (e.g. sales)
• Can be used to help apply for a bank loan
For example: Tandeep may use the cash-flow forecast to take to the bank to
support the application for an overdraft (1) as in the first month of trading he
will need to borrow $200 to keep trading (app). This will allow TT to make a
successful start even though Tandeep does not have sufficient funds to start
with (1) but TT will quickly be able to pay the overdraft back in the following
month (1).
Application might include: toys, nursery, toy shop, toy manufacturer, shop
manager, 5 sales assistants, administration tasks, information from
Appendix 3 cash-flow forecast.
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0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2021
PUBLISHED
Question Answer Marks
3(b) Consider how a job description, job specification and the shortlist of 12
candidates will be helpful in the recruitment process for TT. Which is
the most important stage to ensure Tandeep recruits the best person
to be a manager at TT? Justify your answer.
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of two or more stages of the
recruitment process.
Well-justified conclusion.
Candidates discussing all three stages in detail, in
context and with a well-justified conclusion including
why the other stages were less important should be
rewarded with the top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one stage.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing two or more stages 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 1–4
of relevant business concepts.
Limited ability to discuss these stages with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three stages in context
should be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2021 Page 12 of 17
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PUBLISHED
Question Answer Marks
3(b) Relevant points might include:
Job • Outlines the duties of the job – sets out clearly what
description the toy shop manager will be expected to do – more
likely to get suitable applicants as they will know what
is required of them and if they will be able to carry out
the necessary tasks
• Makes it clear what the applicant should be able to do
– if they cannot do these tasks necessary to manage
the toy shop then they should not apply for the job
• Helps to ensure only suitable people apply for the job
as they are clear about the roles and responsibilities
of the position
Job • Makes it clear what qualifications, experience and
specification skills are required for the job
• Makes it easier for Tandeep to decide between
candidates as to who may be most suitable for the
manager of the toy shop – as qualifications, skills,
personal qualities and experience are listed
• Easier for candidates to see if they could do the job
and therefore decide whether to apply for the job –
people without the necessary qualifications should
not apply – less time is wasted reading through
applications that are not suitable
• Easier when shortlisting applicants for interview to
select the most suitable people
Shortlisting • Selects the most suitable applicants to interview so
less time wasted with unsuitable people for the job of
manager of the toy shop
• May use references to help shortlist applicants to
remove unsuitable people even though the application
form may make the person seem most suitable
Conclusion • A job description makes it clear what the job requires
and therefore it is easier for Tandeep to know what
tasks in the toy shop he wants the applicant to be
able to do. It is no good shortlisting unsuitable
applicants and the job specification only lists skills
and qualifications but does not give details of the job
of manager of the toy shop. Therefore, a job
description is the most important
• A job specification is most important as it makes it
clear what qualifications, experience and skills are
required to be the manager of the toy shop. Without
this an unsuitable person may be recruited and
someone without the necessary experience could not
do the job
• Without shortlisting Tandeep could waste a lot of time
interviewing unsuitable applicants for the job of
manager when they may not know anything about toy
shops
© UCLES 2021 Page 13 of 17
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PUBLISHED
Question Answer Marks
4(a) Explain four reasons why the level of inventory is important to TT. 8
Award 1 mark for each relevant reason (maximum of four reasons).
Award a maximum of 1 additional mark for each applied explanation of
the reason why the level of inventory is important to TT.
Relevant reasons might include:
• To earn revenue from sales – of nursery equipment
• To ensure demand can be met to avoid losing customers – for
pushchairs/strollers
• Without inventory there are no products for customers to see – so no
toys will be sold
• To meet unexpected increases in demand – for products aimed at
babies up to teenagers/toys are often fashionable and children will not
want to wait
• Ties up cash unnecessarily – if too much inventory of toys cars is held
• Too much inventory increases risk of out of date / theft / damage – for
nursery furniture
• May take up too much storage space – in the toy shop
• May allow a variety of different products to be sold
• Too little inventory could damage the reputation of the business
• To avoid losing customers to competitors
• To avoid running out of certain items of inventory in the shop
• Long delivery / lead time – because some toy manufactures take 4
weeks for delivery
• Allows quick replacement of faulty goods
• Too high inventory may indicate a product not selling well
For example: To ensure demand can be met to avoid losing customers (1)
for pushchairs/strollers (app).
Application could include: toys, nursery, toy shop, toy manufacturer, shop
manager, 5 sales assistants, administration tasks, pushchairs/strollers,
nursery furniture, well known brands of toys, target market is higher income
groups, products aimed for all ages of children from babies to teenagers,
meeting demand is seen as important, start-up business, accessories.
© UCLES 2021 Page 14 of 17
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PUBLISHED
Question Answer Marks
4(b) Consider how the following three legal controls will affect TT. Which 12
legal control will have the greatest effect on TT? Justify your answer.
• No misleading promotion
• All goods must be safe for the consumer
• Restrictions on the type of packaging allowed
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of two or more legal controls.
Well-justified conclusion.
Candidates discussing all three legal controls in
detail, in context and with a well-justified conclusion
including why the alternative legal controls were
rejected should be rewarded with the top marks in
the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one legal control.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing two or more legal controls 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 1–4
of relevant business concepts.
Limited ability to discuss legal controls with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three legal controls in context
should be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2021 Page 15 of 17
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PUBLISHED
Question Answer Marks
4(b) Relevant points might include:
No • Toys cannot be described as performing a particular
misleading function and then not being able to do this, for
promotion example a toy car advertised as being suitable for
up to a certain weight of child when the toy car is
not strong enough to hold that weight
• Price cannot be advertised as being reduced when it
has not been previously sold at the higher price – so
any price reductions at the toy shop must be genuine
reductions – or TT could be sued/fined
• Toys cannot be advertised as suitable for babies
when the toy has small parts that could choke a
baby and are therefore unsuitable – may limit some of
the claims made in TT advertisements – need to make
sure any claims about toys are correct – takes time
and effort to check up on facts from toy
manufacturers
• May increase costs if have to change current
advert/promotion
All goods • Toys sold must be safe for children as if a child is
must be injured whilst playing with a toy sold by TT then could
safe for the be sued for damages – increases costs / TT will gain a
consumer poor reputation with consumers – lose sales
• If a toy car easily breaks, then TT will incur higher
costs of having to replace the toy car – then return
these to the manufacturer
• May need to find new supplier – higher unit costs /
time taken to find new supplier
Restrictions • Higher cost for toy manufacturers – may be passed
on the type on to TT as higher cost price – higher price to
of customers – reduced demand – lower sales/revenue
packaging • Toys may be more easily damaged if less packaging
allowed used – increased cost for TT of replacement toys
• Toys may be less attractive if there is no attractive
packaging used – lower sales for TT / TT may need to
change to other types of toys
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Question Answer Marks
4(b)
Conclusion • As TT is a toy shop it will need to make sure its
advertising of toys is not misleading because it may
gain a bad reputation if claims about the toys it sells
are not true, so this is the most important legal control
for TT. It can easily make sure it does not advertise
lower price sales when the prices have not been
reduced. Packaging is likely to be provided by the toy
manufacturer and so is unlikely to affect TT. As TT
sells branded goods then these are all likely to have
been tested and are safe for children.
• Toys being safe will have the greatest effect on TT if
this legal control is not followed as TT could be sued
for damages and this will raise its costs and result in a
bad reputation leading to lower sales at the toy shop.
• Restrictions on the type of packaging will have the
greatest effect on TT as the toy manufacturer may
have to increase its prices to TT and therefore TT may
need to raise its prices leading to lower demand and
revenue.
© UCLES 2021 Page 17 of 17
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*5329982001*
Paper 1 Short Answer and Data Response May/June 2021
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_11_2021_1.2
© UCLES 2021 [Turn over
2
1 BKH is a large public limited company. It has 2 000 employees across 18 locations. BKH sells a
range of insurance products including house and car insurance. BKH’s shareholders want the
business to increase profit. The Managing Director knows increasing profit can conflict with the
objectives of other stakeholder groups. She said: ‘Private sector businesses have different objectives
to public sector organisations.’ BKH is also planning to expand by taking over another insurance
company.
(a) Define ‘public sector’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘profit’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Identify four ways to measure the size of a business.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Way 3: ...............................................................................................................................
...........................................................................................................................................
Way 4: ...............................................................................................................................
........................................................................................................................................... [4]
© UCLES 2021 06_0986_11_2021_1.2
3
(d) Explain one way each stakeholder’s objectives might conflict with BKH’s objective to increase
profit.
Customers objective: ........................................................................................................
...........................................................................................................................................
How this objective might conflict: ......................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Employees objective: ........................................................................................................
...........................................................................................................................................
How this objective might conflict: ......................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think economies of scale are the most important reason for taking over another
business? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2021 06_0986_11_2021_1.2 [Turn over
4
2 PJA make fashion clothing for 16-25 year olds. Many of its competitors are multinational companies.
PJA produce new products every 3 weeks. All PJA’s products are made in a local factory because
of import quotas. The Managing Director is reviewing PJA’s financial statements using ratio analysis.
An extract is shown in Table 2.1.
Table 2.1
Extract from PJA’s financial statements for 2020
Revenue ($m) 7 400
Gross profit ($m) 3 330
Profit ($m) 1 100
Current ratio 1.5
Return on Capital Employed (ROCE) 8%
(a) Define ‘import quota’.
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate PJA’s gross profit margin.
Show your working.
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline one benefit and one limitation to PJA of developing new products.
Benefit: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Limitation: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2021 06_0986_11_2021_1.2
5
(d) Explain two ways PJA’s managers can use ratio analysis.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think multinational companies always benefit the countries they operate in? Justify
your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2021 06_0986_11_2021_1.2 [Turn over
6
3 Alex started APB as a sole trader business 4 years ago. APB provide printing services for local
businesses such as leaflets and brochures. Alex thinks having a good location is important to any
business. All APB’s 6 employees receive on-the-job training. Alex has a democratic leadership
style and uses job rotation to help keep employees motivated. To meet an increase in demand,
Alex plans to buy an additional printing machine. This will cost $1 800. Alex has to decide on an
appropriate source of finance.
(a) Define ‘job rotation’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) State two factors that a service sector business should consider when deciding where to
locate.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
........................................................................................................................................... [2]
(c) Outline one advantage and one disadvantage to APB of using on-the-job training.
Advantage: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2021 06_0986_11_2021_1.2
7
(d) Explain one advantage and one disadvantage of Alex having a democratic leadership style.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think the amount of money needed is the most important factor for a sole trader to
consider when deciding on an appropriate source of finance? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2021 06_0986_11_2021_1.2 [Turn over
8
4 Economic growth in country X has created many opportunities for new businesses such as TGH.
TGH manufacture a range of personalised mobile (cell) phone cases using job production. Quality
assurance is important to all 8 employees. TGH operate in a niche market. The Marketing Manager
uses e-commerce as TGH’s channel of distribution. She is considering ways to build customer
relationships.
(a) Define ‘economic growth’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘quality assurance’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two reasons why building customer relationships might be important to TGH.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2021 06_0986_11_2021_1.2
9
(d) Explain one advantage and one disadvantage to TGH of using job production.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think cost-plus is the best pricing method for a new business to use when selling
products to a niche market? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2021 06_0986_11_2021_1.2
10
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© UCLES 2021 06_0986_11_2021_1.2
11
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© UCLES 2021 06_0986_11_2021_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 06_0986_11_2021_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/12
*9069406460*
Paper 1 Short Answer and Data Response May/June 2021
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_12_2021_1.1
© UCLES 2021 [Turn over
2
1 Pamela is a sole trader. She started her successful photography business 30 years ago. She
specialises in taking pictures of people and places for use in posters, calendars and fashion
magazines. It is a niche market. Pamela uses cost-plus pricing as part of her marketing mix. Offering
a high quality service is important to Pamela and her 2 employees.
(a) Define ‘cost-plus pricing’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘marketing mix’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two reasons why offering a high quality service might be important for Pamela’s
business.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2021 06_0986_12_2021_1.1
3
(d) Explain two advantages to Pamela of operating as a sole trader.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2:.....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think operating in a niche market will help a small business have a better chance of
success than operating in a mass market? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2021 06_0986_12_2021_1.1 [Turn over
4
2 NPX is an online retail business. All orders are sent directly to customers from its warehouse. NPX
employs 60 full-time workers. The Operations Manager is analysing NPX’s cash-flow forecast. An
extract is shown in Table 2.1. To improve productivity, the manager plans to introduce new
technology that can select and pack all the items for each order. This will make 35 workers redundant.
The technology will cost $40 000. The manager is considering using either internal sources or
external sources to finance this technology.
Table 2.1
NPX’s cash-flow forecast for the period July – September 2021 ($000)
July August September
Cash inflows 100 120 140
Cash outflows 90 90 110
Net cash flow 10 30 30
Opening balance 5 15 45
Closing balance 15 45 75
(a) Define ‘opening balance’.
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) State two ways a business can increase productivity.
Way 1: ...............................................................................................................................
Way 2: ............................................................................................................................... [2]
(c) Identify four sources of internal finance a business might use.
Source 1: ..........................................................................................................................
...........................................................................................................................................
Source 2: ..........................................................................................................................
...........................................................................................................................................
Source 3: ..........................................................................................................................
...........................................................................................................................................
Source 4: ..........................................................................................................................
........................................................................................................................................... [4]
© UCLES 2021 06_0986_12_2021_1.1
5
(d) Explain two possible effects on NPX’s cash-flow forecast of introducing the new technology.
Effect 1: .............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Effect 2: .............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think it is better for a tertiary sector business to use full-time employees rather than
part-time employees? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2021 06_0986_12_2021_1.1 [Turn over
6
3 GHT is a public limited company. It produces steel products including gates and garage doors.
GHT has a flat organisational structure and a short chain of command. GHT has many stakeholder
groups including 600 employees. The Managing Director is considering introducing job rotation to
improve employee motivation. He has also been analysing some financial data. An extract is shown
in Table 3.1.
Table 3.1
Extract of revenue and cost data for one of GHT’s products (product X)
Units sold in 2020 30 000
Price per unit $100
Variable costs per unit $60
Fixed costs $900 000
Break even output (units) 22 500
(a) Define ‘fixed cost’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the margin of safety for product X in 2020.
Show your working.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
© UCLES 2021 06_0986_12_2021_1.1
7
(c) Outline two advantages to GHT of having a short chain of command.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
(d) Explain one advantage and one disadvantage to GHT of using job rotation to improve employee
motivation.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2021 06_0986_12_2021_1.1 [Turn over
8
(e) Do you think the shareholders are the most important stakeholder group to the success of a
limited company? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2021 06_0986_12_2021_1.1
9
4 Raul owns a small farm that grows oranges. His farm is based in country Z. Like all primary sector
activities, farming creates external costs and external benefits. Raul sells all 600 tonnes of his
oranges direct to a drinks manufacturer in country E. The Government of country E plan to introduce
either import tariffs or quotas. Raul said: ‘This might help country E’s Government achieve one of
its economic objectives but how will it affect companies that export to country E?’
(a) Define ‘primary sector’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two government economic objectives.
Objective 1: .......................................................................................................................
...........................................................................................................................................
Objective 2: .......................................................................................................................
........................................................................................................................................... [2]
(c) Outline one external benefit and one external cost that Raul’s business activity might create.
External benefit: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
External cost: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2021 06_0986_12_2021_1.1 [Turn over
10
(d) Explain two advantages to Raul’s business of selling direct to a manufacturer.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think the introduction of import tariffs is likely to have a greater effect than the
introduction of import quotas on an exporting business? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2021 06_0986_12_2021_1.1
11
BLANK PAGE
© UCLES 2021 06_0986_12_2021_1.1
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BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 06_0986_12_2021_1.1
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*2492671442*
Paper 2 Case Study May/June 2021
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_21_2021_1.5
© UCLES 2021 [Turn over
2
1 (a) Explain four reasons for changes in the relative importance of the primary, secondary and
tertiary sectors in a country.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 3:..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2021 06_0986_21_2021_1.5
3
(b) Consider the following three problems for FO as it grows through takeovers. Which problem
will be the easiest for FO to overcome? Justify your answer.
• More difficult to control the business
• Lack of finance
• Clash of business cultures
More difficult to control the business: ...............................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Lack of finance: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Clash of business cultures: ...............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_21_2021_1.5 [Turn over
4
2 (a) Explain two reasons why it is important for FO to manage all of its resources effectively when
manufacturing products.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation:.......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2021 06_0986_21_2021_1.5
5
(b) Consider the benefits and limitations of the following three methods of communication FO
could use. Which method of communication would be most suitable when contacting suppliers
about a late delivery? Justify your answer.
• Email
• Mobile (cell) phone
• Letter
Email: ................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Mobile (cell) phone: ..........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Letter: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_21_2021_1.5 [Turn over
6
3 (a) Explain how one internal source and one external source of finance could be used by FO as
it expands.
Internal source of finance: ................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
External source of finance: ...............................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2021 06_0986_21_2021_1.5
7
(b) Consider the advantages and disadvantages to FO of using a wholesaler, retailer or selling
direct to the customer when distributing its products. Which channel of distribution should FO
use? Justify your answer.
Wholesaler: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Retailer: ............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Selling direct to customer: ................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_21_2021_1.5 [Turn over
8
4 (a) Using the information in Appendix 2:
(i) Calculate the break-even level of output per month
................................................................................................................................
................................................................................................................................
................................................................................................................................ [2]
(ii) Calculate the margin of safety per month for tables:
................................................................................................................................
................................................................................................................................
................................................................................................................................ [2]
(iii) Identify four limitations of using break-even analysis.
Limitation 1:............................................................................................................
................................................................................................................................
Limitation 2:............................................................................................................
................................................................................................................................
Limitation 3:............................................................................................................
................................................................................................................................
Limitation 4:............................................................................................................
................................................................................................................................ [4]
© UCLES 2021 06_0986_21_2021_1.5
9
(b) Refer to Appendix 2 and Appendix 3 and other information. Consider the following three ways
FO could use to contribute to sustainable development:
• only use raw materials from sources that replace what they have used
• only use packaging that can be recycled
• only use electric vehicles to deliver products.
Which way should FO choose to maximise profit? Justify your answer.
Only use raw materials from sources that replace what they have used: ........................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Only use packaging that can be recycled: ........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Only use electric vehicles to deliver products: .................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_21_2021_1.5
10
BLANK PAGE
© UCLES 2021 06_0986_21_2021_1.5
11
BLANK PAGE
© UCLES 2021 06_0986_21_2021_1.5
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 06_0986_21_2021_1.5
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
*2018653272*
Paper 2 Case Study May/June 2021
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_22_2021_1.3
© UCLES 2021 [Turn over
2
1 (a) Explain two advantages and two disadvantages of setting up a business as a private limited
company.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2021 06_0986_22_2021_1.3
3
(b) Consider the following three factors that affect the location of TT’s shop. Which of the locations
in Appendix 1 should Tandeep choose? Justify your answer.
• Customers in the area
• Rent
• Types of shops nearby
Customers in the area: .....................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Rent: .................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Types of shops nearby: ....................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_22_2021_1.3 [Turn over
4
2 (a) Explain one likely advantage and one likely disadvantage for Tandeep if he decides to import
the pushchairs (strollers) he sells.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation:.......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation:.......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2021 06_0986_22_2021_1.3
5
(b) Refer to Appendix 2 and other information. Consider the advantages and disadvantages of
TT purchasing toy cars either from a wholesaler or manufacturer. Which channel of distribution
should TT choose? Justify your answer.
Wholesaler in country Z: ...................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Manufacturer in country Z: ................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_22_2021_1.3 [Turn over
6
3 (a) Explain two reasons why the cash-flow forecast in Appendix 3 is important to TT.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2021 06_0986_22_2021_1.3
7
(b) Consider how a job description, job specification and the shortlist of candidates will be helpful
in the recruitment process for TT. Which is the most important stage to ensure Tandeep recruits
the best person to be a manager at TT? Justify your answer.
Job description: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Job specification: ..............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Shortlist of candidates: .....................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_22_2021_1.3 [Turn over
8
4 (a) Explain four reasons why the level of inventory is important to TT.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 3: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2021 06_0986_22_2021_1.3
9
(b) Consider how the following three legal controls will affect TT. Which legal control will have the
greatest effect on TT? Justify your answer.
• No misleading promotion
• All goods must be safe for the consumer
• Restrictions on the type of packaging allowed
No misleading promotion: .................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
All goods must be safe for the consumer: ........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Restrictions on the type of packaging allowed: ................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2021 06_0986_22_2021_1.3
10
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© UCLES 2021 06_0986_22_2021_1.3
11
BLANK PAGE
© UCLES 2021 06_0986_22_2021_1.3
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 06_0986_22_2021_1.3
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/11
Short Answer/Data Response
Key messages
• Centres should be reminded that all aspects of the syllabus will be assessed at some stage.
• As in previous sessions candidates should be reminded to learn precise definitions for all key terms
and to use a different point of application and analysis for each point of knowledge. A point can only
be credited once within a given answer.
• Effective evaluation is an area which continues to require development. Candidates should be
reminded that evaluation must include a justified decision that follows on from the points raised in the
answer. A repetition of points already explained in the answer will not gain evaluation marks. The
mark scheme for each part (e) question includes one example of how evaluation may be
demonstrated in the answer.
General comments
Candidates this session found some of the topic areas assessed quite challenging. This was particularly true
of the topics assessed in Questions 2 and 4. Candidates had quite limited knowledge of some aspects of
these topics. This led to candidates trying to alter the questions asked to fit with their knowledge base. This
was most noticeable in Questions 3(d) and 4(c).
Candidates would benefit from a greater knowledge of topics 1.5.3, 2.1.1, 2.4.2 and 6.2.
Comments on specific questions
Question 1
(a) Candidates were generally aware of this term. Weaker responses lost marks by stating that prices
would be lower than competitors. Such answers were too vague to be credited as predatory and
penetration pricing methods set price below competitors. The key point of difference is that
competitive pricing is set in line or slightly below the competitor’s price.
(b) The precise meaning of this term was not well understood. The strongest candidates were aware
that this was a future financial plan for the promotional activities of the business. Many candidates
gained one mark for some understanding that this is money spent on marketing.
(c) Candidates clearly understood this topic, and many gained both knowledge marks available. Some
candidates struggled to apply their knowledge to the question set or the business in the stem of the
question. Weaker responses described the benefits of e-commerce not the threats.
(d) This question produced a range of responses. The best answers explained how loyalty cards and
communicating with customers could be used in a small gift shop. Some candidates lost marks by
suggesting general promotional activities, or sales, which were not related to existing customers.
Even the strongest candidates struggled to develop their answers fully to gain both explanation
marks available. Candidates who simply stated that customers would be loyal gained no analysis
marks.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
(e) This was a challenging question for candidates and a mark of one or two was common as many
candidates were not able to provide effective evaluations. The strongest answers recognised that
risk taking is essential for enterprise but that successful enterprises also require the new ideas
generated by creativity. The weakest responses described other entrepreneurial characteristics
which were not rewardable.
Question 2
(a) Well answered by many candidates. A common error was to confuse a public sector (government
owned) business with a public limited company.
(b) This calculation was not well understood. Many candidates thought incorrectly that the margin of
safety was the difference between maximum output and break-even output. Some candidates did
not attempt this question.
(c) This question required application to the business in the question stem. The strongest candidates
recognised that inflation would increase manufacturing costs, lower sales, and therefore impact
upon the break-even output for this bed manufacturer. A mark of three was common as many
candidates struggled to find a second point of application. The weakest responses stated that
inflation would increase revenues and profit for the business as prices would rise.
(d) Candidates found this to be one of the more challenging questions on the examination paper. The
strongest candidates were able to explain how the flexibility and staff motivation benefits of batch
production could assist this bed producer. Candidates who were able to explain why batch is
cheaper than job production gained marks. However, candidates who simply stated that batch is
cheaper or quicker were not rewarded.
(e) Candidates showed strong knowledge of environmental issues, but many did not focus their
answers correctly on the question set. Frequently answers lacked the required business
perspective. The strongest candidates explained the benefit of improved reputation on sales and
the cost of buying new equipment or materials. Very few were able to make effective evaluative
comments such as those suggested in the mark scheme. A significant number of candidates
applied their answers to the business outlined in the question stem although application marks are
not available in part (e) questions.
Question 3
(a) Candidates showed strong understanding of shareholders, but many were unaware of this term.
Many candidates confused this with dividends.
(b) A wide variety of suitable financial statements were given in answer to this question. Some
candidates however, provided financial words which could be part of a statement such as profit or
revenue. These answers were not rewardable.
(c) This question was well answered.
(d) This question produced a range of responses. Candidates had a stronger understanding of the use
of accounts to shareholders than to suppliers. Candidates frequently repeated the same application
point in both parts of the question which could only be rewarded once. Some candidates thought
that accounts meant the bank account of the business. Such candidates often explained in detail
how money could be transferred between stakeholders and gained zero marks. Several candidates
did not attempt this question.
(e) Candidates struggled to gain the analysis and evaluation marks available in this question, many
simply identified two other factors that should be considered when making a location decision. The
strongest answers focussed on the view that a labour-intensive manufacturer would not produce
without suitable labour, but that this would be less important for capital intensive production.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
Question 4
(a) Candidates frequently identified general objectives which could apply to any organisation, such as
gaining profit or government objectives, such as economic growth. Only the strongest candidates
provided the objectives as stated in the mark scheme.
(b) Very few candidates provided precise definitions of this term. Many gained one mark by showing
some awareness that it concerns how information is passed in an organisation. Some candidates
incorrectly defined other aspects of the organisation chart such as span of control or hierarchy.
(c) This was the most difficult question on the exam paper for many candidates. Very few candidates
showed clear understanding of Herzberg’s motivators. The best responses identified an action,
such as promotion of doctors, which linked to Herzberg’s recognition or achievement. Many
candidates either attempted to use Maslow’s hierarchy or described hygiene factors such as
improved pay. These responses gained zero marks. A noticeable number of candidates did not
attempt this part of the question.
(d) There were few good answers to this question. Candidates who explained the need for feedback or
delayering often scored highly. Such candidates were able to clearly apply their answers to the
situation described in the question stem. A significant number of candidates repeated similar
solutions when discussing both messages lost and the use of jargon, this limited their ability to gain
marks. A small but significant number of candidates did not attempt this question.
(e) A mark of 2 or 3 was common on this question. Candidates were aware that external recruitment
would provide a wider choice of applicants and new skills. Very few candidates could explain why
these would be beneficial to a firm and therefore gain the analysis marks available. Those that did
often gained a mark by explaining the potential to recruit the best person for the job. Some
candidates stated that costs would be higher when recruiting externally but could not explain why
this would be the case. Many candidates stated that internal recruits would not require training,
showing a lack of understanding that promotion usually requires some form of training.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/12
Short Answer/Data Response
Key messages
• Candidates need to be able to provide clear and precise definitions of business terms.
• Many candidates missed application marks. Candidates should be encouraged to use information from
the stem to help answer part (c) and part (d) questions as this provides the basis for application.
• Candidates should use a different point of application for each point made. The same analysis point
should not be used for both points within the same question.
• Evaluation is more than a decision, or a summary of earlier points made. Evaluation requires candidates
to make a supported judgement which should follow on from points raised in the answer. It should
clearly answer the question set. An example of an answer which includes evaluation can be found in the
mark scheme for each part (e) question.
General comments
This paper included some topics which candidates found challenging. It is important to remember that any
area of the syllabus can be assessed. Many candidates showed good knowledge of concepts but found
accessing the application, analysis and evaluation marks more difficult.
Parts (a) and (b) of each question were generally well attempted. However, many candidates lacked the
necessary precision in their definitions or range of knowledge to access all the marks available.
For most part (c) (excluding 4c which only assessed knowledge) and all part (d) questions, it is important
candidates use the information from the stem to link their answers to the context. This helps ensure that any
point raised are appropriate to the business. Candidates should use a different point of application for each
point made.
Candidates need to be aware of which skills are being assessed in each question. Many continue to include
analysis in part (c) questions and application in part (e) questions. However, the questions do not assess
these skills so marks cannot be awarded. Part (c) questions either assess knowledge or knowledge and
application whilst part (e) assesses knowledge, analysis and evaluation.
Candidates need to develop their evaluative skills. Of those who did attempt an evaluative comment, most
were unable to provide reasoned statements to back up the decision made. One approach is to make a
choice, provide a reason for this decision and then explain why it is better than the alternative option or
viewpoint discussed.
Comments on specific questions
Question 1
(a) Most candidates understood that current liabilities were debts that needed to be repaid. Stronger
responses were able to provide a precise definition. A common mistake was to refer to ‘short-term’
which was too vague as candidates needed to specify that repayment had to be made in less than
12 months. Some candidates confused the term with non-current liabilities or current assets.
(b) This question was well answered by most candidates. A common error was to identify examples of
current assets. Some candidates repeated similar points for both answers which could only be
awarded once.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
(c) Most responses identified at least one reason, with pay day-to-day expenses being a typical
response. Better responses then linked points to the context to access application marks. A
common mistake was to select similar points which had been classified together in the mark
scheme. For example, paying wages and paying suppliers are both examples of day-to-day costs
so this is classed as repetition. Some candidates wrongly assumed that liquidity is used to measure
profit.
(d) This question produced a range of responses. Stronger responses recognised that delegation
might increase employee motivation or allow managers time to focus on other tasks. These points
were then developed to show how they could benefit the business in terms of higher productivity or
better decision making. Good application was evident in many answers, as candidates correctly
mentioned the business had 4 managers, 30 employees or that it sold gardening products. Weaker
responses tended to lack precision. For example, some recognised motivation could increase but
forgot to say whether this referred to the manager or employees. Others ignored the fact that the
business was a retailer, therefore any references to increased production could not be awarded as
analysis.
(e) This was one of the most challenging questions on the paper. Even the best responses struggled
to gain more than two or three marks. Those who did well often focused on the advantages of other
methods that an established business might use, such as cost-plus or promotional pricing. These
answers recognised cost-plus pricing may allow the business to cover costs which may not be
possible using competitive pricing. However, many candidates struggled to access the knowledge
marks. A common mistake was to assume that competitive pricing involved setting lower prices or
it would automatically attract customers. Other candidates defined the terms which was
unnecessary. Many discussed methods such as price skimming and penetration pricing which were
not appropriate. There were also vague statements about higher or low prices. Some candidates
attempted to link points to the context but this is a general question so there are no marks available
for application.
Question 2
(a) Many candidates understood that ‘off-the-job’ training was training away from the workplace. The
second mark was often not achieved as the candidate did not mention ‘who’ provided the training
or ‘where’ it would happen. Some candidates wrongly interpreted ‘off-the-job’ as ‘outside of working
hours’ whilst others identified reasons why training was given. A common mistake was to confuse
the term with induction training.
(b) Well answered by most candidates. A common mistake was to identify two reasons from the same
category on the mark scheme. Others identified financial reasons such as provide for basic needs,
which the question did not allow. Candidates should be reminded to read the question carefully.
(c) Methods of motivation was a strong topic for many candidates with a significant number of
responses gaining full marks. A common wrong answer was promotion. This, or points linked to it,
were not accepted as it is classed as a non-financial method. Others offered descriptions of
methods without naming them as the question required. Some candidates missed the opportunity
to gain application marks as they either did not link points to the context or tried to use the same
application for both answers.
(d) This question produced a range of responses. Stronger responses recognised that legal controls
over the environment could result in the business having to reduce the level of production or having
to pay fines. They were then able to develop these points to show the impact on the business in
terms of fewer sales or higher costs. Application to the business was generally good but analysis was
often limited. A common mistake was to misread the question and discuss the impact on the
environment or to focus on other areas of legal controls not related to the environment such as
Health and Safety or minimum wage. References to ethics were not awarded as this is a different
concept. Some discussed the impact on reputation or brand image, but as legal controls affect all
businesses these answers were not accepted.
(e) This question was poorly answered by most candidates. The best responses recognised that a
reduction in unemployment could result in higher demand or that it might be difficult to recruit
employees. Better responses were able to develop these points to show the positive and negative
impacts on businesses in terms of increased revenue and higher costs. However, many
misunderstood this question and discussed the impact on businesses of recruiting or having more
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
employees. Assumptions such as more people employed means all businesses have more
employees and therefore increased output were common. Evaluation, where attempted, tended to
be a decision without a clear reason to support it.
Question 3
(a) Most candidates could identify a benefit but then found it difficult to identify a cost of developing
new products. Many simply repeated it would be expensive or would cost money to develop which
was stated in the question. Others made vague statements about failure, losses or customers
might not like the product.
(b) Those candidates who knew the formula for break-even output did well on this question. Some
made a mistake by representing the answer as a financial value, by adding the dollar sign ($) so
could not be awarded the second mark. Candidates should be reminded to include formulas in their
answers as often method marks can still be awarded when the final answer is wrong. Other
candidates did not understand the formula, leading to many incorrect answers.
(c) Some candidates clearly understood the concept of margin of safety and correctly outlined ways to
improve it. Application was often awarded for quoting relevant information from the table or by
recognising that the business made cameras. Sometimes the increase or decrease was the wrong way
round while common wrong answers included more advertising or increase production. A few candidates
clearly did not understand the term so outlined ways safety of products or workers could be
improved.
(d) This was one of the most challenging questions on the paper. To access the knowledge marks,
candidates needed to identify both the stage and either the level or purpose of promotion. For
example, at introduction there is likely to be a high level of promotion or promotion is used to raise
awareness. There were many common mistakes. Many candidates did not identify the stage or
simply referred to start, end, peak or declining which were inaccurate. Some identified the stage
but then discussed the impact on pricing or sales, not promotion. Others identified methods of
promotion which the question did not require. One misconception was to assume saturation is a
stage when it is a point in the maturity stage. Others confused the product life cycle with the
business cycle, so used terms such as boom and slump. A small number of candidates did not
understand the concept so discussed whether promotion was the best way to motivate employees.
(e) Good knowledge of production methods was evident in most responses. Stronger answers were
able to develop the points made. Many candidates discussed the merits of other methods, such as
batch production, which opened another way to gain analysis marks. However, all candidates
struggled to access evaluation marks. Weaker answers tended to list points, without developing
them. A common misconception was to assume that high output will automatically lead to an
increase in sales. Others made assumptions about quality which were not credited.
Question 4
(a) This question was well attempted by most candidates. A common mistake was a lack of precision.
This resulted in answers which confused an entrepreneur with a sole trader, investor, or manager.
Many forgot to mention the entrepreneur is responsible for starting the business and not simply
someone who manages, invests or owns it.
(b) It was pleasing to see that many candidates were able to provide a precise definition of opportunity
cost. A common mistake was to mix up which option was being given up so wrongly stated that it
was the alternative which was chosen. Others simply wrote it was the next best alternative without
stating that it was being given up. This was a key omission.
(c) This question only assessed knowledge. Those who did well often achieved three or four marks on
this question. A common mistake was repetition. Many candidates were unable to differentiate
similar points such as lack of finance or liquidity. These are alternative ways of saying the same
thing and not different reasons so can only be awarded once. Candidates need to ensure points
made are clearly distinct from each other.
(d) It was clear that most candidates were familiar with sources of finance. Many candidates also
gained application for references to $700 or that Tom planned to start a window cleaning business,
possibly with his sister. The most popular answers were owner’s savings and bank loans. Stronger
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
candidates recognised that owner’s savings did not need to be repaid but most found it difficult to
explain the benefits of other sources. A common mistake was to focus on the negative aspects such
as bank loans need to be repaid, which did not answer the question. Others identified sources such
as debentures or retained profit which are not options for a start-up business. Some misread the
question so discussed what the business might want to buy rather than how the purchases would
be financed.
(e) Good knowledge was evident in most responses. However, most candidates focused on
knowledge and did not offer any development to show why points such as more ideas or risk of
disagreements would represent an advantage or disadvantage for a new business. Where analysis
marks were gained it was often for an advantage or disadvantage of another form of ownership
such as sole trader. Instead of development most candidates identified additional points, which
restricted answers to two marks as this is the maximum available for knowledge. Some candidates
confused unlimited and limited liability in relation to partnerships and private limited companies.
Attempts at evaluation were rarely successful as if candidates included a decision, they tended to
summarise points already made which does not constitute justification.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/21
Case Study
Key messages
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one (a)
question that will usually be generic. Applying answers to the case will ensure responses are appropriate for
each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a small bakery that
produces bread. It is advisable for candidates to ask themselves about the size of the business, is it a
service or manufacturer and what is the type of business organisation? This may add to the quality of
their answers.
• Candidates should try to give a full explanation of positive and negative consequences of a business
decision when this is asked for. Responses require developed reasoning rather than simple description;
listed points generally only gain Level 1 whereas an explanation of a point could move the answer to
Level 2. Few well developed points will score higher marks than a long list of simple statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of MB, a small bakery producing bread, provided an accessible scenario for candidates.
Those who applied their answers to the context of MB boosted their marks much further. The majority of
candidates seemed to have time to complete the paper and attempted all questions.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Also the question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but in some cases it was
clear that certain topics were not as well understood, the weakest understanding was of lean production
methods and business ethics.
Overall, the standard was good with very few weak scripts. Candidates often provided answers in context
which enabled access to application marks. However, candidates should make sure that different examples
of application are included in each section of (a) questions (not 1(a) on this particular paper) and the
conclusion/recommendation should also be applied to the case in (b) questions. A lack of analysis and
evaluation resulted in answers remaining in the lower-level mark band. Candidates should aim to consider
the consequences/implications/long term/short term/balance issues of the decisions to secure Level 2 or
Level 3 marks in the conclusion/recommendation.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) The majority of candidates could name and explain four ways in which governments might support
business start-ups. Many responses mentioned lowering unemployment, increasing GDP and
raising tax revenue. Some candidates found it difficult to develop their answer by including extra
reasoning or detail. For example, supporting a business start-up might be a way of reducing
unemployment so that the government had fewer welfare benefits to pay or increasing GDP would
bring about a raise in living standards for households.
(b) This question required careful reading. It asked for benefits of two specific sections of a business
plan. A significant number of candidates also discussed the drawbacks of sections about market
research and resources which did not answer the question. Consideration of the negative impact of
market research or resources was only given credit in the conclusion to the response. The benefit
of market research was that MB could identify a target market for eating bread and could respond
to the findings by producing baked items which seemed to be popular in the survey. Stronger
responses supported their answer by referring to the 70 per cent of customers who wanted to
purchase cakes as well as bread from the bakery. This research data would help Yasin to confirm
the idea of widening his product range and would help him to devise a marketing plan for his new
launch. The section of the business plan covering details of the resources would help Yasin to
identify the start-up costs of the bakery. Only a few candidates went on to link this to judging
whether he would need some external source of capital. This meant conclusions generally did not
go beyond the lower-level mark band.
Question 2
(a) Knowledge of break-even charts was quite weak amongst many candidates. Many candidates did
not appreciate it was a predictive rather than an analytical tool. However, some of the stronger
responses explained that the chart would help Yasin identify how much bread he would need to
produce and sell to reach the break-even point where there would be no loss but no profit either.
This would allow him to plan effectively to ensure that the minimum quantity was produced to
ensure business survival. The disadvantages of using a break-even chart were not as confidently
explained. There would need to be a separate chart for each product made. Since Yasin was
planning to produce cakes as well as bread this would require more calculations and careful
forecasting of how many cakes he would need to make and sell to reach a different break-even
point.
(b) The majority of candidates found this to be the most challenging question on the paper. There
appeared to be quite weak knowledge of lean production and of Kaizen particularly. Stronger
candidates explained that the two bakery employees might be able to offer suggestions of how
small continuous changes in the bread production might improve the efficiency of the bakery.
Further development pointed out that the flow-through on the production line would reduce the
wastage of time and ingredients so that bread would be produced as quickly as possible and be as
fresh as possible. The disadvantage of using Kaizen would be that the bakery was only small so
only limited changes could be introduced and there would be disruption to production whilst any
reorganisation took place. Candidates had better knowledge of JIT principles. Control of JIT
inventory required that the response was focused on ingredients rather than storage of bread.
Some good responses mentioned that there would be less need for storage space which would cut
wastage of stale flour and yeast, resulting in lower costs of production.
Question 3
(a) Questions about marketing are popular and often well-answered. This question proved accessible
for the majority candidates with many being able to identify billboards, social media, local radio and
posters as suitable methods of advertising the bakery. Some candidates confused advertising with
promotion and suggested free samples, competitions, and food fairs. Application was awarded for
linking the advertising method to the context of a small bakery such as using posters where large
images of the new cake range could tempt customers to buy.
(b) Candidates displayed strong numeracy skills. Many candidates were able to make good use of the
data in Appendix 2 to calculate levels of profit, margin of safety and units of breakeven for both
options of developing the business. Correct calculations of this nature earned Level 2 credit with
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
additional application marks for referring to the appropriate data in the case study and providing
evidence to support a justified decision by the candidate. The best answers earned Level 3 credit
by using the calculated data to explain which option would be a better plan for development and
why the other option would not be such a good choice. Weaker responses simply copied data
about monthly sales, fixed costs and gross profit margin which did not earn any credit.
Question 4
(a) This question was well answered by many candidates. Sound knowledge of democratic leadership
was developed into an explanation of the advantage of employees welcoming the opportunity to
offer ideas and opinions in running the business, making them feel valued and increasing their
motivation. The disadvantage of democratic leadership was less well answered. Some responses
offered mirror image arguments or suggested that Yasin would lose complete control over his
business. A minority of candidates did not score marks because they confused democratic with
autocratic leadership.
(b) The topic of business ethics was not widely known. Some responses offered a general discussion
of the three ways that Yasin could improve the ethical image of MB without referring to ethics at all.
Their focus centred on the impact on profitability rather than a strong moral code and positive
concern for the environment. The discussion about increasing wage rates to 20 per cent above the
legal minimum wage was well covered by some candidates who were able to suggest that MB
would be seen as a caring employer, attracting more applications to join the business whilst
possibly not affecting their ethical image at all if the news about increased wages did not spread
outside the business. Better recommendations did more than offer repeated earlier points and
weighed up the benefits against the drawbacks of each possible action as part of the justification
for the decision made. Their choice took into account the one that would have the most positive
impact on the reputation of the bakery in caring for the environment, community and employees.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/22
Case Study
Key messages
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one of the
(a) questions which will be generic. Applying answers to the case will ensure responses are appropriate for
each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a business that
manufactures toys for young children. It is advisable for candidates to ask themselves about the size of
the business, is it a service or a manufacturer, and what is the type of business organisation. This may
add to the quality of their answers.
• Candidates should try to give a full explanation of the positive and negative consequences of a business
decision when this is asked for. Responses require developed reasoning rather than simple description;
listed points generally only gain Level 1 whereas an explanation of a point could move the answer to
Level 2. A few well developed points will score higher marks than a long list of simple statements.
• Several questions on this paper asked candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) were rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of TT, a manufacturer of toys for young children, provided an accessible scenario for
candidates. Those who applied their answers to the context of TT achieved higher marks. The majority of
candidates seemed to have time to complete the paper and attempted all questions.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. They should read
each question carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but in some cases it was
clear that certain topics were not as well understood, the weakest understanding was of economies of scale,
lean production methods and statement of financial position.
Overall, the standard was good with very few weak scripts. Candidates often provided answers in context
which enabled access to application marks. However, candidates should make sure that different examples
of application are included in each section of (a) questions, and that the conclusion/recommendation should
also be applied to the case in (b) questions. A lack of analysis and evaluation resulted in answers remaining
in the lower level mark band. Candidates should consider the consequences/implications / long-term / short-
term / balance issues of the decisions to secure Level 2 or Level 3 marks in the conclusion/recommendation.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) The majority of candidates could name and explain two ways the business could grow. Popular
ways were internal and external growth as listed in the syllabus but there were also examples of
internal growth, such as developing a new product and entering new markets, and examples of
external growth, such as merger or takeover of another toy manufacturer. Weaker candidates
found it difficult to explain how the way resulted in growth for TT and provided the benefits of
growth such as increased revenue or profit. Application was often present with answers being in
the context of a new toy being developed or by taking over a toy manufacturer in another country.
(b) This proved to be the most challenging question on the paper. The question asked for benefits of
three specific economies of scale. The majority of candidates could not explain that each of the
economies lead to lower average cost. Vague comments such as costs are lower were often
present when in fact total costs are likely to be higher with the increased output and it is average or
unit costs that are lower. The question asked for benefits and therefore drawbacks were only
appropriate for the conclusion not the main body of the answer. Purchasing economy was the best
understood of the three, but answers often did not go beyond stating that raw materials would be
purchased in bulk leading to discounts. The final link to lower average or unit costs was rarely
made. Technical economy was about increased use of specialised equipment, but the link was
rarely made to increased speed of production leading to lower unit costs. Financial economy was
often just seen as easier to obtain loans at a lower interest rate, but few candidates went on to link
this to a lower cost of borrowing. This meant conclusions generally did not go beyond the lower
level mark band.
Question 2
(a) Just-in-time (JIT), as an example of lean production, was better understood than kaizen by the
majority of candidates. Many candidates gave a generic explanation. Reduced cost of storage was
the most popular explanation for JIT, but answers did not always make it clear why this was the
result. There were vague answers about reduced waste and continuous improvement for kaizen,
but answers did not specify why production was improved. Candidates that did have a clear
understanding of lean production could explain that JIT resulted in raw materials arriving just before
the production of toys which meant that warehouse space was not required for the raw materials
and hence storage costs were saved. Kaizen was explained in several ways such as consulting
employees as to how wasted movement may be saved during the production process to reduce the
time to produce toys, hence efficiency improved. A small number of weaker candidates focused on
the benefits to employees and not to TT. Occasionally there was some confusion between lean
production and flow production.
(b) The majority of candidates could answer this question, but weaker answers did not go beyond
referring to the figures being higher or lower than the previous year, therefore limiting answers to
the lower mark band. Many candidates calculated the current ratio and acid test ratio for 2022 and
gave some explanation of what the figures showed achieving the Level 2 mark band. However, one
error was to write the ratios as a monetary value and another error was to express the ratio as total
assets and liabilities rather than current assets and liabilities. Stronger candidates went on to
include a conclusion that did more than just repeat the earlier statements about the liquidity and
financial position being better or worse than the previous year. Simple copying of the figures
without any comparison between the years or comments on what the figures showed did not gain
any credit.
Question 3
(a) This question proved accessible for the majority candidates with many being able to make it clear
how the information provided in the charts might be useful to TT. The first two charts were most
likely to be answered well for recognising that chart one provided information about the potential
market in the new country while chart two indicated the ease with which TT might be able to recruit
employees for its new factory or the disposable income of potential customers and hence potential
demand. Weaker candidates confused chart three with that of competitors in the market rather than
indicating which distribution channels TT should use and chart four occasionally saw confusion
around the market share with selling shares in a business. Application was awarded for use of the
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2022
Principal Examiner Report for Teachers
information in the appendix as part of the explanation. However, some weaker candidates just
repeated what the chart showed rather than how it was useful for TT.
(b) Many candidates found this question easy to write an extensive answer to, but often it just referred
to the same response for each applicant, such as speaks 2 languages so can communicate well,
speaks 1 language so communication might be difficult. Many candidates thought more IGCSEs,
and A levels made Labiba better educated than Shahin who had a degree. Weaker responses
made statements, such as Samihah speaks 6 languages so she will be good at communication but
there was no other explanation as to how this might have affected the decision to employ her or
not. Stronger answers included explanation, such as Shahin only had experience in a different
industry which was likely to make her less successful in the new market as although she may be
familiar with the culture in that country she was not familiar with the toy industry. However, TT
could pay for her to have training to provide her with this knowledge. Application was achieved
easily by the majority of candidates by making reference to information in Appendix 3. Many
candidates did move into Level 2 by including a conclusion which had a decision that justified the
chosen applicant and reasons why the other two applicants were less suitable. Lack of analysis of
the applicants in the earlier part of the answer meant that only the strongest candidates achieved
the highest mark band for the conclusion as it built on earlier analysis of the applicants in justifying
the choice. Good answers discussed the time and money element of training due of lack of
experience, new ideas brought in by the applicants or the need to replace an internal applicant.
Question 4
(a) This question was well answered by the majority of candidates. A wide range of answers covering
both positive and negative effects were rewarded, such as providing the employees with skills,
increased productivity, fewer errors made, improved quality, increased motivation, output lost whilst
training was taking place, cost of training, employees expecting higher pay. Errors were to repeat
explanation such as leads to higher productivity as explanation for several effects or writing about
the effects of training for employees and not the business.
(b) Many candidates could list benefits and drawbacks for a country of having a business build a new
factory there. The most popular benefits were increased employment/decreased unemployment,
increased GDP/economic growth and tax revenue for the government. The most popular
drawbacks were pollution, increased competition for local businesses, depletion of natural
resources and repatriation of profits. However, only stronger candidates developed an explanation
of the benefits or drawbacks, such as increased tax revenue from income tax due to higher
employment may provide the government with funds to improve health, education and
infrastructure in the country leading to growth/development of the country. The error from a minority
of candidates was to write about the benefits and drawbacks for TT rather than the country. Better
recommendations did more than just repeating earlier points and weighed up the benefits against
the drawbacks as part of the justification for the decision made. Answers were often generic
although some candidates recognised that as unemployment was increasing (Appendix 1) it would
be a beneficial to allow the business to build a factory to provide employment.
© 2022
Grade thresholds – June 2022
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the June 2022 examination.
minimum raw mark required for grade:
maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 45 39 34 29 24 20 16 12 8
Component 12 80 45 39 34 29 24 20 16 12 8
Component 21 80 51 45 39 33 28 22 17 13 9
Component 22 80 51 45 39 33 28 22 17 13 9
The overall thresholds for the different grades were set as follows.
Maximum
Combination of
Option mark after 9 8 7 6 5 4 3 2 1
Components
weighting
X 160 11, 21 96 84 73 62 52 42 33 25 17
Y 160 12, 22 96 84 73 62 52 42 33 25 17
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email [email protected]
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2022
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study
*0645454094-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Any blank pages are indicated.
06_0986_21_2022_1.1
© UCLES 2022 [Turn over
2
MainCity Bakery (MB)
MB is a small bakery that produces bread. Yasin started the bakery 6 months ago with help from
the government. Yasin needed a business plan to support his application for government help. An
extract from the business plan Yasin produced is shown in Appendix 1. The market research was
carried out by Yasin. He asked a small sample of family and friends to fill in a questionnaire. Yasin’s
business plan also contained forecast data.
MB’s bread is freshly-made every day in the bakery, which is located at the back of MB’s small
shop. The bread is then sold the same day. Yasin has 2 employees to help him produce the bread
and 1 employee to serve customers in the shop. All employees work 5 days a week and are paid
the legal minimum wage. Yasin uses a democratic leadership style.
Yasin needs to keep costs low to be competitive. He uses packaging that cannot be recycled. Yasin
also buys the cheapest ingredients, most of which are imported. He is planning to use lean production
in the bakery but he has to decide which method to use.
MB’s main competitors advertise that they only use ingredients from local suppliers. Yasin is thinking
of changing the suppliers he uses for ingredients and packaging. He wants MB to have a good
ethical image which he could use in advertising.
Yasin plans to start making cakes. He is considering two options as outlined in Appendix 2. MB’s
fixed costs will increase as there will be additional expenses whichever option he chooses.
Appendix 1
Extract from Yasin’s business plan for MB
Section Details
Questionnaire results are as follows:
• Bread is eaten by all age groups
Market research • Of the sample asked:
• 85% want products made using ingredients from local suppliers
• 70% want to purchase cakes as well as bread from a bakery
• $10 000 to buy bakery equipment
Resources • Rent for the bakery and shop each month
• $3000 for start-up supplies and ingredients
© UCLES 2022 06_0986_21_2022_1.1
3
Appendix 2
Forecast data for MB’s cake options
Option 1 Option 2
Small cupcakes Large birthday cakes
Monthly sales of cakes 4000 100
Variable cost per cake $0.50 $10
Additional fixed cost per month $3000 $3000
Price per cake $2 per cupcake $60 per birthday cake
Gross profit margin 75% 83.33%
Sales growth Low High
Appendix 3
Packaging supplier advertisement
We only supply packaging made from sustainable sources.
This will keep your products fresh and protect the environment.
We can deliver your packaging when you need it.
© UCLES 2022 06_0986_21_2022_1.1
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 06_0986_21_2022_1.1
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2022
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*9086478757-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages.
06_0986_22_2022_1.1
© UCLES 2022 [Turn over
2
Titantic Toys (TT)
TT is a large manufacturer of toys based in country Y. It is a public limited company and has been
trading for 20 years. TT’s products are designed for children up to the age of 5.
TT has benefited from economies of scale as it has grown. The company has been able to buy
specialist new equipment for the flow production line in its factory. TT’s factory uses lean production
methods, such as Kaizen and just-in-time inventory control. All of its employees are well-motivated
and few leave each year. The company provides training for employees in all departments of the
business whenever there are any changes such as introducing new equipment or new products.
Currently, TT only sells its products in country Y but it plans to expand into country Z and become
a multinational company. TT could buy a toy manufacturer located in country Z or build its own
factory there. The government of country Z will need to give permission for TT to build a new factory.
Either option will cost $10 million. The directors are worried about liquidity as TT expands.
TT has developed a new toy for children under 5. The toy is a soft, easy to hold doll which speaks
4 different languages. The Marketing Director thinks this new toy will help TT expand into country
Z, as there are no other products like it in that country. TT is recruiting a new Marketing Manager
for country Z. Details of the shortlisted applicants are in Appendix 3.
The marketing department has already carried out research in country Z and some results are
shown in Appendix 1.
© UCLES 2022 06_0986_22_2022_1.1
3
Appendix 1
Market research results for country Z
© UCLES 2022 06_0986_22_2022_1.1 [Turn over
4
Appendix 2
Extract from TT’s statement of financial position, 2021 and 2022 (at 31 March)
2021 ($m) 2022 ($m)
Inventories 5 5
Accounts receivable (debtors) 5 8
Cash 0 2
Accounts payable (creditors) 4 5
Bank overdraft 1 0
Long-term bank loans 5 10
Total Shareholder’s equity 40 50
Current ratio 2 ?
Acid test ratio 1 ?
Appendix 3
Three applicants for Marketing Manager for country Z
Labiba Shahin Samihah
5 IGCSEs and 2 A levels
10 IGCSEs and 3 A levels 8 IGCSEs
Qualifications/Skills Degree in Business
Speaks 2 languages Speaks 6 languages
Management
10 years as the
5 years working for TT as 2 years as the Marketing
Marketing Manager of a
Experience the Assistant Marketing Manager of a small food
large toy company in
Manager in country Y company in country Z
country Y
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 06_0986_22_2022_1.1
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer and Data Response May/June 2022
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 2022 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 23 printed pages.
© UCLES 2022 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2022
PUBLISHED
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 descriptors 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.
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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).
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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.
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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0450/7115/0986 Business Studies – Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X 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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
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 Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Define ‘competitive pricing’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
When a product is priced in line or just below competitors’ prices (to try to capture
more of the market) [2]
OR
Setting a price similar to that of competitors products which are already
established in the market. [2]
OR
When the price of a good is set at the same level as other products in the market
and at a level customers expect or are willing to pay [2]
Partial definition e.g. have similar prices to other businesses [1]
OR bases their prices on the competitors pricing [1]
1(b) Define ‘marketing budget’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
A financial plan for the marketing of a product or product range (for a specified
period of time) [2]
OR
The amount of money made available by a business for its marketing activities
during a particular period of time [2]
Partial definition e.g. money to be spent on marketing [1]
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Question Answer Marks Notes
1(c) Outline two possible threats to Pamela’s business of using e-commerce. 4 To use words from the stem as
application, the reference must be
Award 1 mark for each relevant threat (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Points might include: appropriate for this question:
Increased competition [k] which makes it harder to calculate a competitive Gift shop
price [app] (celebration) Cards/toys/candy
Unfamiliarity / customers are less likely to buy from a business they don’t Entrepreneur/the owner
know [k] leading to fewer sales of toys [app] 30 years ago
No face-to-face contact which could make it difficult to establish a relationship 5 employees
[k] so difficult to gain customer loyalty [app] Customer loyalty
Website design must be clear / attractive / easy to use, or customers will not Competitive pricing
visit [k] Marketing budget
Limited/no access to the internet [k] Sales promotion
Increasing costs as a specialist may need to be employed / website design /
maintenance of sites [k] Other appropriate examples in context
May need a larger space to store products increasing costs [k] can still be credited.
Packaging/delivery of each item will increase costs per product [k]
Larger number of returns could lead to higher business costs [k] Can outline two separate costs if both
All customers can see negative reviews [k] clearly related to Pamela/business.
Other appropriate responses can also be credited.
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Question Answer Marks Notes
1(d) Explain two methods Pamela’s business can use to maintain customer 6 To use words from the stem as
loyalty. application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for identification of each relevant method (max 2). relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2). Gift shop
(celebration) Cards/toys/candy
Points might include: 5 employees
Communicate with customers e.g. newsletters, social media [k] so that they Entrepreneur
remember your business [an] when they next need candy (sweets) / toys / 30 years ago
cards [app] Competitive pricing
Offer rewards to existing customers / introduce a loyalty scheme [k] using Marketing budget
money from the marketing budget [app] so consumers have an incentive to Sales promotion
return [an]
Train staff / offer good quality service [k] from all 5 employees [app] Other appropriate examples in context
Extra services or examples such as delivery / credit facilities [k] can still be credited.
Ask for feedback / carry out market research [k] so the items you are selling
match customer needs [an]
Resolve complaints quickly [k] so that customers don’t go to other businesses
[an]
Introduce new products / high quality products [k] satisfying the customers’
needs [an]
Brand loyalty [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think being a risk-taker is a more important characteristic of a 6 This is a general question so there are
successful entrepreneur than being creative? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. For evaluation to be awarded
justification will usually follow on from
Award up to 2 marks for relevant development of points. relevant analysis of points.
Award 2 marks for a justified decision as to whether being a risk-taker is a more
important characteristic of a successful entrepreneur than being creative.
Points might include:
Risk-taker:
A successful entrepreneur must take risks otherwise there is no business [k]
Entrepreneurs take the risk of investing their own money [k] this may bring
high rewards [an] however they may fail and lose their personal possessions
[an]
Taking risks is a way to learn [k] if an idea is good or not [an]
Creative:
New ideas [k] leading to increased sales/revenue [an]
Creativity adds value [k] so higher prices can be charged [an].
Creativity alone does not guarantee success [k] if customers do not purchase
[an]
Other appropriate responses should also be credited.
Justification might include:
Entrepreneurs take the risk of investing their own money [k] this may bring high
rewards [an]. Being creative maybe a more important characteristic as making a
business different to its competitors [k] can lead to increased sales [an]. In a
competitive market creativity is especially important because it helps the business
stand out from competitors. [eval] An entrepreneur can take risks, but if customers
will not buy, they will not be successful. [eval]
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Question Answer Marks Notes
2(a) Define ‘public limited company’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Businesses owned by shareholders, but they can sell shares to the public and
their shares are tradeable on the stock exchange [2]
OR
Often a large company, owned by shareholders who have limited liability. The
company can sell its shares to the general public [2]
OR
A company that sells its shares to the general public through a stock exchange
(because the company can sell shares to anyone, it can raise massive amounts of
money) [2]
OR
A business whose shares can be freely bought and sold to the general public [2]
Partial definition e.g. a business that can sell shares [1]
2(b) Calculate the margin of safety for CTF’s children’s beds. Show your 2
working.
Correct answer: 4000 [2]
Correct method but incorrect answer e.g. Current outputbreak-even output [1]
OR 18 000 – 14 000 [1] = 4000 [1]
If correct answer given with no working shown, award 2 marks.
Award only 1 mark if 4000 is written as part of the answer but is not given as the
final answer.
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Question Answer Marks Notes
2(c) Outline two ways an increase in inflation might affect CTF. 4 To use words from the stem as
application, the reference must be
Award 1 mark for each relevant way (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Points might include: appropriate for this question:
Employees might ask for pay rise [k] reducing its margin of safety [app] Public limited company (PLC)
Increase in raw material costs[k] for manufacturing (beds) [app] (children’s) Beds
Prices may have to increase [k] Factory/manufacturer
Fewer sales / customers cannot afford to buy [k] the beds [app] Margin of safety / 4000
Batch production
Other appropriate responses should also be credited. Environmental pressures
14 000 (break-even output)
18 000 (current output)
25 000 (capacity)
Other appropriate examples in context
can still be credited.
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Question Answer Marks Notes
2(d) Explain two possible advantages to CTF of using batch production. 6 To use words from the stem as
application, the reference must be
Award 1 mark for identification of each relevant advantage (max 2). appropriate (i.e., make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Award 1 mark for each relevant explanation (max 2) appropriate for this question:
Public limited company (PLC)
Points might include: (children’s) Beds
Flexible [k] easy to change the type of beds [app] to adapt to customer Factory/manufacturer
demands [an] Margin of safety / 4000
Economies of scale / materials can be bought in bulk [k] which can help Environmental pressures
reduce average costs [an] improving the margin of safety [app] 14 000 (break-even output)
Production may not be affected to any great extent if machinery breaks down 18 000 (current output)
[k] so some output made [an] so help reach its break-even output of 14 000 25 000 (capacity)
[app]
Variety of products [k] which could lead to increased sales [an] Other appropriate examples in context
Variety of tasks can motivate workers [k] leading to less absenteeism / lower can still be credited.
labour turnover [an] at the factory [app]
Spread risk (as can make more than one type of product) [k] Advantages should focus on
advantages to the business not
Other appropriate responses should also be credited. employees. Answers such as variety of
work on own are too vague [tv].
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Question Answer Marks Notes
2(e) Do you think manufacturing businesses should always respond to 6 This is a general question so there are
environmental pressures? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. For evaluation to be awarded
justification will usually follow on from
Award up to 2 marks for relevant development of points. relevant analysis of points.
Award 2 marks for a justified decision as to whether manufacturing businesses
should always respond to environmental pressures.
Points might include:
Reduces the risk of a customer boycott [k]
Enhance brand image / reputation [k] leading to more potential customers /
revenue [an]
Help recruit / retain employees [k]
Help attract investors [k] so raise more capital [an]
Reduces risk of legal action/fines [k] avoiding bad publicity[an]
May need to buy new equipment [k] which increases costs [an] leading to
higher prices [an]
Reduce productivity [k] which could lower profit margin [an]
May need to find new suppliers of raw materials [k] leading to higher unit
costs [an]
Other appropriate responses should also be credited.
Justification might include:
Yes, although this could mean the business has to find new suppliers of raw
materials [k] increasing unit costs [an]. However, responding to environmental
pressures can improve the reputation of the business [k] leading to an increase in
revenue [an]. The additional revenue gained could offset the costs of responding
to environmental pressures. So, if they can find the resources they need at a
competitive price, they should. [eval] [eval]
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Question Answer Marks Notes
3(a) Define ‘shareholders’ equity’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
(Total sum of) money invested into the business by the owners of the
company [2]
OR
Share capital plus reserves [2]
OR
Total assets minus total liabilities [2]
Partial definition e.g. money raised from selling shares [1]
3(b) Identify two financial statements a public limited company is legally 2 Only award the first two responses
required to publish each year. given.
Award 1 mark for each financial statement. Do not award cash-flow forecast.
Two from:
Income statement (Profit and loss)
Statement of financial position (Balance sheet)
Cash-flow statement/statement of cash flows
Statement of changes in equity
3(c) State whether each of the following are classified as a current asset or a 4
current liability.
Award 1 mark for each correct answer.
Overdraftcurrent liability
Trade receivablescurrent asset
Trade payablescurrent liability
Cash in bankcurrent asset
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Question Answer Marks Notes
3(d) Explain one way each of the following stakeholder groups might use VCG’s 6 To use words from the stem as
accounts: application, the reference must be
appropriate (i.e., make sense) in
Award 1 mark for identification of each relevant way (max 2). relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2). Bags or examples such as
briefcase / travel bag
Points might include: (second) Factory
Shareholders: $2m (revenue)
Help assess business performance / profits [k] to see whether they will $800 000 (equity)
receive a dividend / return on their investment [an] from this bag manufacturer $300 000 (current assets)
[app] $250 000 (current liabilities)
Help decide whether to continue to invest [k] as the business is looking to 1.2 (current ratio)
open a second factory [app] which could mean less dividends paid [an] Highquality
Assess the liquidity [k] they do not want to invest in a business with serious 50 / Skilled workers
cash or liquidity problems [an]
To compare performance over time [k] and how much the $800 000 in equity Other appropriate examples in context
increases [app] to decide whether they should take their money and invest can still be credited.
elsewhere [an]
Compare performance between different businesses [k] to decide whether it Candidates must quote the numbers to
is a good investment [an] be awarded application for use of
Table 3.1 information.
Suppliers:
Can see the total value / level of debt [k] current liabilities $250 000 [app] to Calculation of current ratio is not [an]
help decide whether they should offer (more) credit [an] as it does not answer the question.
Assess whether the business has sufficient cash [k] within current assets of
$300 000 [app] for the business to be able to repay them when debts become
due [an]
Assess profitability / level of sales [k] successful business may need more
materials so maintains or increase revenue for the supplier [an] especially as
make high-quality products [app]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think access to labour is the most important factor for a 6 This is a general question so there are
manufacturing business to consider when deciding where to locate a new no marks for application.
factory? Justify your answer.
For evaluation to be awarded
Award up to 2 marks for identification of relevant points. justification will usually follow on from
relevant analysis of points.
Award up to 2 marks for relevant development of points.
Award 2 marks for a justified decision as to whether access to labour is the most
important factor for a manufacturing business to consider when deciding where to
locate a new factory.
Points might include:
Access to labour:
Skilled labour may be difficult to find/recruit [k] which could increase
recruitment/labour costs [an] but can use machinery to reduce the need for
labour [an]
Labour intensive production requires access to labour [k] without labour they
cannot operate[an]
Can depend on type of workers required (k) unskilled workers may be easy to
find [an]
Other factors might include:
Good transport links [k] to ensure products arrive / sent when needed [an]
Proximity to market [k] to ensure sales / revenue can be made [an]
Type of product [k] a fragile / heavy product may need to be closer to
customers to reduce risk of damage / cost [an]
Access to raw materials / components [k] so production is not delayed[an]
Availability/cost of suitable land [k] which could restrict size of factory / limit
output / increases fixed costs [an]
Government influence or examples e.g. government grants [k] can help
reduce costs [an] whereas legal controls could prevent the business from
locating in certain areas [an]
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Question Answer Marks Notes
3(e) Other appropriate responses should also be credited.
Justification might include:
Skilled labour may be difficult to find [k] which could increase recruitment costs
[an] Factory machinery can replace some labour [k] reducing the importance of
labour in the location decision [an]. Labour is the most important factor if the
business is labour intensive because without labour the new factory cannot
produce output [eval] however, other factors would be of greater importance in a
new capital-intensive factory. [eval]
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Question Answer Marks Notes
4(a) Identify two objectives for a business organisation in the public sector. 2 Only award the first two responses
given.
Award 1 mark per objective.
Points might include:
Financial or examples e.g. meet targets set by government, improve
efficiency/reduce costs
Make product/service affordable to all
Provide a service to everyone
Protect or create jobs in certain areas (social objectives)
Other appropriate responses should also be credited.
4(b) Define ‘chain of command’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
The structure in an organisation which allows instructions to be passed down
from senior management to lower levels of management [2]
OR
The route through which authority is passed down through an organisation [2]
OR
Shows how communication and tasks are passed down the business from the top
to the bottom [2]
Partial definition e.g. shows who gives orders [1]
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Question Answer Marks Notes
4(c) Outline two ways MBH can use ideas from Herzberg’s theory to motivate its 4 To use words from the stem as
employees. application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for each relevant point. relation to the point being made.
Award 1 mark for each relevant reference to this business. The following words are likely to be
appropriate for this question:
Points might include: 440 / doctors
Could give employees more responsibility [k] in the hospital [app] (5) Hospitals / or related words
Offer more interesting work [k] as many are skilled employees [app] 5600 employees
Offer more praise for good work [k] Public sector
Give chances for promotion [k] as there is a tall organisational structure [app] Communication barriers
Phone/email
Other appropriate responses should also be credited. Long chain of command
Tall organisational structure
Skilled employees
Other appropriate examples in context
can still be credited.
Do not award examples of hygiene
factors on their own e.g., Pay, improve
working conditions as these are not
motivators
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Question Answer Marks Notes
4(d) Explain how MBH might reduce or remove each of the following 6 To use words from the stem as
communication barriers: application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for identification of each relevant way (max 2). relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2). 440 / doctors
(5) Hospitals / or related words
Points might include: 5600 employees
Messages lost: Public sector
Ask for feedback [k] to ensure that the message is received [an] by all 5 Phone/email
hospitals [app] Long chain of command
Make sure the medium of communication is suitable/works [k] Tall organisational structure
Delayering/ flattening the structure [k] because it is a long chain of command Externally recruited
[app]
Other appropriate examples in context
Use of jargon: can still be credited.
Use simple language [k] on the phone/email [app] so easy for everyone /
receiver to understand [an]
Make sure language is appropriate to the receiver [k] to make sure there is no
misunderstanding [an]
Providing opportunities for the receiver to ask questions [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Do you think an organisation should always use external recruitment when 6 This is a general question so there are
recruiting skilled employees? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points For evaluation to be awarded
justification will usually follow on from
Award up to 2 marks for relevant development of points. relevant analysis of points.
Award 2 marks for a justified decision as to whether an organisation should Advantages of external recruitment
always use external recruitment when recruiting skilled employees. can be disadvantages of internal but
do not award the same point twice as
Points might include: mirror answers are not accepted.
External recruitment:
Bring in new skills / ideas [k] which could help improve productivity /
effectiveness / efficiency of business [an]
Can bring in valuable knowledge and experience of competition [k] gaining a
competitive edge [an]
Wider choice of applicants [k] increases possibility of finding best person for
job [an]
No knowledge of how business works / current operations [k] so might need
induction training [an]
Avoids risk of upsetting employees when someone internal is promoted [k]
Higher recruitment costs [k]
More time spent / takes longer to fill vacancy [k]
Required if no suitable candidates in the business [k]
Internal recruitment :
Can help motivate other employees [k] which could lead to fewer people
leaving / reduce absenteeism [an]
Internal promotion can create another vacancy that then needs to be filled [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Justification might include:
External recruitment can bring in new skills and ideas [k] helping improve
productivity [an]. Whereas using internal recruitment can help motivate other
employees [k] which could lead to fewer people leaving [an]. Overall, it depends
on the skills within the business because if there are no suitable workers external
recruitment would be the only choice. [eval] [eval]
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Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/12
Paper 1 Short Answer/Data Response May/June 2022
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 2022 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 25 printed pages.
© UCLES 2022 [Turn over
0986/12 Cambridge IGCSE (9–1) – Mark Scheme May/June 2022
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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 descriptors 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.
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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).
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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.
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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0450/7115/0986 Business Studies – Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X 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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
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 Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Define ‘current liabilities’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
(Short-term) debts owed by a business, to be repaid in less than one year [2]
OR
Debts of a business which it expects to pay before the date of the (next) statement
of financial position [2]
Partial definition e.g. money owed by a business [1]
1(b) Identify two examples of non-current assets. 2 Only award the first two responses
given.
Award 1 mark per example (max 2).
Points might include:
• Land/buildings/factory/property/warehouse
• Machinery/technology/equipment
• Fixtures/fittings
• Vehicles or examples such as cars/trucks
• Investments/shares in another business
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(c) Outline two possible reasons why liquidity is important to AHG. 4 To use words from the stem as
application, the reference must be
Award 1 mark for each relevant reason (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Points might include: appropriate for this question:
• To make sure the business has access to enough cash/money to pay day-to- • Plants / flowers / gardening
day expenses / (short term) liabilities / avoid interest charges / keep its products or other examples such
suppliers [k] as shown by the current ratio of 1.1 [app] as seeds
• To help arrange/apply for finance [k] for this established business [app] • 660 000 to 600 000
• Ensure business survival / allow it to continue trading [k] to sell flowers [app] • Established (business) / operating
• To provide for (unforeseen) emergencies [k] for a long time
• 4 managers
Other appropriate responses should also be credited. • 30 or 34 employees
• Competitive pricing
Other appropriate examples in context
can still be credited.
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Question Answer Marks Notes
1(d) Explain two advantages to AHG of its managers using delegation. 6 To use words from the stem as
application, the reference must be
Award 1 mark for identification of each relevant advantage (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Award 1 mark for each relevant explanation (max 2). appropriate for this question:
• Plants/flowers/garden products or
Points might include: other relevant examples such as
• Managers cannot do all tasks on own / reduce managers’ workload / seeds
managers have time to focus on (important/complex) tasks [k] such as • 4 (managers)
improving liquidity [app] so better/quicker decision making [an] • 30 employees
• Can motivate employees [k] as there is less control from its 4 managers [app] • Established business / operating
increasing productivity [an] for a long time
• Quality of managers’ work is often improved / managers are less likely to • Liquidity / current ratio of 1.1
make mistakes [k] leading to a better business reputation [an] of its garden • Statement of financial position
products [app]
• Builds trust between managers and employee / better working relations [k] Other appropriate examples in context
improving loyalty [an] of its 30 employees [app] can still be credited.
• Way to develop skills of employees / increase flexibility of workforce [k]
leading to new ideas [an] Analysis must refer to impact on
business and not employees.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think competitive pricing is the best method for an established 6 This is a general question so there are
business to use? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. Candidates can discuss other
methods of pricing, but evaluation
Award up to 2 marks for relevant development of points. must focus on whether competitive
pricing is the best method to use.
Award up to 2 marks for a justified decision as to whether competitive pricing is the
best method for an established business to use. Some points could be awarded as [k]
or [an] but do not award the same
Points might include: point twice.
• Price will not discourage customers from buying [k] so maintain customer
loyalty [an] Do not award price skimming or
• Prevents business losing market share [k] which could result in less revenue penetration pricing on own unless
[an] explained.
• Customer may be prepared to pay more (if it is a popular brand) [k]
• Need another way to attract customers [k] which could increase costs [an]
• May not cover the costs [k] so may find it difficult to break even [an]
• Takes time/money to find out competitor’s prices [k]
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Question Answer Marks Notes
1(e) Other methods can be discussed such as:
Cost-plus pricing [k]
• Know that the costs will be covered [an]
• Know their profit margin / can make a profit per item [an]
• Easy to calculate/apply [an]
• Does not consider what competitors do / prices may be higher than competitors
[an]
• Does not take account of changes in demand/spending patterns [an] so could
lead to fewer sales being made [an]
• Little incentive to control costs [an]
Promotional pricing [k]
• Help attract sales [an]
• Helps to renew interest in a product if sales are falling [an]
Other appropriate responses should also be credited.
Justification might include:
Competitive pricing will not discourage customers from buying [k] so will buy again
[an]. However, if you base your prices solely on competitors, you might not be able
to cover costs [k] which makes it difficult for a business to break-even [an]. No, as it
depends on what they sell – while cannot ignore what other businesses charge –
especially if it’s a competitive market – but if the business has a good reputation
which an established business might have [eval] it may be able to use other pricing
methods that allow it to charge more [eval].
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Question Answer Marks Notes
2(a) Define ‘off-the-job training’. 2 Do not award examples on own as
this does not define the term.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
First mark is for understanding it is
Training that takes place away from the workplace usually by a specialist away from workplace.
trainer(s) [2]
OR 2nd mark is [+1] for stating by whom
Training that takes place away from the workplace, for example at college, or providing example of where e.g. in
university or a specialist training providers premises [2] a training centre.
OR
Training that takes place away from the place of work using methods such as
courses/conferences/online learning [2]
Partial definition e.g. training away from the workplace [1]
2(b) Identify two reasons (other than financial) why people work. 2 Only award the first two responses
given.
Award 1 mark per reason (max 2).
Points might include:
• Job satisfaction / feeling you have done a good job / enjoyment
• Social or examples such as feel part of a group / meeting people / making
friends at work
• Esteem / recognition / status / feel important
• Opportunity to reach your potential / challenge yourself to do new things /
improve use skills / gain experience
• Help others
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(c) Outline two methods of financial rewards RWB might use to motivate its 4 To use words from the stem as
employees. application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for each relevant method (max 2). relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Points might include: • Buses
• High(er) wages / wage rates / time-based rates [k] for workers in the factory • 1200 (employees)
[app] • Factory
• Piece rate [k] paid to its 1200 employees [app] • ($1.7 million) loss
• High(er) salary [k] for making buses [app]
• Bonuses [k] but this may be difficult as business has made a loss [app] Other appropriate examples in context
• Profit sharing/share ownership schemes [k] can still be credited.
• Performance related pay [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(d) Explain two ways RWB might be affected by new legal controls over business 6 To use words from the stem as
activities which affect the environment. application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for identification of each relevant way (max 2). relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2) • Buses
• 1200 (employees)
Points might include: • Factory
• Change its production methods/equipment e.g. need to buy new machines • ($1.7 million) loss
[k] leading to higher interest/finance costs [an] which may increase its loss • Off-the-job training
[app]
• May need to redesign products [k] so may be able to charge a higher Other appropriate examples in context
price/allow the business to reduce variable costs [an] can still be credited.
• Require more training / retraining [k] for its 1200 employees [app] which could
delay production [an]
• May have to buy (pollution) permits / pay fines/higher taxes / may need to
recycle/change how it disposes of the waste [k] increasing cash outflows [an]
• May have to change materials/components used/switch suppliers / reduced
range/access to materials [k] increase variable costs [an]
• Stop/limit/slow production [k] of its buses [app]
• Lower emissions / use renewable energy [k] in the factory [app] helping to
lower energy costs (in the long run) [an]
• May need to change location [k] increase cost of rent [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Do you think a reduction in the level of unemployment always benefits 6 This is a general question so there are
businesses? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to whether a reduction in the level of
unemployment always benefits businesses.
• Increase in sales [k] could lead to higher revenue [an]
• Difficult to recruit workers [k] which may lead to an increase in recruitment
costs / difficult to increase output / meet orders [an]
• Higher wages may need to be paid [k] increasing labour costs [an]
• Available workers may lack necessary skills [k] leading to lower productivity /
higher training costs / lower quality [an]
Other appropriate responses should also be credited.
Justification might include:
A reduction in unemployment may mean more sales [k] leading to higher potential
revenue [an]. However, because there are fewer people looking for work it may be
difficult to recruit workers [k] which could make it difficult to increase output [an].
Overall, it may depend on whether the business needs employees or not, as
without sufficient workers they may not be able to produce enough to benefit from
higher potential sales [eval] [eval].
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Question Answer Marks Notes
3(a) Identify one benefit and one cost to a business of developing new products. 2 Only award the first response given
for each benefit/cost.
Award 1 mark per benefit/cost (max 1 for each).
Do not award answers such as cost
Benefits might include: on its own.
• Provides diversification / spreads risk
• Increase revenue/sales
• Enter new markets / attracts new customers
• Allow the business to expand into existing markets / increase market share /
improved competitive advantage
• Maintain customer loyalty
Costs might include:
• Costs of carrying out (market) research
• Producing trial products
• (Cost of) raw materials/labour/equipment
• Marketing/advertising costs
Other appropriate responses should also be credited.
3(b) Calculate the break-even level of output for 2021. Show your working. 2 Max 1 where include $ sign as it is not
a financial value.
Correct answer: 2500 [2]
Correct method but incorrect answer e.g. 200 000 / 80 [1]
OR 200 000 / (120-40) [1]
OR Total fixed costs / selling price (per unit) – variable cost (per unit) [1]
OR Fixed costs / contribution (per unit) [1]
If correct answer given with no working shown, award 2 marks.
Award only 1 mark if 2500 is written as part of the answer but is not given as the
final answer.
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Question Answer Marks Notes
3(c) Outline two ways CHW could increase its margin of safety. 2 To use words from the stem as
application, the reference must be
Award 1 mark per way (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Points might include: appropriate for this question:
• Lower fixed costs [k] from $200 000 for the year [app] Factory
• Lower variable costs / variable cost per unit [k] from $40 [app] Cameras/electrical products
• Increase price [k] of cameras [app] 500 (margin of safety)
2500 (break even output)
Other appropriate responses should also be credited. Flow production
200 000 (fixed costs)
$120 (selling price)
$40 (variable cost per unit)
Other appropriate examples in context
can still be credited.
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Question Answer Marks Notes
3(d) Explain two ways in which the stage of the product life cycle might affect 6 To use words from the stem as
CHW’s marketing decisions about promotion. application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for identification of each relevant stage and way (max 2). relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2). • Cameras/electrical products
• 500 / margin of safety
Points might include: • Develop new products
• 2500 (break-even output)
Must name the stage and why or how much promotion to access the • $120 (selling price)
knowledge marks. • $200 000 (fixed costs)
• $40 (variable cost per unit)
Introduction: • Factory
High level/amount of promotional activity [k] to help raise awareness/inform/
attract/persuade new customers [an] about its cameras [app] Other appropriate examples in context
Attract/inform/persuade customers [k] to increase sales/revenue [an] can still be credited.
Establish brand image [k] to make business competitive [an]
Do not award answers which identify
Growth: methods of promotion as this does not
High level/amount of promotion/promotional spending [k] to try to encourage answer the question.
brand loyalty [an] so it can sell 2500 to break even [app]
Attract/inform/persuade customers [k] to increase revenue [an]
Maturity:
Likely to be less promotion [k] as product is well known / business wants to use
its funds for other purposes [an] such as developing new products [app]
To remind customers about its products [k] so maintain sales/market share
[an]
Spending might increase if use an extension strategy [k] to inform people that
the product is worth buying again [an]
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Question Answer Marks Notes
3(d) Decline:
Limited promotion/spending [k] to reduce marketing costs [an]
May only use to inform customers of price reductions [k] so no longer selling at
$120 [app] to encourage some sales [an]
May decide to stop promotion during this stage [k]
To clear out inventory [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think flow production is the best method of production for a 6 This is a general question so there are
manufacturing business to use? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. Can accept discussion of other
methods such as batch production or
Award up to 2 marks for relevant development of points. job production but evaluation must
focus on flow production.
Award up to 2 marks for a justified decision as to whether flow production is the
best method of production for a manufacturing business to use. Advantages of one method could be
presented as disadvantages of
Points might include: another method, but do not award the
• High output [k] so able to meet demand (on time) [an] same point twice.
• Benefit from economies of scale [k] leading to lower unit costs [an]
• More capital intensive [k] leading to lower labour costs [an]
• Lower (employee) motivation [k] leading to lower productivity [an]
• Can produce 24 hours a day [k]
• If one machine breaks down whole production line stops [k] lose output/fewer
sales [an]
• Requires a large capital investment [k]
Batch production [k]
• More flexible / produce a variety of products [an]
Job production [k]
• Unique products so able to charge a higher price [an]
Other appropriate responses should also be credited.
Justification might include:
Materials can be purchased in large amounts / benefit from economies of scale [k]
leading to lower unit costs [an]. However, it requires a large capital investment [k]
which the business might not be able to afford. [an] It might only be worthwhile if
there is a large market for a standardised product [eval] which can cover the high
initial costs [eval].
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Question Answer Marks Notes
4(a) Define ‘entrepreneur’. 2 For both marks must have idea of a
person starting a new business, and
Award 2 marks for a full definition. Award 1 mark for a partial definition. that they take a risk to do this [+1].
A person who takes the risk for a new business venture [2]
OR
An individual who takes the financial risk of starting and managing a new business
[2]
Partial definition e.g. person who starts up a business [1]
4(b) Define ‘opportunity cost’. 2 Do not award examples as this does
not define the term.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
The next best alternative given up by choosing another item [2]
OR
The benefit that could have been gained from an alternative use of the same
resource [2]
OR
A benefit, profit or value that a firm has to give up in order to achieve something
else [2]
Partial definition e.g. what you have to give up / forgo [1]
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Question Answer Marks Notes
4(c) Identify four reasons why a new business might be at greater risk of failure 4 Only award the first four points given.
than an established business.
Award 1 mark for each relevant reason (max 4).
Points might include:
• Lack of / cannot get finance / cash flow problems / lack of liquidity
• Level of competition / lack customer loyalty / lack of customers / demand /
sales
• Poor planning / no business plan / lack of objectives
• Lack of (managerial/business) experience/skills/knowledge
• Inadequate/no market research
• No reputation / low brand awareness / no brand image
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(d) Explain two suitable sources of start-up capital Tom’s business might use. 6 To use words from the stem as
application, the reference must be
Award 1 mark for identification of each relevant source of start-up capital (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference made to this business (max 2).
The following words are likely to be
Award 1 mark for each relevant explanation (max 2). appropriate for this question:
• Window cleaning
Points might include: • $700
• Own savings [k] from his time working in his other job [app] as no need to • Wants to leave his job/other job
repay/no interest to pay [an] • Sister
• Borrow from friends/family [k] such as his sister [app] as may give long time to • Partnership
repay [an] • Opportunity cost
• (Bank) loan [k] for this window cleaning business [app] as could provide all the • Entrepreneur
money at once [an]
• Overdraft [k] can arrange quickly/only pay interest when used [an] Other appropriate examples in context
• Government grant [k] as may be willing to support entrepreneurs [app] as no can still be credited.
interest/no need to repay [an]
• Crowdfunding [k] to raise the $700 [app] so no interest to repay [an] Do not award answers such as
• Micro-finance [k] as does not need security to obtain [an] retained profit/profit or sell shares as
these are not appropriate/available to
Other appropriate responses should also be credited. a start-up.
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Question Answer Marks Notes
4(e) Do you think a partnership is the best form of business organisation for a 6 This is a general question so there are
new business? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. Candidates can discuss other forms of
business organisation, but evaluation
Award up to 2 marks for relevant development of points. must focus on whether a partnership
is the best form.
Award up to 2 marks for justified decision as to whether a partnership is the best
form of business organisation for a new business.
Points might include:
Partnership:
• Share workload/responsibility [k] which could allow time for each partner to
focus on different business activities [an]
• More ideas/skills [k] which could help make the business more competitive [an]
• Can share any potential loss/risks [k]
• Unlimited liability [k] personal possessions at risk if unable to pay business
debts [an]
• Risk of disagreements / slow decision making [k] so less responsive to
changes in customer demand [an]
• Must share any profits made [k]
Other options might include:
Sole traders [k]
• It’s simple/very little paperwork required to set up [an]
• Require limited start-up capital [an]
• Make all the decisions / has total control of business [an]
• Keep all the profit [an]
• Limited access to finance [an]
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Question Answer Marks Notes
4(e) Private limited company [k]
• Benefit from limited liability
• More paperwork/legal requirement to set up/operate [an]
Other appropriate responses should also be credited.
Justification might include:
A partnership allows owners to share workload [k] which could allow time for each
partner to specialise on certain activities to improve the business [an]. The main
problem is unlimited liability [k] which means they could lose personal possessions
if unable to pay business debts [an]. However, partnership is a better choice than
starting up as a sole trader. While there is still unlimited liability, it is possible to
share some of the risk with others if you can work together, then extra skills can
help reduce potential problems [eval] which could increase the chances of success
[eval].
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Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2022
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 2022 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.
© UCLES 2022 [Turn over
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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 descriptors
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.
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 four reasons why governments might support business start- 8
ups.
Award 1 mark for each relevant reason (maximum of four).
Award a maximum of 1 additional mark for each explanation of the reason.
There are no application marks available for this question.
Relevant reasons might include:
To reduce unemployment – new businesses create jobs and therefore
help to reduce unemployment in the country / fewer welfare benefits to
pay
To increase competition – new businesses will provide more choice for
consumers and therefore will provide more competition for existing
businesses / may keep prices lower and quality higher
To provide/have a wider variety of goods and services available – so
there will be a wider choice for consumers
To increase output / improve standard of living – new businesses will
produce more goods and services in the economy/increase in GDP
To benefit society – new start-ups may support social enterprises and
therefore provide benefits other than just creating jobs
They may grow into larger businesses in the future – successful larger
businesses started small, so it is worth supporting businesses to get
started
Earns taxation – the business will pay tax if profitable and this will be a
source of revenue for the government which they can then use for
providing public services.
To motivate/encourage entrepreneurs – government support may reduce
the risk of failure
For example: To reduce unemployment (1) – as new start-up businesses
often need to hire employees and these people may have been unemployed
(1).
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Question Answer Marks
1(b) Consider the benefits to Yasin of the two sections of his business plan 12
shown in Appendix 1. Which section do you think helped him most
when starting up his business? 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 both sections.
Well-justified conclusion.
Candidates discussing both sections in detail, in context
and with a well-justified conclusion including why the
alternative section 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 section.
Judgement with some justification / some evaluation of
choice made.
Candidates discussing at least one section 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 sections with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining both sections 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:
Market Able to identify the market for eating bread as being
research targeted at all age groups
Market research shows that starting to produce cakes is
likely to be successful as 70% of respondents want to
buy cakes
Use of local ingredients could be emphasised in
advertising if MB changes production techniques and
suppliers
Resources To be able to calculate how much start-up capital is
needed by Yasin to buy the bakery equipment
It is a starting point for Yasin to make the necessary
purchases to get the bakery started
helps him to more effectively plan for the opening of the
bakery
Helpful to identify the costs for Yasin to set up the
bakery – to see if he needs a bank loan
Conclusion Justification might include:
Market research is the most important as this shows that
the bakery has the demand for it to be successful.
Without a demand for bread the business will fail.
However, a lack of experience may mean the list is not
accurate or complete and Yasin may need a lot more
capital than he thinks.
Resources is the most important as this helped Yasin to
plan what items of equipment are required for the
bakery and how much all these items will cost. This is
important for Yasin to work out how much start-up
capital is required and make sure he has sufficient
finance to get started successfully or arrange to raise
additional finance if necessary. However, the sample
was small and therefore the results may not be
accurate so Yasin may make bad decisions when
starting the bakery.
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Question Answer Marks
2(a) Explain one benefit and one limitation to Yasin of using a break-even 8
chart.
Award 1 mark for each benefit/limitation (maximum of two marks).
Award a maximum of 3 additional marks for each explanation of the
benefit/limitation of using the break-even chart– one of which must be
applied to this context.
Relevant benefits might include:
Shows break-even output – so Yasin knows how much bread he needs to
sell to break even – this will allow him to plan the bakery and equipment
required – to ensure at least the minimum quantity of bread is produced
and sold
Shows the margin of safety – this is the amount of bread Yasin predicts
will be sold above the break-even output – it provides a target for sales of
bread – so that MB makes a profit
Helps in decision making – so that Yasin knows the minimum target
amount of bread to produce – he can see if he needs to increase the
price to break-even more quickly – or if lower ingredient costs is required
by MB to make a profit
Shows the area of profit or loss – and therefore what the output needs to
be to cover all costs – if the market research shown in the business plan
does not indicate that sufficient sales will be made to make a profit – then
Yasin may need to think again about his plans for the bakery.
Relevant limitations might include:
A break-even chart assumes all the output will be sold/provides an
estimate of sales – but MB may not sell all the bread in the day – some
may be wasted and the costs of producing these will not be taken into
account – so at a specific output the business may not make a profit but
may make a loss
The break-even chart is drawn on the assumption of straight lines – but
when the output is higher Yasin may be able to bulk buy ingredients – this
may mean he can receive discounts so the variable cost per unit may not
be constant
Fixed costs/variable costs may change – if the scale of production
changes as the bakery expands – the rent or depreciation of equipment
will change/ingredient costs may change
Need a separate break-even chart for each product/need a new chart if
prices are changed – relevant if going to make cakes
For example: The chart shows the break-even output for MB (1) so Yasin will
know how many units of bread he will need to sell each month to break even
(app). This will allow him to plan for the equipment required (1) so he can
ensure the bakery sells the minimum amount of bread to cover all the costs
and not make a loss (1).
Application could include: bread; bakery; cakes; data presented in
Appendix 2; fixed costs will change if either of the options in Appendix 2 go
ahead.
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Question Answer Marks
2(b) Consider the following two ways MB could achieve lean production. 12
Which is the best way for Yasin to choose? Justify your answer.
Kaizen.
Just-in-time inventory control.
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of both ways.
Well-justified recommendation.
Candidates discussing both ways in detail, in context and
with a well-justified recommendation including why the
alternative way 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 way.
Judgement with some justification / some evaluation of
choice made.
Candidates discussing at least one way 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 ways with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining both 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
Kaizen Employees might be The 2 employees
able to offer may not be
suggestions about willing/able to make
how small continuous suggestions for
changes may improve improvements
the efficiency of the The employees may
bakery have reduced hours if
Helps eliminate waste efficiency is improved
– time is not wasted which may make
between tasks / them reluctant to help
eliminating waste of It will take time and/or
space / eliminating money to reorganise
wasted resources the bakery to improve
As there is less time the flow of products
between the different through the different
processes of baking processes
bread – it can lead to Yasin may not have
increases in the skills and
productivity/efficiency knowledge to do this
There should be less effectively – may
work-in-progress – as have to pay someone
the flow through and else to plan the
layout of the bakery is bakery layout –
more efficient, and increased costs for a
the amount of part- small business in the
finished bakery short-term
products should be There may be a limit
reduced to the improvements
MB can make using
Kaizen
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Question Answer Marks
2(b)
Advantages Disadvantages
Just-in-time Reduces the costs of If there is an increase
inventory control holding inventory of in demand for certain
ingredients such as types of bread, then
flour there may not be
Less working capital sufficient ingredients
required to pay for to meet the increased
inventory demand
Less storage space Any delays in orders
required – reduces being delivered may
costs or makes more disrupt production
effective use of the and may stop the
bakery production production of some
area items
Bread and cakes will It relies on a good
be fresh due to fresh relationship between
ingredients – helps Yasin and his
ensure customer suppliers
satisfaction Relies on Yasin
No excess ingredients making the orders
purchased – so does quickly when needed
not go out-of-
date/does not go stale
Recommendation Justification might include:
Kaizen is the most effective because it could save
time between the different tasks performed in the
bakery. This may speed up baking and allow more
output to be produced in a shorter time period
therefore increasing the output of bread and
possibly increasing revenue or reducing costs as
more efficient. JIT is less important as the bread is
baked each day and ingredients will need to be
purchased regularly anyway.
Less working capital is required for JIT, so this is
the best option for a small bakery as Yasin is likely
to have limited funds to run the new business. The
bread is made each day so fresh ingredients are
required, and this makes JIT the most suitable
because a small bakery may have limited
opportunities to implement Kaizen ideas.
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Question Answer Marks
3(a) Explain four ways Yasin can advertise MB’s products. 8
Award 1 mark for each appropriate way (maximum of four).
Award a maximum of 1 additional mark for each explanation in context.
Relevant ways might include:
Local radio – as the bakery attracts only local people so many potential
customers may hear the advert
Local newspaper/magazine – as a voucher could be included for money
off bread
Posters – in the window of the bakery shop to attract customers passing
by
Leaflets/fliers – can be handed out in the local town centre so that
potential customers will know the location of the shop as it is new
Social media – emphasise that he uses imported ingredients
Packaging/carrier bags – emphasise the ethical image of the business
Website/online/internet – so if consumers are searching for local shops
that sell bread so it can give information of the products and location of
the shop
Billboards – can be placed in busy areas of the local town directing them
to the bakery location
Sponsorship – local sports team may have shirts with the MB name to
raise awareness of the bakery
Word-of-mouth – existing customers recommend good bread/tasty bread
to their friends and family
For example: Leaflets (1) can be handed out in the local town centre and to
raise awareness of where the bakery shop is located (app).
Application could include: bread; bakery; cakes; bakery shop; uses imported
ingredients; ethical image; ingredients; fresh products; sustainable packaging;
consumed by all age groups.
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Question Answer Marks
3(b) Consider the two options outlined in Appendix 2. Which option should 12
Yasin choose? Justify your answer using appropriate calculations.
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of both options.
Well-justified recommendation.
Candidates discussing both options in detail, in context
and with a well-justified recommendation including why
the alternative option 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 option.
Judgement with some justification / some evaluation of
choice made.
Candidates discussing at least one option 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 options with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining both options 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:
Option 1 – small Sales are higher by 3900 per month (L1)
cupcakes Total cost is $5000 per month (L1)
Total revenue $8000 per month (L1)
Profit per month is $ 3000, $1000 more than
Option 2 (L2)
Break-even output 2000 cupcakes a month (L2)
Forecast margin of safety is 2000 per month (L2)
Option 2 – large Total revenue $6000 (L1)
birthday cakes Total cost is $4000 per month (L1)
Profit per month is $2000 (L2)
Break-even output 60 large birthday cakes a
month (L2)
Forecast margin of safety is 40 per month (L2)
Recommendation Justification might include:
Option 1 is the better one to choose as it has the
higher profit by $1000 than Option 2 and a higher
margin of safety (as a proportion of sales). Option
2 may have a higher predicted growth of sales, but
this is only a forecast and may not happen. It is
better to choose the more certain higher profit now
than the possibility of higher sales later.
Option 2 is better than Option 1 as the gross profit
margin is 8.33% higher. However, the future
growth of sales is forecast to be higher and may
lead to higher profits in the future.
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Question Answer Marks
4(a) Explain one advantage and one disadvantage of Yasin using a 8
democratic leadership style.
1 mark for each advantage/disadvantage identified (maximum 2 marks).
Award a maximum of 3 additional marks for each explanation of an
advantage/disadvantage of Yasin using a democratic leadership style – one
of which must be applied to this context.
Relevant answers might include:
Advantages:
Better decisions – as employees are consulted – may offer additional
ideas from own experience of doing the job
Motivating for employees – asked to offer opinions before decisions are
made – feel more trusted/valued – less likely to leave/lower labour
turnover
Employees work better due to their sense of belonging/builds a
relationship – more productive/positive
Disadvantages:
Takes time to consult employees – Yasin and the employees could be
more productive doing other jobs – less productive/less output produced
Unpopular decisions may be difficult to make – such as making
employees redundant – may be less effective if employees are asked for
their opinions as the decision may affect them directly – therefore
opinions may be biased
Employees may not have the experience to make suitable contributions –
unable to make helpful suggestions
Suggestions made by employees may be different to the objectives of
management – may lead to conflict/confusion
For example: Better decisions may be made by Yasin (1) because employees
are asked for their opinions before decisions are made (1). Yasin only
employs 3 people (app) so it will be easier for them to offer additional ideas
from their own experience of doing the job (1).
Application could include: bakery; 3 employees; work five days a week: paid
legal minimum wage: produce bread; Yasin needs to keep the business
competitive; introduction of cakes; changing suppliers; ethical image.
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Question Answer Marks
4(b) Consider the following three ways Yasin could improve the ethical 12
image of MB. Which way would be most effective? Justify your answer.
Buying all ingredients from local suppliers.
Using only environmentally friendly packaging.
Increasing wage rates to 20% above the legal minimum wage.
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more ways.
Well-justified conclusion.
Candidates discussing all three ways in detail, in context
and with a well-justified conclusion 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 two or more 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
4(b) Relevant points might include:
Advantages Disadvantages
Buying all Ingredients are Costs of ingredients
ingredients from obtained with less are likely to be higher
local suppliers pollution from than low-cost imports
transportation as they and may have to
will no longer be charge higher prices
imported May not be able to
Support local purchase all the
community as flour range of ingredients
produced by local you want – may
businesses restrict the range of
Delivery is cheaper / bread produced
quicker – less impact
on the environment
Popular with
customers – research
showed 85% wanted
this
Can compete with
local competitors –
they already use local
suppliers
Using only Improves the brand May reduce the
environmentally image for the bakery quality of the bakery
friendly packaging – more attractive to products if the
consumers who are packaging does not
environmentally protect the bread as
aware – target a well
different market Takes time to source
segment the environmentally
Will not be affected if friendly packaging –
new environmental less time for Yasin to
laws demand carry out other tasks
sustainable Likely to cost more
packaging than current
Reliable supplier packaging – not all
available (appendix 3) customers will be
Less chance of willing to pay higher
pressure group prices
activity
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Question Answer Marks
4(b)
Advantages Disadvantages
Increasing wage Employees more Wage costs will be
rates to 20% motivated – Taylor’s higher – increasing
above the legal motivation theory – total costs – possibly
minimum wage workers treated lower profit
well/feel appreciated If other bakeries pay
Lower labour turnover higher wage rates,
– as other employers then MB may not
may be less ethical have any advantage
Easier to recruit new and it may not
employees – as motivate employees
attracted by higher The higher wage
rates of pay by a policy may not be
good employer known in the local
community hence
little effect on
reputation
Recommendation Justification might include:
Buying from local suppliers is best because it
supports local businesses, and this will make the
bakery popular with local people. The business is
small and relies on local customers and local
people in the town may have relatives running
other local businesses, improving MBs image and
reputation. Paying higher wages may not be
known by customers and therefore may not help to
improve MB’s ethical image and packaging may
just be thrown away by customers who may not
take much notice of what is used for packaging as
they will be more interested in the product.
Having environmentally friendly packaging is most
important even if the costs are slightly higher for
the packaging as this should ensure the bakery
packaging is sustainable which is a good
marketing point which may be popular with many
potential customers. Buying from local suppliers
may not be possible if the range of ingredients isn’t
wide enough or increasing the wage may increase
costs too much for MB to remain competitive.
Paying above the minimum wage will make the
bakery a better place to work for the 3 employees
and will make them less likely to leave. They will
also tell their family and friends about the bakery,
and this will improve the image of the bakery
therefore attracting local people to buy their bread
from BM.
© UCLES 2022 Page 18 of 18
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2022
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 2022 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 17 printed pages.
© UCLES 2022 [Turn over
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2022
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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 descriptors
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.
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 ways TT could grow. 8
Award 1 mark for each relevant way (maximum of two marks).
Award a maximum of 3 additional marks for each explanation of the way TT
could grow – one of which must be applied to this context.
Relevant reasons might include:
Internal growth such as:
TT grows its existing operations – often by using retained profits from its
existing business – to set up a new factory abroad producing a new toy
for children up to the age of 5
Develop new products – to increase sales
Entering new markets – e.g. produce products for a different age group
Diversification
External growth such as:
TT takes over another toy manufacturer – this is horizontal integration
where TT takes over a competitor – TT wants to expand into country Z
and could take over a toy manufacturer already located in that country
Mergers
Vertical integration – takes over a supplier or retailer
Joint ventures
Licensing
For example: Internal growth (1) as TT decides to expand by opening its own
new factory (1). This could be in country Z where TT plans to expand sales
(app). This is a less risky way to grow than taking over another business,
even though it is quite slow if it has to use its own funds (1).
Application could include: manufacture toys; toys/toys for under 5’s; older
children/children; expanding into new markets abroad; existing economies of
scale; toy shops; cost $10m; multinational company; specialist new
equipment; flow production.
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Question Answer Marks
1(b) Consider how TT might benefit from the following three economies of 12
scale as it continues to grow. Which is likely to have the greatest effect
on TT’s profit? Justify your answer.
Purchasing
Technical
Financial
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more economies of scale.
3 Well-justified conclusion. 9–12
Candidates discussing all three economies of scale in
detail, in context and with a well-justified conclusion
including why the alternative economies of scale were
rejected should be rewarded with the top marks in the
band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one economy of scale.
2 5–8
Judgement with some justification / some evaluation of
choice made.
Candidates discussing two or more economies of scale in
detail and applying them to the case should be rewarded
with the top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the economies of scale with
little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining all three economies of scale 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:
Bulk buy components – discounts/cheaper prices for bulk
purchases – reduces unit costs of components/lower
Purchasing average cost – may be able to lower prices – becomes
more competitive – increases sales of toys – revenue
increases and reduced unit costs
Specialist machines can be used – specialisation easier
to implement – easier to use in flow production –
Technical speeding up the production process and becoming more
efficient – unit costs lower as output of toys per worker is
higher
Raise capital more cheaply – lower risk of not repaying
debts – banks may offer lower interest rates – lower
Financial
costs of borrowing for the expansion of the large
business than if it was a smaller business
Purchasing economy of scale will have the greatest
effect on TTs profit as it produces toys on a large scale
so discounts on components will reduce unit costs by a
significant amount, increasing gross profit and profit. TT
has already benefited from technical economies when it
purchased specialist equipment for its flow
production line and therefore there may be few
additional increases in efficiency and if TT uses internal
sources of finance for expansion then financial
economies will not benefit TT at all.
Technical economy of scale will have the greatest effect
as this will enable TT to expand flow production further
and more technologically advanced machines can be
purchased, speeding up the production process and
Conclusion
increasing productivity by a high amount. There may be
significant savings on unit costs, which will allow TT to be
more competitive in the new market in country Z. Lower
unit costs and increased revenue will probably lead to
higher profit.
Financial economy of scale will have the greatest effect
as TT plans to expand and will probably need to raise
some of the capital by borrowing. This will keep down the
costs of expanding, as $10m may need to be borrowed if
TT takes over the other company or builds a factory in
country Z. TT is already producing on a large scale so
the increased benefits from the other economies may be
limited leaving financial economies giving the biggest
increase in profit.
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Question Answer Marks
2(a) Explain two benefits to TT of using lean production methods. 8
Award 1 mark for each benefit (maximum of two marks).
Award a maximum of 3 additional marks for each explanation of the benefit
of using lean production methods – one of which must be applied to this
context.
Relevant benefits might include
Employees might be able to offer ways for small continuous
improvements in the factory – may improve efficiency – reduce unit costs
Less inventory / less storage required for components – as JIT means
components only ordered when required for production – reduces cost of
storage of inventory / reduces amount of working capital required / may
improve cash flow
Production of toys is quicker – as Kaizen means the factory layout is
more effective – time is not wasted between manufacturing tasks
Defects/waste could be reduced or eliminated – reduces repair/returns
cost – customer happy with quality – good reputation
The equipment used for flow production could be used in a better way
– increased efficiency – lower unit costs
Some processes may be removed – speeds up the production of toys
– increases productivity
Improved health and safety of employees as motion between jobs may be
reduced – less time off work due to injury – more output produced
For example: There is less storage required for components (1). This is
because just-in-time inventory control is used (app) means the components to
manufacture the products are only ordered when required for production (1).
This will reduce the warehouse space required and reduce costs (1).
Application could include: manufacture toys; toys/toys for under 5’s; older
children/children; expanding into new markets abroad; existing economies of
scale; Kaizen; JIT; specialist new equipment; flow production.
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Question Answer Marks
2(b) Using Appendix 2 and other information, consider TT’s financial 12
position. Do you think TT is in a good financial position to expand?
Justify your answer using suitable calculations.
Level Description Marks
3 Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of whether TT is in a good financial
position.
9–12
Well-justified conclusion.
Candidates discussing in detail whether TT is in a good
financial position, in context and with a well-justified
conclusion including why TT may not be in a good
financial position should be rewarded with the top marks
in the band.
2 Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of some arguments around whether
TT is in a good financial position.
5–8
Judgement with some justification / some evaluation of
choice made.
Candidates discussing in detail whether TT is in a good
financial position and applying it to the case should be
rewarded with the top marks in the band.
1 Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the financial position of TT with
little/no explanation.
1–4
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining the financial position of TT 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:
Accounts receivable has increased by $3m
The amount of cash held has increased by $2m
Amount of trade credit has increased by $1m
TT no longer has an overdraft
Level 1
TT has taken out another bank loan for $5m
statements
TT has current assets of $15m in 2022
TT has current liabilities of $5m in 2022
Current assets have increased by $5m
Current liabilities have remained the same
Accounts receivable has increased by $3m – as more
customers are allowed credit or existing customers are
allowed a longer period to pay
The current ratio in 2022 is 3 / the current ratio has
increased by 1
This is high as 2 would be more acceptable and indicates
Level 2 that TT may have too many of its assets in a liquid form
statements The acid test ratio in 2022 is 2 / the acid test ratio has
also increased by 1
The acid test ratio is high as a ratio of 1 would be
acceptable and indicates that assets are being held in
non-income earning form
The liquidity seems to be sufficient to encourage banks
to increase the loans to pay for the $10m expansion
Yes, TT is in a good financial position to expand as it has
increased both liquidity ratios between 2021 and 2022. It
is in a good position to be able to expand and fund some
of the $10m for expansion out of its own funds. It does
not look likely to have a liquidity problem as it expands.
No, TT may not be in a good financial position to expand
as it appears to have too much liquidity as the liquidity
Conclusion ratios could be considered to be too high. It has also
increased its current liabilities by increasing its accounts
payable and doubled its bank loans. These loans will
have to be doubled again if TT chooses to finance the
expansion from external sources. However, as TT is
planning to expand then this may be a good financial
position to fund this expansion with some internal
sources of finance.
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Question Answer Marks
3(a) Explain one way the information in each chart in Appendix 1 might be 8
useful to TT.
Award 1 mark for each appropriate way (maximum of four).
Award a maximum of 1 additional mark for each explanation in context.
Relevant ways might include:
Chart 1 – Can estimate the size of the market – as the number of under
5’s in the population is 20m which is quite a large market
Chart 2 – Higher unemployment increases the availability of potential
employees / lower consumer incomes – therefore easier to recruit
workers for the new factory / consumers may not be willing to pay a
higher price for toys
Chart 3 – Helps to choose the most suitable channel of distribution in the
new country – as the majority of consumers buy their products in
specialist toy shops
Chart 4 – Can know how much competition there is in the market – there
are only 3 main companies so easier to check on competitors’ prices
For example: TT can estimate the size of the market (1) as the research
shows that there are 20 million children under 5 in country Z (app).
Application can come from information in the charts in Appendix 1 or
elsewhere in the case study.
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Question Answer Marks
3(b) Using Appendix 3 and other information, consider the three applicants 12
for the job of Marketing Manager for country Z. Who is the best applicant
for the job? Justify your answer.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more applicants.
3 9–12
Well-justified recommendation.
Candidates discussing all three applicants in detail, in
context and with a well-justified recommendation
including why the alternative applicants were rejected
should be rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one applicant.
2 5–8
Judgement with some justification / some evaluation of
choice made.
Candidates discussing two or more applicants in detail
and applying this to the case should be rewarded with the
top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the applicants with little/no
explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining all three applicants 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:
Benefits Possible drawbacks
Well qualified so has Experience is as an
the capacity to learn assistant so she may
new skills not have the
Has experience of the necessary experience
job as an Assistant to run a department
Marketing Manager Labiba may find it
so will understand difficult to settle in
what the job involves country Z
Speaking 2 It may cause jealousy
languages will be from other employees
suitable to work in at TT if Labiba is
another country promoted
Already works for TT
and so will
Labiba
understand the toy
products and the
way TT works
TT trains its staff and
so will probably be
well trained for
existing job
Other TT employees
may be more
motivated as they see
the promotional
opportunities within
the business – may
be less likely to leave
The best qualified of The experience has
all the applicants with not been in a toy
a degree in company and
business therefore may not
management and understand TT’s
therefore might be a market
quick learner No experience of
Already experienced working in large
as a marketing company as has only
Shahin
manager and will been working in a
understand what the small food company
role involves
Is already based in
country Z and so
will not need to
move there – already
understands the
culture of country Z
© UCLES 2022 Page 13 of 17
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2022
PUBLISHED
Question Answer Marks
3(b)
Benefits Possible drawbacks
Speaks more Lowest qualified of
languages than the the three applicants
other applicants – Works for a
more likely to be able competitor and may
to speak to have very different
employees in country working practices –
Z may not fit in well to
The most TT
experienced as has Samihah may find it
worked in a large difficult to settle in
Samihah toy company so will country Z
be more familiar with
the requirements of a
toy company
Works for a
competitor of TT and
may bring additional
ideas to TT to
improve the
marketing of the new
toy
Labiba is the best applicant as she already works
for TT and TT knows how well Labiba works. Her
boss can give an accurate assessment of Labiba’s
capabilities, which is likely to be more accurate
than outside references. Labiba already
understands the toy market and will be better than
Shahin who only has experience of a small
company. Samihah may not fit into the culture of
TT as the competitor may have very different ways
of operating.
Shahin is the best applicant as she is already a
Recommendation marketing manager and is the only applicant
already based in country Z. Shahin will have the
best understanding of the market in country Z even
though their experience is with food and Shahin
does not need to move to another country unlike
the other two applicants.
Samihah is the best applicant as she has the most
experience of the three, as is already a marketing
manager and understands what the role involves,
unlike Labiba. Samihah’s experience has been in a
large toy company similar to TT and is likely to
bring new ideas to the marketing of the new toy.
© UCLES 2022 Page 14 of 17
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2022
PUBLISHED
Question Answer Marks
4(a) Explain four effects of training on a business. 8
Award 1 mark for each relevant reason (maximum of four).
Award a maximum of 1 additional mark for each explanation.
There are no application marks available for this question.
Relevant effects might include:
Greater motivation of employees – work harder to produce output
More flexible workforce – employees can be moved between tasks as
necessary
Increased productivity/efficiency – lower unit costs
Quality of the product may be improved – greater customer satisfaction /
improved brand image / improved reputation
Employees able to use new technology – easier to introduce new
equipment to speed up production
Improves customer service – if trained how to answer customer queries
Fewer mistakes as employees are trained – less waste/less repair costs
Workforce is more knowledgeable/skilled – able to complete tasks more
effectively
Output lost whilst training employees – higher costs
Employees may expect higher pay increasing wage costs as a result of
being trained – lower motivation if pay is not increased
Training costs are incurred by the business – higher costs for the
business may lead to lower profit initially
Employees may leave the business after they have been trained –
therefore increases recruitment costs
For example: The business will have a more flexible workforce (1) this means
when an employee is absent another employee can be moved to cover their
task without production being halted (1).
© UCLES 2022 Page 15 of 17
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2022
PUBLISHED
Question Answer Marks
4(b) Consider the benefits and drawbacks for country Z if TT builds a factory 12
there. Do you think the government of country Z should allow TT to
build this factory? Justify your answer.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of both the benefits and drawbacks
for country Z.
3 9–12
Well-justified conclusion.
Candidates discussing in detail both the benefits and
drawbacks for country Z, in context and with a well-
justified conclusion including why the alternative benefits
or drawbacks were rejected should be rewarded with the
top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one benefit or drawback
for country Z.
2 5–8
Judgement with some justification / some evaluation of
choice made.
Candidates discussing in detail both benefits and
drawbacks for country Z and applying these to the case
should be rewarded with the top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the benefits and/or drawbacks
with little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining the benefits and drawbacks for
country Z in context should be rewarded with the top
marks in the band.
0 No creditable response. 0
© UCLES 2022 Page 16 of 17
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2022
PUBLISHED
Question Answer Marks
4(b) Relevant points might include:
Benefits Drawbacks
It creates jobs – lowering The jobs created may be
unemployment as it has been unskilled and low paid
rising in country Z – raising There may be reduced sales for
incomes in the country and the three local toy businesses
helping to increase economic as their costs may be higher
growth/GDP Profits may be sent back to
Increased investment – the new country Y – loss of government
factory will create jobs to build it tax revenue in country Z
and new infrastructure may be Scarce resources may be used
built also benefiting local up quickly by the multinational
businesses business leaving few non-
TT could export from county Z – renewable resources remaining
improving its balance of when the multinational has left
payments – earns foreign The multinational business
currency for country Z to could have a lot of political
purchase more imports influence and gain concessions
TT may pay taxes to the such as grants that could have
government – increases tax been spent on local businesses
revenue to provide more Increased noise and air
services for its population of 200 pollution when the factory is
million being built – may cause
Increased consumer choice – damage to the environment and
more competition and more health of the local population
toys available to buy and the
new toy is unique
Conclusion:
Allowing TT to locate in the country has more benefits for country Z than
it has drawbacks. The jobs created when unemployment is increasing
will help the country develop and may benefit from a technology transfer
from TT to other businesses in the country. This may increase their
efficiency and improve their productivity – so many other local businesses
may benefit which outweighs the drawbacks to the three local toy
companies that may not be able to compete with TT.
The government in country Z should not allow TT to build a factory there
as it may not gain tax revenue if the government of country Z has to make
concessions to attract TT to locate there. As TT’s production is quite
automated few jobs will be created and these may not increase incomes
much so there will be little gain to the economy.
© UCLES 2022 Page 17 of 17
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*4702154016*
Paper 1 Short Answer and Data Response May/June 2022
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_11_2022_1.3
© UCLES 2022 [Turn over
2
1 Pamela is a successful entrepreneur. She is the owner of a gift shop selling celebration cards, toys
and candy (sweets). When Pamela started her business 30 years ago she had no help to manage
the shop. She now has 5 employees. Pamela knows maintaining customer loyalty is important.
She uses competitive pricing. Most of her marketing budget is spent on sales promotion. Pamela
does not use e-commerce.
(a) Define ‘competitive pricing’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘marketing budget’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible threats to Pamela’s business of using e-commerce.
Threat 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Threat 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_11_2022_1.3
3
(d) Explain two methods Pamela’s business can use to maintain customer loyalty.
Method 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think being a risk-taker is a more important characteristic of a successful entrepreneur
than being creative? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_11_2022_1.3 [Turn over
4
2 CTF is a public limited company. It manufactures beds using batch production. The Operations
Director is using break-even analysis to calculate the margin of safety for children’s beds. An extract
from CTF’s output data is shown in Table 2.1. The Operations Director wants to know how an
increase in inflation might affect CTF. She knows there are many environmental pressures that a
manufacturing business could respond to.
Table 2.1
Extract from CTF’s output data (children’s beds per month)
Break-even output 14 000
Current level of output 18 000
Maximum factory output 25 000
(a) Define ‘public limited company’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the margin of safety for CTF’s children’s beds. Show your working.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two ways an increase in inflation might affect CTF.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_11_2022_1.3
5
(d) Explain two possible advantages to CTF of using batch production.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think manufacturing businesses should always respond to environmental pressures?
Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_11_2022_1.3 [Turn over
6
3 VCG manufactures high-quality briefcases and travel bags. VCG has 50 skilled production workers
in its factory. VCG is planning to expand by building a second factory. Different locations are being
considered. The Managing Director is reviewing VCG’s financial statements. An extract is shown
in Table 3.1. Both internal and external stakeholder groups of VCG are interested in this information.
Table 3.1
Extract from VCG’s 2021 financial statements ($)
Revenue 2 000 000
Current assets 300 000
Current liabilities 250 000
Shareholders’ equity (funds) 800 000
(a) Define ‘shareholders’ equity’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two financial statements a public limited company is legally required to publish each
year.
Financial statement 1: ......................................................................................................
...........................................................................................................................................
Financial statement 2: ......................................................................................................
........................................................................................................................................... [2]
(c) State whether each of the following are classified as a current asset or a current liability.
Overdraft: ..........................................................................................................................
...........................................................................................................................................
Trade receivables: ............................................................................................................
...........................................................................................................................................
Trade payables: ................................................................................................................
...........................................................................................................................................
Cash in bank: ....................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_11_2022_1.3
7
(d) Explain one way each of the following stakeholder groups might use VCG’s accounts:
Shareholders: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Suppliers: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think access to labour is the most important factor for a manufacturing business to
consider when deciding where to locate a new factory? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_11_2022_1.3 [Turn over
8
4 MBH is a business organisation in the public sector. It controls 5 hospitals and has 5600 employees
including 440 doctors. External recruitment is used when recruiting skilled employees. The Human
Resources Director uses ideas from Herzberg’s theory to improve employee motivation. He is
worried about communication barriers within MBH. The business has a tall organisational structure
and a long chain of command. Most of MBH’s internal communication is by email and phone calls.
(a) Identify two objectives for a business organisation in the public sector.
Objective 1: .......................................................................................................................
...........................................................................................................................................
Objective 2: .......................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘chain of command’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two ways MBH can use ideas from Herzberg’s theory to motivate its employees.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_11_2022_1.3
9
(d) Explain how MBH might reduce or remove each of the following communication barriers:
Messages lost: ..................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Use of jargon: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think an organisation should always use external recruitment when recruiting skilled
employees? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_11_2022_1.3
10
BLANK PAGE
© UCLES 2022 06_0986_11_2022_1.3
11
BLANK PAGE
© UCLES 2022 06_0986_11_2022_1.3
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 06_0986_11_2022_1.3
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/12
*0605185869*
Paper 1 Short Answer and Data Response May/June 2022
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_12_2022_1.1
© UCLES 2022 [Turn over
2
1 AHG is an established business as it has been operating for a long time. It sells garden products
including plants and flowers. AHG uses competitive pricing. The business has 4 managers and 30
other employees. All AHG’s managers use delegation. The Finance Manager is analysing AHG’s
statement of financial position as she is interested in its liquidity. An extract is shown in Table 1.1.
Table 1.1
Extract from AHG’s statement of financial position at 30 March 2022 ($000)
Non-current assets 800
Current assets 660
Current liabilities 600
(a) Define ‘current liabilities’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two examples of non-current assets.
Example 1: ........................................................................................................................
...........................................................................................................................................
Example 2: ........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible reasons why liquidity is important to AHG.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_12_2022_1.1
3
(d) Explain two advantages to AHG of its managers using delegation.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think competitive pricing is the best method for an established business to use? Justify
your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_12_2022_1.1 [Turn over
4
2 RWB manufactures buses.1200 people work in its factory. All employees receive off-the-job training.
RWB uses financial rewards to motivate its employees. Last year RWB made a $1.7 million loss.
The Managing Director said: ‘There are many external influences affecting our business, including
changes in the level of unemployment and new legal controls over business activities which affect
the environment.’
(a) Define ‘off-the-job training’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two reasons (other than financial) why people work.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two methods of financial rewards RWB might use to motivate its employees.
Method 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_12_2022_1.1
5
(d) Explain two ways RWB might be affected by new legal controls over business activities which
affect the environment.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think a reduction in the level of unemployment always benefits businesses? Justify
your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_12_2022_1.1 [Turn over
6
3 CHW manufactures electrical products including cameras. The business is developing new products.
The Managing Director knows that the stage of the product life cycle can influence CHW’s marketing
decisions about promotion. He is analysing data for one of its products. An extract is shown in
Table 3.1. The business would also like to introduce flow production into the factory.
Table 3.1
Extract from CHW’s data for one type of camera (2021)
Selling price per unit ($) 120
Variable cost per unit ($) 40
Fixed costs ($) 200 000
Margin of safety (units) 500
(a) Identify one benefit and one cost to a business of developing new products.
Benefit: .............................................................................................................................
...........................................................................................................................................
Cost: .................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the break-even level of output for 2021. Show your working.
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two ways CHW could increase its margin of safety.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_12_2022_1.1
7
(d) Explain two ways in which the stage of the product life cycle might affect CHW’s marketing
decisions about promotion.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think flow production is the best method of production for a manufacturing business
to use? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_12_2022_1.1 [Turn over
8
4 Tom wants to leave his job to become an entrepreneur. He and his sister plan to start a window
cleaning business. Tom has been told that new businesses are at a greater risk of failure than
established businesses. Tom has to decide whether a partnership is a suitable form of business
organisation for the new business. He has calculated the business will need $700 as start-up capital.
Tom knows that every decision he makes will have an opportunity cost.
(a) Define ‘entrepreneur’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘opportunity cost’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Identify four reasons why a new business might be at greater risk of failure than an established
business.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Reason 3: .........................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 06_0986_12_2022_1.1
9
(d) Explain two suitable sources of start-up capital Tom’s business might use.
Source 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Source 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think a partnership is the best form of business organisation for a new business? Justify
your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 06_0986_12_2022_1.1
10
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© UCLES 2022 06_0986_12_2022_1.1
11
BLANK PAGE
© UCLES 2022 06_0986_12_2022_1.1
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 06_0986_12_2022_1.1
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*0645454094*
Paper 2 Case Study May/June 2022
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_21_2022_1.1
© UCLES 2022 [Turn over
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1 (a) Explain four reasons why governments might support business start-ups.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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Reason 3: .........................................................................................................................
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Reason 4: .........................................................................................................................
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(b) Consider the benefits to Yasin of the two sections of his business plan shown in Appendix 1.
Which section do you think helped him most when starting up his business? Justify your answer.
Market research: ...............................................................................................................
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Resources: .......................................................................................................................
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Conclusion: .......................................................................................................................
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2 (a) Explain one benefit and one limitation to Yasin of using a break-even chart.
Benefit: .............................................................................................................................
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Explanation: ......................................................................................................................
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Limitation: .........................................................................................................................
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Explanation: ......................................................................................................................
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(b) Consider the following two ways MB could achieve lean production. Which is the best way for
Yasin to choose? Justify your answer.
• Kaizen.
• Just-in-time inventory control.
Kaizen: ..............................................................................................................................
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Just-in-time inventory control: ...........................................................................................
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Recommendation: ............................................................................................................
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3 (a) Explain four ways Yasin can advertise MB’s products.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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Way 3: ...............................................................................................................................
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Way 4: ...............................................................................................................................
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© UCLES 2022 06_0986_21_2022_1.1
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(b) Consider the two options outlined in Appendix 2. Which option should Yasin choose? Justify
your answer using appropriate calculations.
Option 1: ...........................................................................................................................
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Option 2: ...........................................................................................................................
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Recommendation: ............................................................................................................
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© UCLES 2022 06_0986_21_2022_1.1 [Turn over
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4 (a) Explain one advantage and one disadvantage of Yasin using a democratic leadership style.
Advantage: .......................................................................................................................
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Explanation: ......................................................................................................................
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Disadvantage: ...................................................................................................................
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Explanation: ......................................................................................................................
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© UCLES 2022 06_0986_21_2022_1.1
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(b) Consider the following three ways Yasin could improve the ethical image of MB. Which way
would be most effective? Justify your answer.
• Buying all ingredients from local suppliers.
• Using only environmentally friendly packaging.
• Increasing wage rates to 20% above the legal minimum wage.
Buying all ingredients from local suppliers: ......................................................................
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Using only environmentally friendly packaging: ...............................................................
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Increasing wage rates to 20% above the legal minimum wage: ......................................
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Conclusion: .......................................................................................................................
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© UCLES 2022 06_0986_21_2022_1.1
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© UCLES 2022 06_0986_21_2022_1.1
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 06_0986_21_2022_1.1
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
*9086478757*
Paper 2 Case Study May/June 2022
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_22_2022_1.1
© UCLES 2022 [Turn over
2
1 (a) Explain two ways TT could grow.
Way 1: ...............................................................................................................................
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Explanation: ......................................................................................................................
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Way 2: ...............................................................................................................................
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Explanation: ......................................................................................................................
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© UCLES 2022 06_0986_22_2022_1.1
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(b) Consider how TT might benefit from the following three economies of scale as it continues to
grow. Which is likely to have the greatest effect on TT’s profit? Justify your answer.
• Purchasing
• Technical
• Financial
Purchasing: .......................................................................................................................
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Technical: ..........................................................................................................................
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Financial: ..........................................................................................................................
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Conclusion: .......................................................................................................................
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© UCLES 2022 06_0986_22_2022_1.1 [Turn over
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2 (a) Explain two benefits to TT of using lean production methods.
Benefit 1: ..........................................................................................................................
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Explanation: ......................................................................................................................
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Benefit 2: ..........................................................................................................................
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Explanation: ......................................................................................................................
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© UCLES 2022 06_0986_22_2022_1.1
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(b) Using Appendix 2 and other information, consider TT’s financial position. Do you think TT is
in a good financial position to expand? Justify your answer using suitable calculations.
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© UCLES 2022 06_0986_22_2022_1.1 [Turn over
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3 (a) Explain one way the information in each chart in Appendix 1 might be useful to TT.
Chart 1: .............................................................................................................................
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Chart 2: .............................................................................................................................
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Chart 3: .............................................................................................................................
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Chart 4: .............................................................................................................................
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© UCLES 2022 06_0986_22_2022_1.1
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(b) Using Appendix 3 and other information, consider the three applicants for the job of Marketing
Manager for country Z. Who is the best applicant for the job? Justify your answer.
Labiba: ..............................................................................................................................
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Shahin: .............................................................................................................................
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Samihah: ..........................................................................................................................
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Recommendation: ............................................................................................................
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© UCLES 2022 06_0986_22_2022_1.1 [Turn over
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4 (a) Explain four effects of training on a business.
Effect 1: .............................................................................................................................
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Effect 2: .............................................................................................................................
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Effect 3: .............................................................................................................................
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Effect 4: .............................................................................................................................
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© UCLES 2022 06_0986_22_2022_1.1
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(b) Consider the benefits and drawbacks for country Z if TT builds a factory there. Do you think
the government of country Z should allow TT to build this factory? Justify your answer.
Benefits for country Z: ......................................................................................................
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Drawbacks for country Z: ..................................................................................................
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© UCLES 2022 06_0986_22_2022_1.1
11
BLANK PAGE
© UCLES 2022 06_0986_22_2022_1.1
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 06_0986_22_2022_1.1
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/11
Short Answer/Data Response 11
Key messages
• As in previous sessions candidates should be reminded to learn precise definitions for all
key terms and to use a different point of application and analysis for each point of
knowledge. A point can only be credited once within a given answer.
• Effective evaluation is an area which continues to require development. Candidates should
be reminded that evaluation must include a justified decision that follows on from the points
raised in the answer. A repetition of points already explained in the answer will not gain
evaluation marks. The mark scheme for each part (e) question includes one example of
how evaluation may be demonstrated in the answer.
General comments
Candidates this session found some of the questions quite challenging. This was particularly true of
Questions 2(a), 2(d) each of the part (e). Candidates had quite limited knowledge of some aspects of these
topics. This led to candidates trying to alter the questions asked to fit with their knowledge base. This was
most noticeable in Questions 1(d), 2(d) and 4(e).
Candidates would benefit from a greater depth of knowledge of topics 1.3.3, 1.4.1, 6.2.1 and 6.3.1
Comments on specific questions
Question 1
(a) Candidates were generally aware of this term and recognised that the key elements were the focus
and higher skills level. Weaker responses lost marks by confusing specialisation with division of
labour.
(b) This topic was well understood by most candidates. Some responses confused methods of
production with management to achieve lean production. Such responses incorrectly stated lean,
JIT and Kaizen.
(c) Candidates did not clearly understand this topic. Better responses identified the benefits of fewer
complaints and less reworking for this manufacturing business. Some strong responses struggled
to apply both of their knowledge points to the business in the stem of the question and simply
repeated carpet in each answer. Weaker responses incorrectly explained that this would increase
quality or missed the focus of the question and described the benefits to the customer not WLT.
(d) This question produced a range of responses. The best answers explained the benefit of increased
access to new markets and the potential threat of increased competition for this manufacturing
business. Responses needed to develop fully to gain both explanation marks available. Candidates
for example who identified increased competition as a threat could not explain the potential of this
on WLT. Some candidate’s lost marks by confusing globalisation with international trade. A
noticeable number of candidates discussed the dangers of child labour, cultural differences and
quotas which were irrelevant to the question asked.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
(e) This was a challenging question for candidates and a mark of one or two was common as
candidates struggled to provide effective analysis. The strongest answers recognised the
improvements may reduce mistakes reducing wastage costs but at a financial cost in terms of
training time and money. The weakest answers simply repeated the word efficiency or stated that
output would increase rather than output per worker.
Question 2
(a) A common error was to define a cashflow problem i.e., cash inflow less than cash outflow rather
than identify the reasons why this might occur. The most common correct answers were a fall in
demand and allowing customers too long a credit period.
(b) Over 80 per cent of candidates correctly calculated these two figures. Some candidates lost a mark
by indicating incorrectly that X was a negative figure.
(c) A wide variety of suitable cash inflows were given in answer to this question. A small number of
candidates did not attempt this question. An error evident in several responses was to state
investors and trade receivables which are not inflows of money. Better responses precisely
identified funds from investors and payments to clear trade receivables.
(d) Some candidates found this to be the most challenging part (d) question on the paper. Advantages
were often explained correctly but a suitable disadvantage was not always clearly identified. A
common incorrect answer was that funds would be limited as this was not a PLC. The question
required a disadvantage of the private limited companies not a discussion of why PLC would be
better. The strongest responses were able to explain how limited liability would benefit the owners,
but that legal formalities would be a disadvantage.
(e) Candidates frequently misunderstood this question. The strongest answers identified that a lack of
finance, a small market size or the fear of diseconomies of scale would limit the ability of a
business to expand. Very few candidates were able to offer effective evaluation, those who
attempted it often simply repeated points already credited as analysis. Weaker answers offered
general statements such as ‘because it is expensive to change’. Such points were too vague for
credit.
Question 3
(a) Some candidates confused a job description and person specification. Often such candidates were
able to gain one mark by showing some understanding of the term. The weakest responses simply
reordered the words and stated that this was a ‘description of the job’ gaining no credit.
(b) All five levels of Maslow were presented in answering this question. Some candidates however,
provided answers which were confused such as psychological or self – fulfilment. These answers
were not rewardable. A small number of candidates did not answer this question.
(c) This question was generally, well answered by most candidates who explained the qualifications,
skills or experience required for this delivery business.
(d) This question produced a range of responses. Candidates who understood suitable methods of
finance frequently repeated the same application and analysis points in both parts of the question.
Most frequently this was by explaining loans would have interest and retained profit would not. This
mirror argument was not sufficient to gain both analysis marks. Several responses confused profit
and revenue with retained profit. The weakest responses stated short-term sources such as an
overdraft which is unlikely to be sufficient to purchase 20 vehicles. Several candidates did not
attempt this question.
(e) Candidates struggled to gain the analysis and evaluation marks available in this question, many
simply identified two points of knowledge concerning part-time workers. The strongest answers
focused on the view that part-time workers would be more flexible and would create an overall
lower wage bill. Weaker answers explained incorrectly that part time workers would be less tired or
lack skills. Such candidates seemed to be unaware that highly skilled consultants are often
employed on a part time basis as their specialist skills are not required full time.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
Question 4
(a) This question was well answered the most common correct answers being sample size, bias, and
poorly worded questions. Weaker responses incorrectly stated that a key factor was the type of
research completed. Primary research was often stated incorrectly as being more accurate.
(b) This topic was not well understood. Very few candidates provided two distinct benefits. Many
gained one mark by showing some awareness that segmentation would make research simpler.
The weakest responses incorrectly stated that segmentation would allow a business to ‘charge a
higher price’. Some candidates did not attempt this question.
(c) Candidates who recognised that the question required an explanation of methods NLR could use to
be more environmentally friendly scored highly. The best responses identified an action, such as
using recyclable material and linked this to the skin care producer. Many candidates confused
environmentally friendly and ethical actions. Such responses often explained that the business
should not test products on animals. These responses gained zero marks.
(d) There were few good answers to this question. Knowledge marks were awarded for correctly
stating either two stages of the product life cycle or pricing methods. Responses which stated a
stage of the life cycle life and then explained how prices would set in this stage scored highly. Such
responses were able to clearly apply their answers to the situation described in the question stem.
Responses which identified pricing strategies by name often struggled to develop in the context of
the question set. The weakest responses confused the product and business cycle and stated peak
and trough as their two stages. A small but significant number of candidates did not attempt this
question.
(e) A mark of 2 or 3 was common on this question. Better responses stated two functions of
packaging. Very few responses effectively explained the link between brand image and packaging
to gain the analysis marks available. Those that did often gained one knowledge mark by
explaining the potential to attract customers or stand out from competitor’s products. The weakest
responses explained the importance of brand image with no link to packaging which was the key
focus of the question.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/12
Short Answer/Data Response 12
Key messages
• Definitions need to be clear and precise.
• Candidates should be encouraged to use information from the stem to help answer part (c) and part (d)
questions as this provides the basis for application. Different points of application are needed to access
both application marks within the same question.
• Candidates should not use the same analysis for both points within the same question.
• Evaluation requires candidates to make a supported judgement which should follow on from points
raised in the answer, and clearly answer the question set. A decision alone, or summary of points made,
are not evaluation. An example of an answer which includes evaluation can be found in mark scheme
for each part (e) question.
General comments
This was an accessible paper with most candidates demonstrating good knowledge of most topics. Many
candidates continue to find accessing the application, analysis and evaluation marks more challenging.
Parts (a) and (b) of each question were generally well attempted. However, definitions often lacked the
necessary precision to access the marks available.
Candidates should be reminded that questions can be set on any area of the syllabus. It was clear that some
candidates were not familiar with topics such as why markets are competitive and the stages of the business
cycle.
For most part (c) (excluding 3c which only assessed knowledge) and all part (d) questions, candidates
needed to use information from the stem to link their answers to the scenario to access application marks.
Candidates should not use the same application for more than one point in their answer.
Candidates must understand which skills are being assessed in each question. Some candidates included
analysis in part (c) questions and application in part (e) questions. However, part (c) questions only assess
knowledge or knowledge and application, while part (e) questions assess knowledge, analysis and
evaluation. No other skills can be awarded in these questions.
Developing evaluation skills is important. The School Support Hub provides skills exercises which candidates
might find helpful. Many responses still do not include any decision in part (e) questions. Of those
candidates who did attempt an evaluative comment, most were unable to provide reasoned statements to
support the decision made. One approach is to make a choice, provide a reason for this decision, and then
explain why it is better than the alternative discussed.
Comments on specific questions
Question 1
(a) This question was well answered by most candidates.
(b) Candidates who understood break-even charts did well on this question. A common mistake was to
represent break-even output as a financial value instead of as units. Break-even output was 500
units and break-even revenue was $60 000.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
(c) There were many excellent answers to this question. A common mistake was to use the same
application for both answers. Other candidates focused on the impact of higher prices on sales -
forgetting that a break-even chart assumes all items are sold.
(d) This question was poorly answered by most candidates. Responses which gained knowledge
marks did tend to gain application for relevant references to this watch manufacturer. However,
most candidates struggled to develop their points. Many candidates continue to make incorrect
assumptions about full-time employees. For example, they must be more skilled, efficient or
motivated which is not necessarily true as this depends on the job and/or the person. Other
candidates defined the term or simply stated they would produce more because they were there for
longer periods of time. These answers were not awarded any marks.
(e) Good knowledge of job production was evident in most responses. Better responses were able to
develop the points made. Instead of analysis weaker responses identified additional knowledge
points. A common error was repetition. For example, stating job production has no economies of
scale while batch production allows for some economies of scale is classed as a mirror argument
so will only be credited once. Flow production was mentioned in many responses, but this is not
appropriate for a small business. Other candidates applied their answer to FBW which was
unnecessary in this generic question. Where a decision was made, this was either not supported or
repeated earlier points made so did not count as evaluation.
Question 2
(a) The best answers identified ways stated in the mark scheme such as help set objectives and
support requests for loans. A common mistake was a lack of precision. Answers such as help
decision making, avoid problems or be more organised were too vague. Other candidates identified
elements of a business plan which was not the focus of this question.
(b) A well answered question by most candidates.
(c) Good knowledge was evident in most responses with speed and no written record typical
advantages and disadvantages respectively. A common mistake was a lack of application which
meant candidates missed two potential marks. Other candidates outlined general factors such as a
language barrier which could refer to any method of communication. Some candidates made vague
references that using a phone was easy without indicating why this might be the case.
(d) Most candidates could identify at least one factor with skills and access to finance popular choices.
Better responses were able to access the application marks by recognising that Meena was a sole
trader or that she was looking to expand her house-cleaning business. Most candidates found it
difficult to offer relevant development. A common mistake was to focus on who should be the
partner rather than whether she should have one.
(e) Candidates were clearly familiar with the concept of market research and most candidates were
therefore able to access the knowledge marks. Better responses tended to gain the analysis marks
for explaining either the advantages or disadvantages of the methods discussed. The best answers
then used this information as the basis for their evaluation. However, to access both evaluation
marks, they needed to focus on this research being for a new product or service. Some candidates
described a method without identifying it which was necessary to access any marks. Other
candidates made vague statements such as it would be easy to gather information or commented
on the accuracy of the data gathered. A small number of candidates had the wrong focus as they
identified reasons for carrying out primary market research.
Question 3
(a) Most candidates understood the term but did not gain the second mark as they said the tax was on
imported goods without stating what an import was. A common mistake was to confuse an import
tariff with a quota. Many responses lacked precision as they referred to money or costs which could
be confused with the general costs of international trade. Other candidates identified reasons why
tariffs were introduced.
(b) This question was poorly answered by most candidates. A common mistake was to identify factors
affecting demand rather than reasons why some markets are more competitive.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
(c) Most candidates could identify at least one stage with growth the most popular correct answer. The
most common mistake was to confuse the business cycle with the product life cycle.
(d) This question was split into two parts. Many candidates understood that an import quota is likely to
reduce the amount of goods that could be imported. Better responses developed this point to show
how this might affect the business in terms of lower output or having to find alternative suppliers. A
common mistake was to confuse quotas with tariffs. Most candidates found the second part more
challenging. Many confused currency appreciation with currency depreciation, so wrongly assumed
that imports would be more expensive.
(e) This question produced a range of responses. The best answers understood the role retailers could
play through wider distribution and advertising and explained how this could lead to higher sales or
lower costs. Most candidates had some knowledge of distribution channels, but many had the
wrong focus as they discussed the advantages to retailers, wholesalers or customers rather than
manufacturers. Weaker responses struggled to develop the points made. Without analysis,
candidates could not access evaluation marks.
Question 4
(a) Many candidates showed partial understanding of the term but did not provide a clear definition. A
common mistake was to define profit or identify uses of profit. Other candidates reordered the
words which showed no understanding.
(b) Most candidates either understood that a current asset was owned or that it was held in the
business for less than one year. The best answers mentioned both elements. One common
mistake was to refer to ‘a short period of time’ without specifying what this meant. Some repeated
the word ‘asset’ or gave examples which did not define the term. Other candidates confused assets
with liabilities by saying the assets were owed to others.
(c) Many candidates understood that working capital is used to pay day-to-day expenses. However,
most candidates found it difficult to outline a second reason. Common mistakes were to offer
different examples of costs such as paying employees and suppliers which could only be awarded
once. Other candidates confused working capital with profit. Some responses defined the term
which was unnecessary.
(d) This question produced a range of responses. Candidates generally did better when considering
the effect on employees as stakeholders, but often struggled to explain the effect on suppliers.
Stronger responses recognised promotion could be an opportunity for employees while suppliers
might gain additional orders. They then developed these points to show the effect on wages and
revenue respectively. There were many mistakes and misunderstandings. For example, some
assumed suppliers would provide raw materials to CPF ignoring the context which states CPF was
a retailer. Other candidates assumed the expansion would mean employees being made
redundant or receiving lower wages, while suppliers would not be paid. Some responses focused
on the effect on CPF instead of the named stakeholders.
(e) Good knowledge was evident in many responses, but most candidates struggled to develop their
points. Instead of analysis candidates tended to identify additional points of knowledge. A common
mistake was repetition. Stating a loan incurs interest but equity does not is the same point and will
only be credited once. Care is needed when using abbreviations. For example, PLC is commonly
used to refer to a public limited company so such answers could not be credited. Some candidates
compared the advantages and disadvantages of the two types of limited companies which did not
answer the question. Definitions of a private limited company were unnecessary.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/21
Case Study 21
Key messages
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one (a)
question that will usually be generic. Applying answers to the case will ensure responses are appropriate for
each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study candidates were expected to refer to a large business that
operates a chain of 500 fast-food restaurants. It is advisable for candidates to ask themselves about the
size of the business, is it a service or manufacturer and what is the type of business organisation? This
may add to the quality of their answers.
• Candidates should try to give a full explanation of positive and negative consequences of a business
decision when this is asked for. Responses require developed reasoning rather than simple description;
listed points generally only gain Level 1 whereas an explanation of a point could move the answer to
Level 2. Few well developed points will score higher marks than a long list of simple statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of VP, a large business operating fast-food restaurants, provided an accessible scenario
for candidates. Those who applied their answers to the context of VP boosted their marks much further. The
majority of candidates seemed to have time to complete the paper and attempted all questions.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Also, the question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but it was clear that certain
topics were not as well understood. The weakest understanding was of short- and long-term business
finance and economic influences on business.
Overall, the standard was good with very few weak scripts. Candidates often provided answers in context
which enabled access to application marks. However, candidates should make sure that different examples
of application are included in each section of (a) questions (not 1a on this paper) and the
conclusion/recommendation should also be applied to the case in (b) questions. A lack of analysis and
evaluation resulted in answers remaining in the lower-level mark band. Candidates should aim to consider
the consequences/implications/long term/short term/balance issues of the decisions to secure Level 2 or
Level 3 marks in the conclusion/recommendation.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) The majority of candidates could name and explain four barriers to communication for a business
and offered an appropriate explanation. The business operates 500 restaurants across Country Z
so one barrier would be caused by a long chain of command where messages could easily be
distorted as they passed through each level of the hierarchy. Many responses mentioned problems
with the sender or receiver, but the most common response focused on the barrier to
communication of poor technology. Internet failure, lack of computers and weak technology skills
amongst the workers were often discussed. Some responses offered only bullet points with
insufficient explanation to earn the full marks available.
(b) This question required candidates to consider two ways that VP can purchase its inventory, either
by head office or restaurant managers. In the discussion about the head office purchasing the
inventory, many candidates identified the benefit of bulk buying ingredients which would bring
advantages of purchasing economies of scale reducing unit costs. This would then increase profit
margins for VP. However, it might be necessary to store some ingredients in a warehouse because
not all branches would order the same amount at the same time. This kind of developed
explanation earned Level 2 reward. Simple statements which mentioned that head office could
retain responsibility and control for ordering ingredients for all 500 restaurants earned only Level 1
reward. Consideration of the restaurant managers ordering their own inventory often cited the
benefit of local suppliers being able to deliver much more quickly in response to changes in
demand. More importantly the food would be fresher which would enhance the reputation of VP’s
restaurants. However, the restaurant managers are already very busy and may not have the time
to order ingredients.
Question 2
(a) Knowledge of the topic of delegation was generally strong. Many candidates identified the
advantages of restaurant managers delegating tasks to assistant managers as an opportunity for
the manager to focus on other tasks and to give the assistant manager the chance to develop new
skills and gain experience in a managerial role. The disadvantages of delegation were well
considered. The restaurant manager would still carry the responsibility of the quality of food served
and the reputation of the restaurant, whilst lack of experience on the part of the assistant manager
might require extra training in customer service or food hygiene knowledge. There were four
application marks in this question, so it was possible to earn maximum marks by making four clear
points with reference to the context of VP Restaurants in each part of the response. Some weaker
responses offered repetition of points or answered in a generic style.
(b) Some candidates found this question quite challenging. Using the information from the case study,
they were asked to compare country A and country B as possible locations for new restaurants. In
Country A the higher average variable costs and higher wage rates would lead to higher costs
overall. Even though VP might charge $20 for each meal they would have to be mindful of the high
level of competition which might require an expensive marketing campaign. This would further
increase costs and reduce profit margins. The option of locating new restaurants in Country B
would allow VP to operate with much lower variable costs and wage rates. Since unemployment
was high it would likely be easier to recruit cooks and servers for the new restaurants. However,
high unemployment would make it less likely for customers to afford fast food because the average
disposable income would be quite low. This might keep sales below the expected level and
therefore restaurants might not be profitable. To earn Level 3 credit in the conclusion responses
needed to make a justified judgement about which option would be the ideal choice. The best
answers avoided repeating points made earlier in the response and related to why one location
was more suitable and the other less suitable for VP.
Question 3
(a) This was a well-answered question. Many candidates were able to outline the aim of gaining higher
profit or accessing new markets as a possible reason for expansion. The benefits of operating on a
large scale to reduce unit costs from bulk buying of food ingredients was often discussed by
candidates. Other strong responses explained that expansion would help VP gain a larger share of
the market which could strengthen the brand image and develop customer loyalty. To gain the
highest number of marks on this question additional explanation was required which also referred
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
to the context of VP’s restaurants. Some responses briefly mentioned several reasons for
expansion instead of developing the explanation of just two points.
(b) This question required candidates to consider the benefits and limitations of VP entering a new
country as a joint venture or franchising. Not all responses showed good knowledge of these two
methods of operating a business. The discussion about operating as a joint venture often
mentioned the benefit of sharing ideas and using the partner’s knowledge of the local market
before the restaurants opened in the new country. This would make it less risky for VP and less
expensive in terms of market research. However, the joint venture might result in disagreements
and an unequal sharing of the workload and resources. The possibility of franchising the VP brand
would reduce the start-up costs of new restaurants for VP. The franchisee would make the bulk of
the investment in premises and kitchen equipment rather than VP. VP would benefit from the fees
paid by the franchisee and expansion of the restaurants could occur quite rapidly. Some weaker
candidates wrongly assumed that VP themselves would be franchisees and made contradictory
arguments in their response.
Question 4
(a) This question required candidates to explain, using an example, the reason why VP might need
short-term and long-term finance. Strong responses mentioned that VP would need short-term
finance to pay day-to-day expenses such as paying wages to more than 25, 000 restaurant
workers. This might require an overdraft from the bank to enable wages to be paid on time every
week. Long-term finance might be needed for the restaurants that needed to update ovens and
cooking equipment. This would be very expensive. A bank loan might be an appropriate method of
finance in this case so that VP could spread repayments over a few years. This topic did not seem
to be well-known by quite a large number of candidates. Some responses offered brief mention of
debts without explaining a specific reason for needing finance and, more importantly, not linking
their answer to VP itself.
(b) The discussion about the impact of three changes in the economy of Country Z resulted in some
varied responses. It was often mentioned that an increase in interest rates would not only increase
repayments on any loans taken by VP but also reduce consumer spending in the economy as a
whole. As a result, sales of fast-food at VP might fall and profits decrease. Many candidates argued
that there would be a significant impact on VP following the depreciation of the exchange rate in
Country Z. Imported food ingredients would cost much more, especially since 30 per cent of VP’s
ingredients were imported. It might mean that the business buys from local suppliers instead of
importing to keep their costs down, but the quality of the food may not be as good as the imported
food supplies. Many candidates suggested that introducing legal controls for listing ingredients in
its meals would not have a major impact on VP. They already reprint menus frequently when new
meals were introduced so listing would require just a little more time and attention to detail. Better
recommendations did more than offer repeated earlier points – they weighed up the impact, large
or small, which resulted from the economic changes. The best answers justified their decision with
reasoned argument about which would affect VP the most.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/22
Case Study 22
Key messages
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one (a)
question which will be generic. Applying answers to the case will ensure responses are appropriate for the
given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both (a) and (b) questions for
application. In this particular case study, candidates were expected to refer to a start-up theatre
business. It is advisable for candidates to ask themselves about the size of the business, whether it is a
service business or a manufacturer, and the type of business organisation.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2. A few well developed points will achieve higher marks than a long list of simple
statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of ET, a start-up theatre business, provided an accessible scenario for candidates. Those
who applied their answers to the context of ET achieved higher marks. The majority of candidates seemed to
have time to complete the paper and attempted all questions.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. The question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees.
Many candidates showed good knowledge and understanding of the full range of the syllabus that was
assessed, but in some cases it was clear that certain topics were not as well understood. The weakest
understanding was of incorporated and unincorporated businesses, the objectives of a social enterprise, the
importance of preparing a cash-flow forecast and the roles of marketing.
Overall, the standard was good, with very few weak scripts, which was in line with previous years.
Candidates often provided answers in context which enabled them to access the application marks.
However, candidates should make sure that different examples of application are included in each section of
(a) questions, and that the conclusion/recommendation is also applied to the case in (b) questions. A lack of
analysis and evaluation resulted in answers remaining in the lower level mark band. Candidates should aim
to consider the consequences / implications / long-term / short-term / balance issues of the decisions to
secure Level 2 or Level 3 marks in the conclusion/recommendation.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) The majority of candidates were able to state at least three, if not four, characteristics of an
entrepreneur as well as explaining some of these characteristics. The most popular characteristics
were risk-taker, hard worker, effective communicator, creative and innovative. A few candidates
stated the characteristics but explained the characteristics using the same term in the explanation,
for example, being creative... an entrepreneur should be creative to be successful or a risk-taker…
that the entrepreneur would have to take risks. Some candidates attempted to apply their
explanations to ET even though this was a generic question. The weakest responses did not focus
on the personal attributes of the entrepreneur but on other factors for a successful business, such
as having sufficient capital and drawing up a business plan.
(b) This was a challenging question. Many candidates were able to identify the benefits and drawbacks
of partnerships and private limited companies. However, they did not always compare them with
each other but with sole traders or public limited companies. Some responses included mirror
arguments, such as listing ‘not a separate legal identity’ for partnerships and ‘separate legal
identity’ for private limited companies which could only be credited once. Weaker responses
confused limited and unlimited liability, and private limited companies with the public sector. The
concepts of personal liability, continuity, ease of setting up and privacy of information were well
understood and well explained in stronger responses. However, only the strongest candidates
could justify which option to choose and which one to reject without repeating earlier points.
Question 2
(a) This question was well answered with the majority of candidates identifying survival or profit as the
objective for ET and helping the community as the objective for Daycare. A large number of
candidates could explain the objectives well and in context. However, weaker responses did not
focus on one objective, or they focused on how the objective could be achieved rather than why ET
or Daycare would have that objective. An error made by some candidates in the first section about
ET’s objectives was to think that profit is acquired in order to pay expenses rather than being the
surplus after those expenses have been met. A minority of candidates got confused and thought
ET was running Daycare.
(b) This question differentiated candidates into those that could carry out calculations using the data
provided and those who could not. It should be emphasised to candidates that when the question
says justify your answer using suitable calculations then calculations should be included in the
answer. Answers need to go beyond comments such as makes a loss and give the actual figure.
Weaker responses gave a basic answer and included a comparison of the figures from Appendix 2,
such as the forecast revenue is higher for Option 2. Some answers simply said the revenue was
high, but it is not known whether this is true. Some candidates stated that Option 1 made a loss
and did not include the actual figure but did calculate the actual profit for Option 2. Stronger
candidates could calculate both the profit and loss figures. Some candidates also calculated the
profit margins for both options as well, although this was not necessary to make a valid
recommendation. The most popular recommendation was to choose Option 2 as it made a profit,
and this was argued to be important for a new business. A smaller number of candidates argued
that the low-income area may not yield many customers who could pay the higher price for Option
2 and therefore Option 1 should be chosen as the profit was only a forecast and may not be
achieved. A minority of weaker responses made assumptions about staff motivation or the quality
of the performance, which was based on their own opinions rather than the actual information
provided in the appendix.
Question 3
(a) This question was not well answered by the majority of candidates. The most common error was to
confuse cash flow with profit. Stronger candidates recognised the use of cash flow in planning,
decision-making, for obtaining a bank loan, ensuring there is cash for day-to-day activities and
avoiding a liquidity problem. For those candidates who were able to identify appropriate reasons,
most were not able to apply them to the case study and therefore did not gain the second mark for
each reason. A number of candidates discussed cash inflows and outflows separately. The terms
‘revenue, expenditure, finance, money’ were used instead of ‘inflows, outflows, cash, working
capital.’ It was important for candidates to recognise that this was a forecast not a report on the
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies June 2023
Principal Examiner Report for Teachers
previous period. Another reason for weaker answers was the amount of repetition, for example
candidates gave multiple examples of expenses as cash outflows that could be monitored via the
cash-flow forecast.
(b) Many candidates could discuss the importance of identifying customers’ needs. Weaker responses
offered repetition of the question and often resulted in overlapping answers between the three parts
of the question. Better responses discussed in detail why identifying a specific target market was
important and also recognised the significance of providing suitable performances at a price that
would satisfy customers, particularly in a low-income area. Additionally, these candidates
established a connection between maintaining a strong reputation through excellent customer
service and gaining customer loyalty, ultimately leading to an increase in revenue and market
share. Many candidates did provide a justified conclusion with ‘identifying customers’ needs’ most
likely to be seen as the most important because the other two roles are based on this. A small
minority of candidates did not answer the question as they explained how the three roles could be
achieved rather than why they were important, for example, providing a description of primary
research methods to identify customers’ needs.
Question 4
(a) The majority of candidates answered this question well and discussed the leadership styles of
autocratic and democratic with laissez-faire being the least popular style. Many candidates then
went on to explain how each leadership style was used including its benefits and/or drawbacks.
The most common errors confused democratic leadership with delegation. Weaker responses
included explanations that were too vague, for example it was not always clear if an explanation
was for democratic or laissez-faire. Many answers were generic and hence application marks were
not gained so full marks were not achieved, even if the response had a good explanation of each
leadership style. Some weaker candidates mixed up the explanation of the leadership style, for
example they explained autocratic under the heading of democratic.
(b) Candidates were able to consider the three ethical issues. Strong responses often discussed:
better motivation and increased costs when paying fair wages; support for the local community and
reduced transport costs but then the quality of the costumes may be lower when buying from
suppliers in the local area; and gaining a better brand image increasing sales to ethically minded
consumers but increased costs for refreshments supplied by producers that do not damage the
environment. Responses from weaker candidates lacked development and so remained in the
Level 1 mark band. These included simple statements such as ‘it will be more expensive’ rather
than explaining why this was a disadvantage to the business by increasing costs which might lead
to higher prices and consequently lower sales. A small number of candidates thought that paying
fair wages meant paying the same amount to all employees and felt that most qualified employees
would be demotivated by this. Stronger responses demonstrated their understanding by outlining
the drawbacks of each change and offering a conclusive judgment on the change that was likely to
have the most significant impact on ET. This did not just repeat earlier points but justified the
choice by providing reasoning as to why this particular change would have a greater effect
compared to the other two changes.
© 2023
Grade thresholds – June 2023
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the June 2023 examination.
Minimum raw mark required for grade:
Maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 52 47 43 37 31 25 19 14 9
Component 12 80 52 45 39 34 29 24 18 12 7
Component 21 80 52 46 39 34 29 24 19 14 9
Component 22 80 52 48 43 37 31 26 20 15 9
The overall thresholds for the different grades were set as follows.
Maximum
Combination of
Option mark after 9 8 7 6 5 4 3 2 1
components
weighting
X 160 11, 21 104 93 82 71 60 49 38 28 18
Y 160 12, 22 104 93 82 71 60 50 38 27 16
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email [email protected]
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*7306362678-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Any blank pages are indicated.
06_0986_21_2023_1.2
© UCLES 2023 [Turn over
2
Vegetable Palace (VP)
VP was started 10 years ago in country Z. It is a public limited company. VP has a chain of 500 fast-food
restaurants that operate across country Z. The VP brand is famous for its vegetarian food, this means
none of its meals contain meat.
VP has a head office in Main City where all the directors and senior managers work. There are many
barriers to communication. Each VP restaurant has a Manager, an Assistant Manager and 50 employees
who cook and serve the meals. Restaurant Managers are often very busy and they are considering
delegating some of their tasks to the Assistant Managers.
The ingredients for the restaurants are ordered in bulk by head office and then distributed from its
warehouse to each of the restaurants. However, some senior managers think that Restaurant Managers
should purchase their own ingredients from local suppliers. This would mean the ingredients would be
fresher and would allow variations in the meals served.
VP wants to expand into another country. It will choose between the two countries shown in Appendix
2. VP will also need to decide how to enter a new market in another country. It has the option of forming
a joint venture with another business or franchising the VP brand. The choice of finance will need to be
considered for the expansion and the amount of finance will depend on the option chosen.
Appendix 1
Advertisement for VP's restaurants
Choose VP for the finest vegetarian meals. Our service is the fastest possible!
You will receive your meal in less than 5 minutes – guaranteed!
Delicious and varied meals for even the biggest of appetites and all at competitive prices.
New meals are being introduced all the time.
There is a VP restaurant near you – we look forward to serving you soon.
© UCLES 2023 06_0986_21_2023_1.2
3
Appendix 2
Summary of the two possible countries that VP could choose to locate its new restaurants.
Country A Country B
Average variable cost Average variable cost
Raw materials
$6 per meal $2 per meal
Low unemployment High unemployment
Labour
$10 per hour for each employee $5 per hour for each employee
Many competitors Few competitors
Market
Average price per meal = $20 Average price per meal = $10
Appendix 3
Email from VP’s Managing Director to VP’s Marketing Director
To: VP’s Marketing Director
From: VP’s Managing Director
Date: 31 March 2023
Re: Economic changes in country Z
Did you see the news this morning that interest rates will be raised from 3% to 5% later today? This will
have several effects on our business in country Z.
The news also said that the exchange rate in country Z has depreciated. We will have to consider how
this will affect our business, especially as we import 30% of our ingredients into country Z.
There are also new legal controls being introduced that mean we have to list all the ingredients used in
each of our meals on the menu. We do reprint menus every time we change the meals, but it is something
to consider.
Speak later today.
© UCLES 2023 06_0986_21_2023_1.2
4
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publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
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Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 06_0986_21_2023_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*3081804448-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Any blank pages are indicated.
06_0986_22_2023_1.2
© UCLES 2023 [Turn over
2
Everyone Theatre (ET)
Zane and Zaara are both actors. They plan to start up a theatre in a low-income area of Main City. Zane
and Zaara believe that helping the community is as important as being successful entrepreneurs.
The theatre will be a private sector business and Zane and Zaara have to decide whether to start up as
an unincorporated business (partnership) or as a limited company. Zane is planning to prepare a cash-flow
forecast for the first year. Zaara knows they will need to set business objectives for the theatre and also
decide on a leadership style to use when managing employees. ET will have 24 part-time employees
as shown in the organisational chart in Appendix 1.
Zane and Zaara plan to put on performances in the evenings for local people and tourists. There will be
100 seats in the theatre but not all the seats will be sold if the price is too high. The Marketing Manager,
Zaara, will need to decide which performances to put on, what price to charge and which refreshments
to sell. Zaara will also need to decide between the two possible options for the first performance when
the theatre opens. Information on the two options is shown in Appendix 2.
In the daytime the theatre building will be used by Daycare, a local social enterprise. Daycare takes care
of young children up to the age of 5 so that low-income family members can go out to work. It also
provides education for the children which helps their development and progress before they start school.
Some of Daycare’s objectives are different to those of ET.
Appendix 1
Proposed organisational chart for the theatre
Marketing Manager (Zaara) Finance and Administration
Manager (Zane)
Backstage e.g. Actors Promotion Cleaners Ticket office
costumes and (10) (2) (3) (3)
scenery
(6)
Note: The numbers in brackets are the number of part-time employees who work in each department.
© UCLES 2023 06_0986_22_2023_1.2
3
Appendix 2
Forecast data for the two possible options for ET’s first performance at the theatre
For each performance Option 1 Option 2
Number of actors/employees 7 24
Average wage cost per actor/employee $30 $10
All other costs including scenery, costumes and
$1000 $2000
promotion
Forecast revenue assuming all 100 seats are sold $1000 $2500
Appendix 3
Email from Zane to Zaara
To: Zaara
From: Zane
Date: 1 April 2023
We want to support the local community and we need to make decisions about the following.
Should we:
• Pay fair wages even though they may be higher than those paid by competing theatres?
• Only buy costumes produced in the local community?
• Purchase all refreshments from suppliers that do not pollute the environment?
© UCLES 2023 06_0986_22_2023_1.2
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reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 06_0986_22_2023_1.2
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer/Data Response May/June 2023
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 2023 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 23 printed pages.
© UCLES 2023 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2023
PUBLISHED
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 descriptors 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.
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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).
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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.
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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0450/7115/0986 Business Studies - Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X 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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
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 Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Define ‘specialisation’. 2
Award 2 marks for a full definition. Award 1 mark for the
partial definition.
When people/businesses/countries concentrate on what
they are best at [2]
OR
Focusing an individual or group on one particular skill or
process that they are suited to or for which they possess the
correct skills [2]
OR
Way in which work is divided so each worker concentrates
on a specific task [1] so they become expert at it [1]
Partial definition, e.g. Workers do only one job [1] Other
appropriate responses should also be credited.
1(b) Identify two methods of production. 2 Only award the first two responses given.
Award 1 mark per method (max 2). Two from: Do not award answers such as lean production or cell
Job (production) production.
Batch (production)
Flow/mass (production)
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Question Answer Marks Notes
1(c) Outline two advantages to WLT of using quality 4 To use words from the stem as application, the reference
assurance. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant advantage (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Carpets
40%/exported
Points might include: Globalisation
Reduces faults/errors at all stages of production/fewer Specialisation
mistakes [k] when making carpets [app] 60 (employees)
Less waste/less rework (of faulty products) [k] which Efficiency
could help improve efficiency [app] Manufactures/production
Encourages teamwork which may motivate worker [k]
among its 60 employees [app] Other appropriate examples can be credited.
Fewer customer complaints/fewer customer
returns/replacements [k] Do not award:
Better brand image/improve/maintain reputation [k] improve customer satisfaction
Reduce inspection costs/do not need to hire inspectors [k] better quality
Allows business to know at what stage mistakes happen increase sales
[k] lower cost on its own
encourages teamwork/motivation on its own
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(d) Explain one opportunity and one threat of globalisation 6 To use words from the stem as application, the reference
for WLT. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each opportunity/threat (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Award one mark for each relevant explanation Carpets
(max 2). 40%/exported
Specialisation
Opportunities might include: 60 (employees)
Increase potential sales/access to more markets [k] as it Efficiency
exports 40% of its products [app] increasing revenue Manufactures/production
[an]
Cheaper raw materials from other countries [k] to Other appropriate examples in context can be credited.
manufacture [app] which can improve the profit margin
[an] Accept sales as either [k] or [an] but not both.
Labour may be cheaper [k] reducing (labour) costs [an]
Economies of scale or relevant examples [k]
Global brands are more recognised/desirable [k]
Threats might include:
Increased competition [k] leading to a reduction in
market share [an]
Employees may leave if WLT cannot pay as much as
international competitors [k] so may lose some of its 60
employees [app] increasing recruitment costs [an]
Over dependent on supplies from other countries [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think improving labour skills is the best way for 6 This is a general question so there are no marks for
a manufacturing business to increase efficiency? application.
Justify your answer.
For evaluation to be awarded justification will usually follow
Award up to 2 marks for identification of relevant points. on from relevant analysis of points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to whether Do not award as [an]:
improving labour skills is the best way for a manufacturing increased productivity
business to increase efficiency. profitability
lower cost
Points might include: more output
Improving labour skills:
Able to work faster [k] which will increase output per
worker [an]
Fewer mistakes are made [k] leading to less
rework/wastage [an]
Training takes employees time [k] which will lower
output in the short-term [an]
Increase training costs [k] which will increase unit costs
[an]
Workers are more versatile/ flexible [k]
Other ways might include:
Automation/machinery [k] allows operation with fewer
employees [an]
Lean production/Just-in-time/Kaizen [k] therefore lower
cost per unit [an]
Improved motivation or methods of motivating, e.g. piece
rate [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Justification might include:
Improving labour skills can mean that employees make
fewer mistakes.
[k] leading to less rework [an]. Whereas automation [k]
allows the business to operate with fewer employees [an].
Improving labour skills is the best way, because automation
could lead to redundancies which may demotivate the
remaining employees [eval] and potentially leading to less
output overall [eval].
Question Answer Marks Notes
2(a) Identify two reasons why a business might have cash- 2 Only award first two answers given.
flow problems.
Award 1 mark per reason (max 2). Points might include:
• Too much inventory
• Growing too quickly/overtrading
• Allow customers/ trade receivables too long to pay
• Paying suppliers/ trade payables too quickly
• Seasonal /low demand
• Poor (financial) planning
Other appropriate responses should also be credited.
2(b) Calculate X and Y. 2 $ sign not required.
Award 1 mark for each correct calculation (max 2).
X = $10 000 or 10
Y = $20 000 or 20
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Question Answer Marks Notes
2(c) Identify four examples of a cash inflow. 4 Only award the first four responses given.
Award 1 mark per example (max 4). Points might include: Can award ‘sales’ if the candidate does not identify specific
(Cash) sales/revenue examples (of cash or credit sales).
Payments from trade receivables/money from credit
sales Can allow ‘additional income from renting assets’.
Grants Allow Debt factoring if seen.
Bank loan
Sponsorship Do not award trade receivables alone.
Sale of non-current assets
Funds from investors/share issue/capital introduced by
owner
Dividends from shares in other companies
Interest received from savings/bonds/investments
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(d) Explain one advantage and one disadvantage to LMA of 6 To use words from the stem as application, the reference
becoming a private limited company. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant advantage/disadvantage
(max 2). Award 1 mark for each relevant reference to this The following words are likely to be appropriate for this
business (max 2). Award 1 mark for each relevant question:
explanation (max 2). Restaurant
Partnership
Points might include: Remain small
Advantages: 20 years ago
Limited liability [k] so personal assets are not at risk if Family(-owned)
the business is not able to repay its debts/ only liable
for the amount invested [an] Other appropriate examples in context can be credited.
Separate legal identity [k] so the owners are not held
responsible for the actions of the business [an] which is
not true for a partnership [app]
Able to raise finance by selling shares [k] to fund
expansion [an] if the business decides it does not want
to remain small [app]
Continuity [k]
Can choose who buys shares [k]
Disadvantages:
More legal formalities [k] which takes time away from
other activities [an] in the restaurant [app]
Separation of ownership and control [k] so the owners
may not be involved /agree with business decisions
taken [an] as the directors may not listen to the family
[app]
Expensive/time consuming to change to this form of
business organisation [k]
Accounts must be made available [k]
Dividends may/ be paid [k] reducing retained profit [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Explain two reasons why a business might remain 6 This is a general question so there are no marks for
small. Which reason is likely to be most important? application.
Justify your answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to which reason
is likely to be the most important reason why a business
might remain small.
Points might include:
Access to capital/lack of finance [k] which makes it
difficult to fund expansion/working capital [an]
Small market [k] so there is not sufficient demand [an]
Lack of skills/knowledge to expand/larger business
more difficult to manage [k] so more likely to make
mistakes if expand [an]
Lack of workers [k]
Type of industry/service industries (offer a personal
service)/specialised products [k] where close contact
maybe needed [an]
Personal objectives/owner’s objectives or example such
as better communication with customers, keeping
control [k] which might help retain/increase customer
loyalty [an]
Market dominated/controlled by a few large competitors
[k] so will struggle to attract more customers [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Justification might include:
One reason is the size of the market [k] as there may be
insufficient customers [an]. Another reason is lack of finance
[k] making it difficult to fund expansion [an]. The size of
market is a more important reason why a business might
remain small as without customers there is no revenue
[eval], which is likely to reduce the need for finance anyway
[eval].
Question Answer Marks Notes
3(a) Define ‘job description’. 2
Award 2 marks for a full definition. Award 1 marks for a
partial definition.
Outlines the responsibilities and duties to be carried out by
someone employed to do a specific job [2]
OR
A list of the key points about a job, job title, key duties,
responsibilities, and accountabilities [2]
OR
A description of the tasks, role, and responsibilities of a
particular position [2]
OR
What the job entails/explains the job with a list of suitable
content [2]
Partial definition, e.g. What they must do in a job/list of
content [1]
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Question Answer Marks Notes
3(b) Identify two levels from Maslow’s hierarchy of needs. 2 Only award the first two responses given.
Award 1 mark per level (max 2). Two from: Do not award examples such as job security.
Physiological/physical
Safety/security Do not award answers such as ‘psychological’ or ‘basic
Social/(love and) belonging needs’ as too vague.
Esteem
Self-actualisation
3(c) Outline two factors DZD should consider when deciding 4 To use words from the stem as application, the reference
which applicants to recruit. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for identification of each relevant
factor (max 2). The following words are likely to be appropriate for all
Award 1 mark for each relevant reference to this business responses on this question:
(max 2). Delivery business or examples such as parcels
60 employees
Points might include: Large business
Experience [k] of delivering parcels [app] (20) vehicles
Qualifications or relevant examples such as do they Part-time
have a driving licence [k] to drive the (20) vehicles [app] Planning to expand
Skills or examples such as good at communication [k] as Maslow
will work in a large business [app] Human resource director
Whether they match the requirements of business/job or
examples such as physical ability/know the area [k] Other appropriate examples in context can be credited.
willing to work part-time [app]
Whether they match the culture of the business [k]
Performance during interview/testing [k]
Age [K]
References [K]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(d) Explain two sources of finance DZD might use for the 6 To use words from the stem as application, the reference
new vehicles. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant source of finance (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2). Delivery business or examples such as parcels
Planning to expand/expansion
Points might include: Large business
Bank loan [k] as able to purchase immediately [an] so 20 (vehicles)
there is no delay to the planned expansion [app]
Retained profit [k] as it's a large business [app] as no Do not award ‘vehicles’ as application as stated in question.
need to repay [an] Other appropriate examples can be credited.
Leasing [k] of the 20 [app] vehicles as do not need to
make a large initial payment [an] Do not award short-term options such as overdraft as not
Hire purchase [k] appropriate in this context.
Grant [k]
Selling of assets [k]
Owner’s capital/share issue [k]
Debenture [k]
Crowdfunding [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think a service business should only employ 6 This is a general question so there are no marks for
part-time workers? Justify your answer. application.
Award up to 2 marks for identification of relevant points. The focus should be on the benefit/cost to the business not
Award up to 2 marks for relevant development of points. the worker.
Award up to 2 marks for justified decision as to whether a
service business should only employ part-time workers.
Do not award points such as part-time workers are likely to
Points might include: be less tired, more motivated, lack skills, do not have a
contract.
Part-time:
When not working no need to pay wages [k] helping to Do not award answers which confuse part-time with
reduce labour costs [an] temporary/seasonal workers.
Need to recruit/train more employees [k] taking more
time/money [an]
Could allow the business to recruit wider range of skills
[k]
More flexible hours/less likely to take time off for
appointments [k]
Easier to extend worker hours at busy times [k] or [an]
Some employees may not be willing/want part-time jobs
[k] so may miss out on possible candidates if not
offered full-time option [an]
Full-time:
Able to offer consistency of service [k] so could improve
reputation/increase customers [an]
Workers may be committed to business [k] which could
increase the productivity of the business [an]
Easier to communicate/update [k]
Less workers needed [k]
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Question Answer Marks Notes
3(e) Other appropriate responses should also be credited.
Justification might include:
Part-time employees are only paid when they are working [k]
reducing labour costs [an]. However, consistency of service
may fall [k] which could damage the business reputation [an].
A service sector business especially should not have only
part-time employees as service quality is vital for customer
loyalty [eval] and therefore sales. [eval].
Question Answer Marks Notes
4(a) Identify two factors that might affect the accuracy of 2 Only award the first two answers given.
market research.
Award 1 mark per factor (max 2). Points might include:
Sample size
Sample chosen/who is asked
Interviewer experience/interviewer bias
Wording of the questions
Who carried out research
Age of information/when data gathered/information
might be out of date
People’s actions do not always match what they say
Anonymity
Bots or use of AI
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(b) Identify two benefits to a business of using market 2 Only award the first two responses given.
segmentation.
Award 1 mark per benefit (max 2).
Points might include:
Able to tailor goods to specific needs of segment/know
what to produce
Identify gaps in the market
To help decide best place to sell
Research is simpler
Help focus spending/make best use of resources
Help target promotion/advertising
Help set prices
Help increase sales/revenue
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(c) Outline two ways NLR might respond to environmental 4 To use words from the stem as application, the reference
pressures. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference made to this question:
business (max 2). • Skincare or examples such as hand cream
• Packaging
Points might include: • 85% of consumers/customers
Reduce amount of materials used/wastage [k] when • Product life cycle
making its skincare products [app] • Market research
Use recycled materials [k] for the packaging [app] • Branded
Develop environmentally friendly products [k] based on
its market research [app] Other appropriate examples can be credited.
Buy energy efficient/environmentally friendly
machinery/use renewable energy [k] Do not award environmental pressures as [app] on its own
Offer different sizes/only make to order/reduce number as stated in question.
of products available [k]
Alter/reduce transport use [k]
Promote/support environmentally friendly causes [k]
Ask customers to reuse containers (when buying from
shops) [k] as 85% of consumers (want the business to
respond to environmental pressures) [app]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(d) Explain how NLR’s pricing decisions might be affected 6 Attract customers/To use words from the stem as
at two different stages of the product life cycle. application, the reference must be appropriate, (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant stage of life cycle/pricing
method (max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Award 1 mark for each relevant explanation (max Skincare or examples such as hand cream
2). 85%
Market research
Points might include: Packaging
During introductory stage [k] the business may set a low Environmental pressures
price to attract customers [an] to their hand cream [app] Branded (product)
At growth stage [k] prices may be lowered due to Market segmentation
increased competition [an]
At maturity stage [k] price is likely to be similar to Other appropriate examples in context can be credited.
competitors to retain market share [an] for the branded
products[app]
During decline stage[k] discounts might be offered to
maintain sales/ sell of remaining inventory [an]
Skimming pricing [k] can be used at the introductory
stage to recover development costs [an] of new
packaging [app]
Penetration pricing [k] in some market segments [app]
Cost plus pricing [k]
Competitive pricing [k]
Promotional pricing [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Do you think promoting the brand image is the most 6 This is a general question so there are no marks for
important role of packaging? Justify your answer. application.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to whether
promoting the brand image is the most important role of
packaging.
Points might include:
This can help the product attract customers/stand out
against competitor's products [k] which can help
increase/maintain sales [an] leading to higher revenue
[an]
Protect the product [k] so the product does not get
damaged/can be kept fresh [an] which can help reduce
the amount of wastage [an]
Ease of storage/transport [k] which could lead to lower
storage/transport costs [an]
Provide information about the product [k]
Legal requirements [k] as a business might have to
identify the ingredients to avoid legal action [an]
Easy to open the container and use the product [k]
Justification might include:
Packaging helps the product stand out against competitor's
products [k] helping increase sales [an]. Protecting the
product is important [k]to keep the product fresh [an] This is
the most important role because damaged goods will not
sell [eval] Therefore, brand image is not the most important
role although customers need to be aware of the product, to
buy. [eval]
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Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/12
Paper 1 Short Answer/Data Response May/June 2023
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 2023 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 24 printed pages.
© UCLES 2023 [Turn over
0986/12 Cambridge IGCSE (9–1) – Mark Scheme May/June 2023
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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 descriptors 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.
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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).
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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.
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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0450/7115/0986 Business Studies – Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X 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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
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 Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Identify two reasons why a business might offer training to its 2 Only award the first two responses given.
employees.
Award 1 mark per reason (max 2).
Points might include:
• To introduce a new process/new equipment
• Improve efficiency/productivity
• Increase output
• Reduce mistakes/fewer errors/better quality goods or services
• Improve employee skills
• Increase knowledge
• Improve motivation
• Help reduce labour turnover
• Decrease the chance of accidents
• Familiarise new employees with business/other employees
Other appropriate responses should also be credited.
1(b) Calculate the following values using Fig. 1.1: 2
Award 1 mark for each correct answer.
Break-even output: 500 (watches) [1]
Break-even revenue: $60 000 OR 60 000 [1]
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Question Answer Marks Notes
1(c) Outline two possible effects on FBW’s break-even chart if the prices of 4 To use words from the stem as application,
its products are increased. the reference must be appropriate (i.e.
make sense) in relation to the point being
Award 1 mark for each relevant effect (max 2). made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Points might include: Watches
Reduce/lower break-even output [k] below 500 units [app] 5 (employees)
Increase the margin of safety [k] above 100 [app] Training (every year)
Increase contribution per unit [k] when using job production [app] Job production
Increase revenue [k] from sale of its watches [app] 600 units (sold)
Reduce break-even revenue [k] 500 (break-even output)
Increase profit margin [k] 100 (margin of safety)
Increase (potential) profit/reduce (potential) loss [k] $4000 (profit at 600 units)
$60 000 (break even revenue)
Other appropriate responses should also be credited.
Other appropriate examples can be credited.
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Question Answer Marks Notes
1(d) Explain two benefits to FBW of having full-time employees. 6 To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for identification of each relevant benefit (max 2). sense) in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2). Watches
5 (employees)
Points might include: (Regular) training
Workers likely to be more loyal/committed [k] so lower labour Job production
turnover/lower cost of recruitment [an] for its 5 employees [app] 600 units sold
Easy to communicate/update [k] when making its watches [app] so could 500 (break-even output)
be more efficient [an]
Consistent standard of work [k] leading to better reputation [an] which is Other appropriate examples can be
helpful as using job production [app] credited.
Fewer workers needed [k] so less training required [an]
Less employees to manage [k] so managers can focus on other issues
[an]
Employees become more familiar with the business [k]
Always available/can find when needed [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think job production is the best method of production for a 6 This is a general question so there are no
small business to use? Justify your answer. marks for application.
Award up to 2 marks for identification of relevant points. Some points could be written as an advantage
or a disadvantage of each method but only
Award up to 2 marks for relevant development of points. award once.
Award up to 2 marks for a justified decision as to whether job production is Some points can be [k] or [an] but do not
the best method of production for a small business to use. award the same point twice.
Points might include:
Do not award:
Job production: Comparisons between batch and flow e.g.
Meet exact customer requirements [k] which increases customer batch production not greatly affected by
loyalty/sales [an] machine breakdown, batch is flexible/can
Unique/high-quality products [k] can charge higher price [an] change production easily as not appropriate
Products made to order/can take a long time to make [k] so low output for this question.
[an]
No economies of scale [k] leading to higher average cost [an]
Skilled labour is needed [k] increases labour/training costs [an]
Requires a lot of employees/labour intensive [k]
Batch production [k]:
Some economies of scale [an]
Able to produce more [an] so unit costs lower [an]
Can produce range/variety of products [an]
Demotivated employees [an] increasing labour turnover [an]
Machines must be reset between batches [an]
Added cost of moving/storing semi-finished goods [an]
Warehouse space is needed [an]/increases storage costs [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Justification might include:
Job production allows a business to produce goods that meet exact
customer demands [k] so able to charge a higher price [an]. However, skilled
labour can cost more [k] which can lead to high labour costs [an]. Overall, I
think job production is not the best method for a business, especially if it is
small as the number of sales may not cover the additional cost of the labour
[eval] so the business is unable to make a profit. [eval]
Question Answer Marks Notes
2(a) Identify two ways a business plan can help a business to reduce risk. 2 Only award the first two answers given.
Award 1 mark per way (max 2).
Points might include:
Help secure funding/attract investors
Can show whether/when extra finance needed/help budgeting
Help set goals/objectives/provide sense of direction
Help monitor/check/track progress
Test feasibility of idea/identify demand
Help set (suitable) prices
Understand level/type of competition
Help identify skills/employees needed
Help allocate resources (appropriately)
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(b) Identify two possible reasons why a business might want to expand. 2 Only award the first two answers given.
Award 1 mark per reason (max 2).
Points might include:
Increase sales/revenue
Increase profit
Widen customer base/target new markets
Increase market share
Increase reputation/more prestige/status
Increase output
Spread risk/diversify
Gain economies of scale
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(c) Outline one advantage and one disadvantage to Gloria of using 4 To use words from the stem as application,
telephone calls as a method of communication with her employees. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant advantage/disadvantage
(max 2). The following words are likely to be
appropriate on this question:
Award 1 mark for each relevant reference to this business (max 2). (House) cleaning
4 employees
Points might include: Sole trader
Can help share her workload
Advantages:
Instant/quick to contact [k] her 4 employees [app] Other appropriate examples can be
Opportunity to get immediate feedback [k] about cleaning jobs [app] credited.
Can talk to employees who are anywhere/elsewhere [k]
Can leave a message/voice note [k]
Disadvantages:
Technical problems e.g. no internet/signal [k] so will not help reduce her
workload [app]
No hard copy/nothing to refer to [k]
Receiver may not answer the phone/might be busy when call [k]
Not face to face/no body language [k]
May only be able to speak to one person at a time [k]
Cannot show data/chart over a phone [k]
Cost [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(d) Explain two factors Gloria should consider when deciding whether to 6 To use words from the stem as application,
take on a business partner. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant factor (max 2).
The following words are likely to be
Award 1 mark for each relevant reference to this business (max 2). appropriate for this question:
(House) cleaning
Award 1 mark for each relevant explanation (max 2). Expand/repair service
4 employees
Points might include: Effective communication is important
Have to share responsibilities/management/control [k] of the cleaning Reduce her workload
business [app] which could lead to conflict [an] Sole trader
Offer skills (or examples of) [k] which could lead to business Market research
opportunities [an] such as the repair service [app]
May offer experience/expertise/knowledge [k] increasing efficiency [an] Other appropriate examples can be
to help reduce the workload [app] credited.
Access to finance/capital [k] so can grow faster/upgrade equipment [an]
making it easier to expand [app] Takes time to make decisions is [k] or [an]
Different objectives/ways of working [k] which could lead to slower but do not award the same point twice.
decision-making/conflict [an]
Whether want to share decision-making/take longer to make decisions Reduce workload can be [k], [app] or [an]
[k] but may lead to better decisions [an] but only award once.
Someone to share risk/losses/costs [k]
Whether wants/have to share any profit [k] compared to staying as a Conflict/argument is [an] only.
sole trader [app]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Explain two methods of primary market research a business could use 6 This is a general question so there are no
to find out the demand for a new product or service. Which would be marks for application.
the best method to use? Justify your answer.
Some points could be written as either
Award up to 2 marks for identification of relevant points. advantages or disadvantages of different
methods but only award once.
Award up to 2 marks for relevant development of points.
Some points can be awarded as [k] or [an]
Award up to 2 marks for a justified decision as to which is the best method of but only award once.
primary market research for a small business to use to find out the demand
for a new product or service.
(Postal) questionnaire/survey [k] – apply to either method:
Customer opinions/preferences/suggestions can be gathered [an]
Large amounts of information can be collected [an]
Detailed information can be gathered [an]
Allows many people to be asked (the same questions) [an]
Questions may be poorly worded/difficult to phrase questions
properly/people interpret questions in a different way [an]
People may not tell the truth/say what they think sounds good [an]
Customers may not complete/return the questionnaires [an]
May have to pay someone with the right skills to design the
questionnaire properly [an] which increases the cost [an]
Online survey [k] – additional specific points
Data can be quickly presented/analysed using IT tools [an]
Fast/quicker response time (than other forms of survey) [an]
Cheaper than interviews/postal questionnaire/focus group etc. [an]
No representative needed to carry it out [an]
(Postal) questionnaire/survey [k] – additional specific points
Carrying out questionnaire takes time/money [an]
Analysing results takes time [an]
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Question Answer Marks Notes
2(e) Interview [k]
Allows for detailed information to be gathered [an]
Can explain questions [an]
Interviewer bias possible (if interviewer is not properly trained) [an]
Expensive [an]
Time consuming to carry out [an]
Focus group [k]
Highly detailed responses [an]
Chance to ask follow-up questions [an]
Some group members can influence what others say [an] leading to
unreliable results [an]
Can only ask a few people [an]
Expensive [an]
Time consuming [an]
Observation [k]:
• Seeing what people do can be more accurate than what they say [an]
• More expensive (than other methods) [an]
• Test marketing/product trials [k]:
• Cost of any mistake is limited to a small output [an]
• Takes longer for final product to reach main market [an]
Other appropriate responses should also be credited.
Justification might include:
One method is a questionnaire [k] which allows many people to be asked the
same questions [an]. Another option is a focus group [k]. This might be better
because it could provide highly detailed responses [an]. Although fewer
people can be asked, the ability to ask follow-up questions is important
especially when offering a new product [eval] so the extra detail could allow
the business to make more informed decisions increasing the chances of
success [eval].
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Question Answer Marks Notes
3(a) Define ‘import tariff’. 2 First mark for understanding it is a tax.
Idea of from another/into the country is 1
Award 2 marks for a full definition. Award 1 mark for a partial definition. only.
A tax placed on imported goods when they arrive into a country [2]
OR
A specific form of tax imposed on imported goods [2]
Partial definition e.g. type of tax [1] OR tax on imported goods [1]
Other appropriate responses should also be credited.
3(b) Identify two reasons why some markets can become more competitive. 2 Only award the first two answers given.
Award 1 mark per reason (max 2). Do not award:
Factors affecting demand/spending patterns
Points might include: e.g. changes in population, spending on
Globalisation/free trade advertising, lower prices/actions of
Internet/ecommerce/social media/developments in technology competitors
Improvements in transport/infrastructure
New legal controls/provide grants/removal of tariffs/quotas
Increase in competitors
Other appropriate responses should also be credited.
3(c) State the four stages of the business cycle. 2 Award the first four responses only.
Award 1 mark per stage (max 4). The order does not matter.
Recession
(Economic) growth
Boom
Slump/depression
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Question Answer Marks Notes
3(d) Explain one possible effect of the following changes on VVA when 6 To use words from the stem as application,
importing raw materials: the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant effect [max 2].
The following words are likely to be
Award 1 mark for each relevant reference to this business [max 2]. appropriate for this question:
School backpacks/bags
Award 1 mark for each relevant explanation [max 2]. 45% (raw materials) / 55% locally
Retailers
Points might include: Increased level of competition
Introduction of import quotas in country X: Other appropriate examples can be credited.
Limit/reduce the amount of imports [k] as import 45% of these [app]
which could reduce output/may have to find more (local) suppliers [an] Do not award: Tariff as [app].
May mean have to find local/alternative suppliers/may not be able to
find suitable suppliers [k] leading to increase time/cost [an]
Fewer imports possible [k] leading to fewer (potential) sales [an]
Lower production [k]
Appreciation of country X's exchange rate:
Imports become cheaper [k] reducing VVA’s costs [an] of its school bags
[app]
Imports become cheaper [k] so may be able to lower prices [an]
Lower import price [k] so could increase its profit margin [an]
Imports become cheaper [k] so can import more [an]
Can import more (materials) [k] so can increase output [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think retailers are the best channel of distribution for a 6 This is a general question so there are no
manufacturing business to use? Justify your answer. marks for application.
Award up to 2 marks for identification of relevant points. Points must focus on viewpoint of
manufacturing business.
Award up to 2 marks for relevant development of points.
Some points can be presented as
Award up to 2 marks for a justified decision as to whether using retailers is advantages/disadvantages of different
the best channel of distribution for a manufacturing business to use. channels but only award point once.
Points might include: Some points can be written as [k] or [an] but
only award once.
Retailers:
Wide distribution/access to customers/sell in different places [k]
increase sales/revenue [an]
Retailers will carry out/pay for advertising/promotional activities [k] raise
awareness/increase sales [an]
Can sell in large quantities/higher sales [k]
Manufacturer can hold less inventory [k] lower storage costs [an]
Price may be higher [k] leading to fewer sales [an]
No direct contact with customers [k] so difficult to build/maintain
customer relationship [an]
Loss of (some) control of marketing mix/promotion/price/product [k]
Retailer takes some of the profit [k] which reduces profit margin [an]
Manufacturer must pay delivery costs to the retailers [k]
Other options could include:
Sell direct to customers/direct selling/online/internet/ecommerce open own
shops [k]
All/more profit goes to manufacturer [an]
Can sell at a lower price [an] leading to more sales [an]
Can control all/more of the marketing [an]
Allows for direct customer contact/feedback/market research [an]
Increased delivery costs/customers over a wide area/[an]
May need to employ extra workers (to manage paperwork/pack) [an]
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Question Answer Marks Notes
3(e) Use wholesalers [k]
Wholesalers will buy in bulk/large amounts [an]
Saves storage space for manufacturer [an]
Loss of control over marketing mix [an]
Takes part of the profit [an]
Agents (when selling in other countries) [k]
Have local market knowledge [an]
Other appropriate responses should also be credited.
Justification might include:
Retailers offer a wide distribution [k] which can help increase potential sales
[an]. Selling direct to customers [k] would mean the business could keep all
the profit [an]. I think selling to retailers is better as the high sales will
increase the total revenue [eval] which will offset the lower profit margin.
[eval]
Question Answer Marks Notes
4(a) Define ‘retained profit’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Profit (left, or) reinvested back into the business, (after all payments have
been made) [2]
OR
Profit (remaining after all expenses, tax and dividends have been paid), which
is ploughed back into the business [2]
Partial definition e.g. profit /money to reinvest [1] OR profit left after dividends /
shareholders paid [1]
Other appropriate responses should be credited.
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Question Answer Marks Notes
4(b) Define ‘current assets’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Items owned by/belong to business and used within one year [2]
OR
Resources that the business owns and expects to convert into cash before
the date of the next statement of financial position [2]
Partial definition e.g. items in the business for less than one year/12
months/within a financial year [1] OR assets owned
Other appropriate responses should be credited.
4(c) Outline two possible reasons why working capital is important for CPF. 4 To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for each relevant reason (max 2). sense) in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2) The following words are likely to be
appropriate for this question:
Points might include: (4) shops/retailer/stores
To pay day-to-day expenses/(short term) debts or examples such as pay 30 (employees)
wages [k] for its 30 employees [app] Clothes
To pay for unexpected expenses/emergencies [k] especially as the Private limited company
business is looking to expand [app] Plans to expand
To ensure the business has a good credit reputation [k] for the 4 shops Retained profit is low
[app]
Ensures the business can take advantage of special offers/discounts on Other appropriate examples can be credited.
bulk purchases [k] of its clothes [app]
To cope with seasonal demand [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(d) Explain one way each of the following stakeholder groups might be 6 To use words from the stem as application,
affected by CPF’s plans to expand its business. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be
Award 1 mark for each relevant reference to this business (max 2). appropriate for this question:
(4/new) shops/retailer/stores
Award 1 mark for each relevant explanation (max 2). 30 (employees)
Clothes
Points might include: Private limited company
Low retained profit
Employees:
Opportunities for promotion [k] for the 30 employees [app] so may be Other appropriate examples can be credited.
able to benefit from higher wages [an]
Work extra hours [k] at the new shop [app] so gain extra payments/which Some points can be [k] or [an] but only
may lead to mistakes [an] award once.
Greater variety/different tasks/work to do [k] making the work more
interesting/less boring for them [an]
More job security [k] increasing motivation [an]
Employees may have to move location [k] so long time to get to
work/travel costs increase [an]
Suppliers:
Additional orders/sales/produce more [k] of clothing [app] leading to
additional revenue [an]
Security/certainty of regular orders [k] so able to plan effectively [an]
May struggle to meet extra demand [k]
May have to distribute goods to a new area [k] increasing transport costs
[an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Do you think it is better for a private limited company to use debt (e.g. 6 This is a general question so there are no
a loan) or equity (issuing more shares) as a source of long-term marks for application.
finance? Justify your answer.
Some points could be written as either
Award up to 2 marks for identification of relevant points. advantages or disadvantages of different
sources but only award once.
Award up to 2 marks for relevant development of points.
Some points can be written as [k] or [an] but
Award up to 2 marks for a justified decision as to whether it is better for a only award a point once.
limited company to use debt (e.g. a loan) or equity (issue shares) as a source
of long-term finance.
Points might include:
Debt:
May be difficult to raise additional finance [k] if banks/suppliers
concerned about its ability to repay existing loans [an]
No change of ownership [k] so lenders have no say in decisions [an]
Can receive all the money at once/at the same time [k]
Must pay interest [k] which increases costs/cash flow problems [an]
Need to repay [k]
Need security [k] which can lose if unable to repay debt [an]
Equity/issue shares:
No interest/finance costs to pay [k] so no extra cash outflows [an]
Permanent source of capital/no need to repay [k]
Can only sell to friends and family/small number of shareholders [k]
which can limit the amount of capital raised [an]
Dividends expected/paid to shareholders [k] so less retained profit [an]
Give up some ownership [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Justification might include:
Using debt may be difficult to raise additional finance [k] if banks are
concerned about its ability to repay existing loans [an]. Selling shares
means no interest [k] so no extra cash outflows [an]. Equity is better because
if the business has financial difficulties debt is still expected to be repaid
[eval] which increases the risk of the business failure. [eval]
© UCLES 2023 Page 24 of 24
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2023
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 2023 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 21 printed pages.
© UCLES 2023 [Turn over
0986/21 Cambridge IGCSE (9–1) – Mark Scheme May/June 2023
PUBLISHED
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 descriptors
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 four barriers to communication for a business. 8
One mark for each barrier (max 4).
Award a maximum of one additional mark for each explanation of the barrier.
There are no application marks available.
Reasons could include:
Problems with the sender – the language used is not clear/use of jargon
or technical terms so do not understand instructions
The message is too long/too much detail is included in the message –
so the main meaning of the message may be lost in the detail
Problems with the medium/method – the wrong medium is used such as
putting an urgent message on a noticeboard so may not be seen
immediately
Computer failure/internet connection/technology fails – the message
may not be received
No feedback is given – so the sender is unaware the message has not
been received
Problems with the receiver – if a meeting is used and it goes on a long
time then the receiver may stop listening
The channel/chain of command may be too long – too many people
through which the message is sent it may be distorted
Language differences – hinder understanding of the message
For example: Problems with the sender (1) they may use language that
includes jargon or technical terms so do not understand instructions (1).
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Question Answer Marks
1(b) Consider the following two ways VP can purchase its inventory. Which 12
way should it use? Justify your answer.
Head Office purchases the inventory for all the restaurants.
Restaurant Managers purchase their own inventory from local
suppliers.
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of both ways. Well-justified
recommendation.
Candidates discussing both ways in detail, in context
and with a well-justified recommendation including
why the alternative way is rejected should be
rewarded with the top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one way.
Judgement with some justification/some evaluation of
choices made.
Candidates discussing at least one way 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 1–4
of relevant business concepts.
Limited ability to discuss the ways with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choices made.
Candidates outlining both 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
1(b) Relevant points might include:
Able to make bulk purchases – discounts
received – lowering variable costs/lower unit
cost of food ingredients - possibly reducing
prices/increasing profit
Easier to standardise the meals/control
Head office quantity and quality of ingredients in
purchases the different restaurants as all the inventory come
inventory for all the from the same food suppliers - maintains
restaurants reputation for good quality fast food
Increased transport costs for food ingredients
to be taken to each fast-food restaurant
Warehouse storage is required for inventory
before it is sent out to each restaurant –
increases costs
Managers can order different ingredients for
meals to meet local tastes – increases
demand/improved competitiveness – increases
revenue
Local suppliers can deliver more frequently
and quickly – ensures ingredients will be
fresh – improves reputation of the
restaurants
Managers may feel more motivated/trusted –
Restaurant
if allowed to make some decisions and order
Managers purchase
their own ingredients
their own inventory
May be unable to meet sudden increase in
from local suppliers
demand for specific meals – if ingredients
are not available – may lose customers as
disappointed – lose reputation/customers do
not return
Restaurant Managers are very busy - so
may not have the time to order ingredients
Some ingredients may not be available locally
to each restaurant - limiting the availability of
the full menu in some restaurants
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Question Answer Marks
1(b)
Justification might include:
All inventory is purchased by head office is
the best way for VP to choose as this will
allow considerable cost savings due to
purchasing economies of scale. This will
allow VP to keep prices low and to be more
competitive with other similar restaurants,
possibly increasing revenue. Ordering only
from local suppliers may make it difficult to
Recommendation meet customer demand as food ingredients
may run out if local suppliers are small.
Each Restaurant Manager purchases their
own inventory is the best way to choose
because each restaurant can meet local
demand, and this will attract more customers
leading to higher revenue. Also the costs of
storage are lower as smaller quantities can
be purchased so profit from selling fast-food
will be higher.
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Question Answer Marks
2(a) Explain two advantages and two disadvantages of VP’s Restaurant 8
Managers delegating tasks to their Assistant Managers.
One mark for each advantage/disadvantage (max 2 advantages/max 2
disadvantages).
Award a maximum of one additional mark for each explanation of the
advantage/disadvantage in the context of VP.
Advantages could include:
Restaurant Managers cannot carry out every job themselves/reduce
workload – they can then focus on the most important tasks at the fast-
food restaurant and make better decisions
Restaurant Managers are less likely to make mistakes – as they can
focus on specific tasks such as marketing new menus
Gives the Restaurant Managers time to assess employees performance
below them in the hierarchy – they can then identify where employees
need more support/training in developing/cooking new recipes
May increase motivation/feel more trusted for Assistant Managers –
improved speed of serving fast-food
Assistant Managers may develop new skills Disadvantages could
include:
Restaurant Managers could lose some control over subordinates –
mistakes may be made leading to worse reputation if food is served
longer than 5 minutes after ordering
Restaurant Managers may be reluctant to give up some control – if
Assistant Managers do a good job carrying out the delegated tasks such
as ordering new ingredients for the meals
The Assistant Manager may not have the skills to carry out the tasks that
have been delegated to them/may need additional training – may lead to
poor decisions being made such as unskilled chefs being employed at
the restaurant
Assistant Managers may not like having tasks delegated to them/feel
overloaded with work by Restaurant Managers
For example: Restaurant Managers can focus on their most important tasks
(1) which will help them to make better decisions for the fast-food
restaurants (app).
Application could include: fast food; restaurant; vegetarians; meals; public
limited company; food outlets across the country; diners; menus; recipes;
cooking; serving; ingredients; 50 employees; receive a meal in less than 5
minutes; service is the fastest possible.
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Question Answer Marks
2(b) Using Appendix 2 and other information, consider the two countries VP 12
could choose to locate its new restaurants.
Which country should VP choose? Justify your answer.
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of both countries Well-justified
recommendation.
Candidates discussing both countries in detail, in
context and with well-justified recommendation
including why the alternative country is rejected
should be rewarded with the top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one country.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing at least one country 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 1–4
of relevant business concepts.
Limited ability to discuss the countries with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both countries 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:
Benefits Drawbacks
Gross profit is $14, There are many
and Country B is competitors so
$8 demand may be
Highest price per lower – may have
meal at $20 – to reduce price to
possibly highest attract customers –
revenue if demand possibly reducing
remains high revenue
Many competitors May have to spend
may indicate that more on marketing
there is high as there are many
demand for fast- competitors in the
food restaurants market in order to
enter the new
market abroad –
Country A
increasing costs
Higher wage costs
at twice the cost of
Country B – may
lead to higher costs
overall
Harder to recruit
new workers as
unemployment is
low – may have to
offer more fringe
benefits to attract
employees from
their many
competitors
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Question Answer Marks
2(b)
Lowest variable Lower gross profit
cost per meal at between price of
$2 rather than $6 $10 and costs of
in country A – $2 = $8, whereas it
makes it easier to is $14 in country A
charge the lowest Few competitors
price of $10 per may indicate that
meal demand for
High vegetarian fast-
unemployment food in country B
makes it easier to is low – VP needs
recruit new to spend on market
employees for the research to be sure
restaurants – there is a market in
more likely to country B –
remain with VP as investment could
few alternative be wasted if there
Country B
employment is not a sufficient
opportunities in demand to make
country B – the expansion
lowering successful
recruitment
costs/training costs
in the future
Lowest wage costs
at $5 per hour –
reducing total
labour costs
Low price at $10
per meal may
attract many
customers –
possibly increasing
revenue
Justification may include:
VP should choose country A as it can charge
the highest price of $20 per meal which may
lead to higher revenue and costs are likely to
be lower as variable costs are lower at $6
which gives a higher gross profit, so after
expenses have been paid, it may lead to
Recommendation higher profit. Country B should not be chosen
because it has a lower price per meal and
unemployment is high and there may be
lower demand.
VP should choose country B as it has the
lowest wage costs, and it will be easy to
recruit new employees as there is high
unemployment there.
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Question Answer Marks
3(a) Explain two possible reasons why VP wants to expand. 8
One mark for each reason (max 2).
Award a maximum of three additional marks for each explanation of the
reason why VP wants to expand, one of which must be in context.
Answers might include:
To gain higher profits for the owners – as expansion will lead to
increased sales in new markets abroad – leading to increased revenue
To lower average/unit costs – gain from economies of scale – such as
bulk buying of food ingredients – a discount will be received from bulk
purchases
To gain a larger share of the market – may produce a stronger brand
image – might result in greater customer loyalty
To gain more status and prestige for the owners – from the company
being more well known in country Z – may be listed on stock exchanges
in other countries
To gain access to new markets/diversification – this would
reduce/spread risk
For example: To gain higher profits for the owners (1) because expansion is
likely to increase revenue, (1) as VP will sell its products in more markets
(1). The higher profits should allow the shareholders of VP to be paid higher
dividends (app).
Application could include: fast food; restaurant; vegetarians; meals; food
outlets across the country; diners; shareholders/public limited company;
ingredients.
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Question Answer Marks
3(b) Consider the benefits and limitations of the following two ways VP can 12
enter a new market in another country. Which way should VP choose?
Justify your answer.
• Joint venture
• Franchising
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of two ways. Well-justified
conclusion.
Candidates discussing both ways in detail, in context
and with well-justified conclusion including why the
alternative way is 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
choices made.
Candidates discussing one or more ways 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 ways with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both 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
3(b) Relevant points might include:
Advantages Disadvantages
VP will share the It will take time and
risks and costs of effort to find the right
setting up the fast- partner to join with in
food chain in the venture – which
another country with may delay the
its partner in the expansion plans
joint venture – this There may be
may help VP to management
borrow less capital conflicts between
to expand into the the two businesses
other country – leading to
VP can gain arguments and
important local inefficiency – higher
knowledge about costs
the market – easier Profits will have to
to focus meals on be shared – may
local tastes – reduce return on
increasing investment from the
demand/sales/reven expansion – may
ue not be agreeable to
Joint venture
Less likely to the shareholders of
require expensive VP
market research to The level of
understand the fast- expertise may not
food market – be the same in the
reducing the costs partner business –
of entering the new may make the
market abroad return on
Lowering the risks investment unfair
of entering the new The work and
market abroad - resources may not
more likely to be equally shared
understand local between the two
customs and tastes partners in the joint
– adapt fast-food venture – VP may
meals to meet local have to put more
demand work and resources
as it is the main
partner in the
venture
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Question Answer Marks
3(b)
Saves time on Poor quality
expanding into the management may
foreign market – as lead to a lowering of
business operating the reputation of the
fast-food VP brand – if the
restaurants will franchisee in the
make the foreign country
investment does not maintain
Payment from standard of
franchise fees for delivering fast food
using the VP brand in 5 minutes
- fee goes back to Low level of control
VP which may by VP Directors –
increase profits – over how the
making a return franchise operates
Franchising from the expansion the vegetarian
for low investment fast-food chain
from VP The franchisee has
Lower capital information about
requirement - no the food
need to raise ingredients and
finance for the recipes of VP and
expansion – no may use these
need to sell when the franchise
additional shares agreement has
with possible loss of expired – could
control/no bank loan develop a better
required so no need version and become
to pay interest rates a competitor
increasing fixed
costs
Justification may include:
Forming a joint venture is the best way to
overcome the problems of entering a new fast-
food market in another country which VP is
unfamiliar with as this will enable VP to
understand this new market by gaining
knowledge from this other business. The local
business will be able to advise and guide VP on
the best locations to choose and the best
meals to serve to meet local demand and
Conclusion
successfully enter this market. Franchising
should not be chosen as the franchisee may
provide poor service and lead to a poor brand
image of VP.
Selling a franchise to businesses in the new
fast-food market in another country will reduce
the investment required for VP to expand. This
will make it cheaper and quicker to expand into
this new market while still receiving revenue
from the fees charged for the franchise.
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Question Answer Marks
4(a) Explain, using an example, one reason why VP might need: 8
short-term finance
long-term finance.
One mark for reason for short-term/long-term finance (max 1).
Award a maximum of three additional marks for the explanation of the
reason why VP needs short-term/long-term finance, one of which must be
in context, and one must include an example.
Answers for short-term finance might include:
To provide working capital for the business – so that day-to-day
expenses can be paid for – an overdraft may be suitable as it is only
used if needed/potentially reducing interest paid
To prevent cash-flow problem/improve the cash position of the
business – by taking short-term bank loan – this will provide finance for
a short time to overcome the potential shortage of cash and increase
liquidity
For example: To provide working capital for the business (1) so that
day-to-day expenses can be paid for (1). An overdraft may be suitable as it is
only used if needed which potentially reduces the interest to be paid
(1) when buying food ingredients for the restaurants (app).
Answers for long-term finance might include:
To purchase long-term non-current assets – as these assets are likely to
be very expensive – so a long-term bank loan may be suitable as it is
repaid over a long period of time reducing the amount of monthly
repayments/outflows each month
To expand the business – which requires a large amount of money in
order to grow – the issue of shares will not incur interest payments
To update the business – often involves new technology which is
expensive – so payments may need to be spread over a long period of
time such as with a lease
For example: To expand the business (1) as VP is planning to expand in
another country (app) which requires a large amount of money to grow
(1). VP might choose to issue new shares which will not incur interest
payments (1).
Application could include: fast food; restaurant; vegetarians; meals; public
limited company/shareholders; food outlets across the country; diners; 500
restaurants; 25 000 employees; ingredients; expand into another country.
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Question Answer Marks
4(b) Using Appendix 3 and other information, consider how the following 12
three changes in country Z may affect VP. Which change is likely to
have the greatest effect on VP's profits? Justify your answer.
Increase in interest rates.
Depreciation of country Z’s exchange rate.
New legal controls which require all restaurants to list the
ingredients in their meals.
Level Description Marks
3 Sound application of knowledge and 9–12
understanding of relevant business concepts
using appropriate terminology.
Detailed discussion of two or more changes. Well-
justified conclusion.
Candidates discussing all three changes in detail,
in context and with well-justified conclusion
including why the alternative changes are 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 change.
Judgement with some justification / some
evaluation of choices made.
Candidates discussing two or more changes in
detail and applying them 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 changes with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three changes 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:
• Higher fixed costs from interest paid if bank loan
taken out for expansion of the restaurant chain
in another country – likely to lead to lower
profit
• Customers may buy fewer meals due to interest
rates being increased for 3% to 5% to be paid
on borrowing leaving less money to spend
leading to reduced revenue for VP
Increase in
• As VP is a public limited company it is large
interest rates
and may enjoy financial economies of scale –
leading to relatively lower interest rates charged
on bank loans than smaller businesses –
reducing the impact of the interest payable on
the loans
• Increased interest received on any reserves held
by VP – increase income into the business –
leading to an increase in profit
• Imported food ingredients will now cost more –
leading to higher variable costs – possibly lower
profit margin/higher prices
• Increased cost of imported ingredients may lead
to VP changing to purchase from local suppliers
Depreciation of
- however the quality may be lower
country Z
• When VP has expanded to another country
exchange rate
and set up new restaurants profits sent back to
country Z will exchange for a higher amount of
country Z currency – but capital needed for
expansion will exchange at a lower rate – higher
investment needed
• Increased costs of rewriting all menus – time
taken to work out and list all the ingredients in
meals – will need to be repeated every time a
Introduction of new meal is added to the menu – increases
new legal costs both in the short-run and possibly the long-
controls that run – reducing profit
require all • If VP wants to keep the same mark-up on costs
restaurants to – may lead to increased price of meals –– may
provide lead to lower demand/lower sales – reduced
information profit
about the • All restaurants will have the same costs – so
ingredients in competitiveness may not change
their meals • May attract different target market who didn’t
appreciate the ingredients used by VP – as
these are now listed on menus - may increase
sales
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Question Answer Marks
4(b)
Justification may include:
• Increase in interest rates will have the greatest
effect on profit because VP will need to take out
large bank loans to finance the expansion in
another country leading to a large increase in
costs from the interest payable which will reduce
VP profits. Depreciation will have little effect as
ingredients are only a small proportion of costs
and only 30% of ingredients are imported. The
new legal controls will have little effect on profit
as these are a relatively small cost and the
menus are printed regularly anyway when the
Conclusion of
menus change with the new meals.
which is likely
• Depreciation of the exchange rate of country Z
to have the
will have the greatest effect on profit as 30% of
greatest effect
food ingredients are imported. This will lead to
on profits
a large increase in variable costs which will
reduce gross profit and then profit for VP.
• New legal controls that require all restaurants to
provide information about the ingredients in their
meals will have the greatest effect on profit as
menus will have to all be reprinted every time a
new meal is developed. As VP do this regularly to
encourage customers to return so they do not get
bored with the same meals it will result in a
regular increase in costs and therefore a
reduction in profit.
© UCLES 2023 Page 21 of 21
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2023
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 2023 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 20 printed pages.
© UCLES 2023 [Turn over
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2023
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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 descriptors
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.
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 question Used when the answer or parts of the answer are not
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 four characteristics needed for an entrepreneur to be 8
successful.
Award 1 mark for each relevant characteristic (max 4).
Award a maximum of one additional mark for each explanation of a
characteristic of being a successful entrepreneur.
There are no application marks available.
Relevant characteristics might include:
Self-confident – strong belief in their own ability and ideas
Creative – find new and different ways to attract customers
Independent – willing to go with own ideas
Hard worker/dedicated – prepared to work long hours
Risk-taker – willing to risk losing own capital/as a sole trader or
partnership willing to risk losing personal assets
Effective communicator – able to persuade others
Optimistic – think positively about new ventures and continue if there are
setbacks
Innovative – able to develop new products to retain customers
Good at networking – prepared to learn from others
Self-motivated/Determined/Passionate/Driven
Results driven
Strong leadership qualities
Resilience
Experience/Knowledge/Multi-skilled
For example: Self-confident (1) as the entrepreneur has a strong belief in their
own ability and ideas to convince others such as banks to lend to them (1)
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Question Answer Marks
1(b) Consider the advantages and disadvantages of starting up ET as either 12
an unincorporated business or as a limited company. Which should
Zane and Zaara choose? Justify your answer.
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of both options.
3 Well-justified recommendation. 9–12
Candidates discussing both options in detail, in context
and with a well-justified conclusion including why the
alternative option was rejected should be rewarded with
the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of at least one option.
2 Judgement with some justification / some evaluation of 5–8
choices made.
Candidates discussing at least one option in detail and
applying it to the case should be rewarded with the top
marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the options with little/no
explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining both options 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:
Advantages Disadvantages
Partners are in Unlimited liability –
complete control of could lose all
the business personal
Do not have to share possessions
profits with Limited sources of
shareholders – may capital – if only 2
lead to higher profits partners invest in
each if shared the business as
Unincorporated between fewer limited to their own
business owners capital
Easy to set up the Partners are
theatre and will responsible for all
have few legal decisions taken by
requirements to either partner if
operate the business mistakes are made –
– reducing effort and may lead to personal
cost to set up financial losses and
may be equally liable
Limited liability – Accounts are not
owners personal private – competing
possessions will not theatres may
be used to pay access the accounts
business debts Not easy to transfer
Owners and shares as a private
business are limited company –
separate legal may make it difficult
identities – provides to sell shares to
continuity on the family and friends
death of owners Legal formalities to
Limited company Can sell shares to set up – may take
raise capital to set- more time and cost
up the theatre – to than a partnership
family and friends – Legal formalities to
large amounts of operate the
capital may be company – needs to
raised have accounts
audited and
registered with the
government takes
time and increases
costs
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Question Answer Marks
1(b)
Recommendation Justification may include:
ET should be an unincorporated business
because it is easy to set up the partnership. Zane
and Zaara will have complete control of the
theatre and keep all the profits. There are not
the legal formalities with a partnership that will
increase costs that there are if ET was a private
limited company.
ET should be a limited company to gain the
benefits of limited liability. If anything goes
wrong with the theatre, then any liability will only
be for an amount invested in the business, all
Zane and Zaara's personal belongings will be
safe.
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Question Answer Marks
2(a) Explain one business objective for ET and one other objective that a 8
social enterprise like Daycare might have.
One mark for each objective (max of 2).
Award a maximum of 3 additional marks for each explanation of the
objective – one of which must be applied to this context.
Relevant answers might include:
Business objective for ET
Survival – to not go bankrupt in the first year of operation – to cover
costs
Profit – to provide a return on investment – for the owners who risked
their own money
Growth of the business – to possibly increase sales – leading to
increased revenue in the future
Market share – attract a higher number of customers – possibly leading to
higher revenue
Other objectives for social enterprise, Daycare
Service to the community/help local people – to create jobs for people in
the local area – support disadvantaged groups in society/make a profit
to put back into local initiatives
Provide childcare to enable low-income parents/carers to go out to work
– increase their incomes – raising their living standards
Provide education for the pre-school children of low-income families
Provides access to education that otherwise would not be provided
Improves the likelihood of these children being more successful when
they do go to school/may improve their ability to earn higher incomes in
the future/get a better paid job
To provide funds to reinvest back into the social enterprise – by making
a profit
To break-even
For example: To provide a service to the community (1) to look after the pre-
school children (app) and support disadvantaged groups in the society that
cannot afford to pay for these services (1) so it will allow parents/guardians
to go to work and improve their family’s income (1)
Application might include: pre-school children; theatre; performances;
actors; pay fair wages; tourists; low-income area; 24 part-time employees;
provides education for children under 5.
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Question Answer Marks
2(b) Using Appendix 2 and other information, consider the two options for 12
the first performance at the theatre. Which is the best option for Zaara
to choose? Justify your answer using suitable calculations.
Level Description Marks
3 Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of both options.
Well-justified recommendation. 9–12
Candidates discussing both options in detail, in
context and with a well-justified recommendation including
why the alternative option is rejected should be rewarded
with the top marks in the band.
2 Sound application of knowledge and understanding of
relevant business concepts using appropriate terminology.
Detailed discussion of at least one option.
Judgement with some justification / some evaluation of 5–8
choice made.
Candidates discussing at least one option 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
relevant business concepts.
Limited ability to discuss the options with little/no
explanation.
1–4
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both options 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
Fewer employees The average wage
are required to put cost is the highest –
on a performance – $20 higher than
reducing total Option 2
variable costs Makes a loss of
Costs for scenery $210 for each
and costumes is performance
the lowest of the Lowest revenue
two options – gained for each
$1000 lower than performance of the
Option 1 Option 2 two options –
Total cost is the $1000 per
lowest of the two performance
options – at $1210
per performance
Lowest price per
seat at $10 – so
likely to sell all the
tickets ensuring the
estimated revenue
is received
Has the lowest • Has the highest
wage cost per number of
employee of the employees per
two options – at performance – 17
$10 per actor more than Option 1
Makes the highest – highest total
profit per wage costs
performance of the • Highest cost of the
two options – at two options –
Option 2
$260 per $2240 per
performance performance
Has the highest Highest price per
revenue of the two person – $25 each
options – at $2500 – may not sell all
– $1500 higher tickets – so
than Option 1 revenue may be
lower than
estimated at $2500
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Question Answer Marks
2(b)
Justification may include:
• ET should choose Option 1 to have in the
theatre as it has the cheapest total cost at
$1210 per performance. As the theatre is
new it should try to keep its costs as low as
possible. Option 2 has much higher costs to
put on the performances and ET may not
have the funds to do this. Also the price per
Recommendation
ticket is higher for the other option and as the
theatre is located in a low-income area of
Main City the theatre may not sell all 100
seats and the estimated revenue may not be
received.
• ET should choose Option 2 for the theatre as
it makes a profit of $260 per performance when
the revenue is $2500.
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Question Answer Marks
3(a) Explain four reasons why it is important that Zane prepares a cash-flow 8
forecast before starting ET.
One mark for each reason (max 4).
Award a maximum of one additional mark for each explanation of the reason
which must be applied to this context.
Relevant answers might include:
To manage the cash flows in and out of the business – so that Zane and
Zaara will be aware of how much cash they may have available when
operating the theatre
To ensure there is cash/working capital available to pay for day-to-day
expenses/short term debts – or they may be unable to put on
performances
To show the bank to gain a bank loan/overdraft – without a loan
performances may be of poor quality if costumes cannot be purchased
To show if the business is likely to run short of cash – avoid having a
lack of liquidity for the 2 partners or shareholders
To help plan ahead – to make decisions about which price to charge so
that all 100 seats are sold
To see whether the business is achieving its financial objectives
May need to include it in the business plan
For example: To manage the cash flows in and out of the business (1) so
that Zane and Zaara will be aware of how much cash they may have
available to spend at the theatre (app).
Application could include: theatre; performances; 100 seats; costumes; 2
partners/shareholders; pay fair wages; tourists; low-income area; 24 part-
time employees; costumes produced in the local area; refreshments from
suppliers that do not pollute the environment.
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Question Answer Marks
3(b) Consider the following three roles of marketing for ET. Which role will 12
be the most important for ET to be successful? Justify your answer.
Identifying customer needs
Satisfying customer needs
Maintaining customer loyalty
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more roles of marketing.
3 Well-justified conclusion. 9–12
Candidates discussing all three roles of marketing in
detail, in context and with a well-justified conclusion
including why the alternative roles of marketing are
rejected should be rewarded with the top marks in the
band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one role of marketing.
2 5–8
Judgement with some justification / some evaluation of
choices made.
Candidates discussing two or more roles of marketing
in detail and applying them to the case should be
rewarded with the top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss the roles of marketing with
little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining three roles of marketing 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:
The Marketing Manager needs to find out what types
of performances will be popular with audiences –
this is to ensure that the shows that are planned will
attract enough customers to buy tickets for most of
the seats – increasing/maximising revenue for the
theatre
Identifying
Find out what price customers are willing to pay for
customer
seats at the theatre for a performance – if too high
needs
a price is charged then many seats may not be
sold – leading to a loss for that performance
To find out what types of refreshments customers
wish to buy at the interval – this will help to raise
these sales and provide additional revenue for the
theatre
Ensuring that the performances are what the
audience expects – this improves the reputation of
the theatre – so customers tell their friends about the
Satisfying theatre – increasing sales of seats for
customer performances
needs If performances are on days which are not
convenient for customers then fewer seats will be
sold – so it ensures the performances are put on
during days that most suit local people and tourists
Having links with customers to ensure they keep
coming back to the theatre to watch performances –
rather than go to other theatres – as regular visits
to the theatre will maintain its revenue – enabling them
Maintaining
to keep putting on performances/provide liquidity for
customer
the next performance/avoid cash flow problems
loyalty
Keeping existing customers is preferable to attracting
new ones – as it is often cheaper to market to
existing customers than to find new ones – makes the
theatre’s marketing budget more efficient
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Question Answer Marks
3(b)
Justification may include:
Identifying customer needs is most important
because if these needs are not understood then the
theatre may plan and pay to put on a performance
that will not attract customers, leading to a loss.
Satisfying customer needs is less important to the
success of the theatre as if the needs have been
identified then it is more likely that these will be met by
the chosen performance. As theatres may keep
attracting new audiences such as tourists then
maintaining customer loyalty may be less important
as long as the different needs of these audiences
have been identified.
Conclusion
Satisfying customer needs is most important
because if customers are disappointed with the
performance, then they will tell their friends and
family about it and ET will gain a poor reputation.
This may lead to fewer sales of seats for future
performances leading to ET being less successful.
Maintaining customer loyalty is most important as
without this it will mean the theatre will need to keep
attracting new customers and this is expensive to
research suitable plays and shows that they will want
to see. Marketing costs will therefore be lower if
regular customers keep coming back to watch the
shows.
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Question Answer Marks
4(a) Explain two leadership styles that Zane and Zaara could use when 8
managing ET’s employees.
One mark for each leadership style (max 2).
Award a maximum of 3 additional marks for each leadership style – one of
which must be applied to this context.
Relevant answers might include:
Autocratic
The manager expects to be in charge and have all orders followed
Manager keeps themselves separate from the employees
Manager makes all the decisions and keeps information to themselves
Communication is one-way/employees having no opportunity to
comment or take part in any decisions about business
Decision-making is quick
Democratic
Gets employees involved in decision-making about the business
Information about future plans for the business shared with employees and
discussed before owners make the final decision
Communication is both downward and upward allowing the experience of
employees to be considered by the owners – leading to possibly better
decisions being made
Motivating for employees as they feel more involved in the business –
less likely to leave/reduced labour turnover
Laissez-faire
Main objectives of the new business are shared with employees but
then they are left to organise their own work and take decisions without any
interference
Communication can be difficult as the leader has little involvement in the
decisions being made
Employees can be motivated as they are valued and trusted to take the
decisions
Employees can be creative with fresh ideas about how to operate the
business
For example: They could use a democratic leadership style (1) where
communication is both downward and upward allowing the experience of
employees to be considered by the owners (1) leading to possibly better
decisions being made (1) about how to operate the theatre (app).
Application could include: theatre; performances; 100 seats; pay fair
wages; tourists; low-income area; 24 part-time employees; provides
education for children under 5; costumes produced in the local area;
refreshments from suppliers that do not pollute the environment.
© UCLES 2023 Page 17 of 20
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2023
PUBLISHED
Question Answer Marks
4(b) Consider the following three ethical issues for the theatre. Which ethical 12
issue is likely to have the biggest effect on ET? Justify your answer.
• Paying fair wages to employees
• Only buying costumes produced in the local community
• Purchasing all refreshments from suppliers that do not pollute the
environment
Level Description Marks
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more issues.
3 9–12
Well-justified conclusion.
Candidates discussing all three issues in detail, in
context and with a well-justified conclusion including
why the alternative issues are rejected should be
rewarded with the top marks in the band.
Sound application of knowledge and understanding of
relevant business concepts using appropriate
terminology.
Detailed discussion of at least one issue.
2 5–8
Judgement with some justification / some evaluation of
choices made.
Candidates discussing two or more issues in detail and
applying them to the case should be rewarded with the
top marks in the band.
Limited application of knowledge and understanding of
relevant business concepts.
Limited ability to discuss issues with little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three issues in context should
be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2023 Page 18 of 20
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2023
PUBLISHED
Question Answer Marks
4(b) Relevant points might include:
This will provide local people with a
higher income than they might have had
– leads to higher standard of living in
the local area – more likely to sell more
theatre seats – increasing revenue for
the theatre
Higher wage rates might lead to higher
motivation – improved quality of
Paying fair wages to performances at the theatre
employees Lower labour turnover – the 24 part-time
employees may be less likely to leave
and work for another theatre –
improved employee loyalty – lower
recruitment costs
Wage costs are likely to be higher which
may lead to higher prices for theatre
seats – may lead to lower demand –
reducing revenue
Will attract local people to watch the
theatre performances – increase
revenue from ticket sales
May receive good publicity – many local
people may encourage family and
friends to support the theatre –
Only buying
increasing revenue
costumes produced
Provides work for local people –
in the local
important as it is based in a low-
community
income area – raising the standard of
living for people in the local area
Local people may not have the skills
necessary – limiting the quality of
costumes used and possibly the overall
performance
May be more expensive than buying from
less ethical suppliers – possibly lowering
the profit margin for each performance
Purchasing
Reduces the range of refreshments
refreshments from
available – may reduce revenue as
suppliers that do not
choice may be less popular
pollute the
environment Pressure groups will be less likely to
protest outside the theatre – which
might deter tourists from visiting the
theatre
© UCLES 2023 Page 19 of 20
0986/22 Cambridge IGCSE (9–1) – Mark Scheme May/June 2023
PUBLISHED
Question Answer Marks
4(b)
Justification may include:
Paying fair wages is likely to have the
biggest effect on ET as this may
increase costs which may lead to higher
prices for the 100 seats so customers
may go to their competitors instead and
reduce revenue. Costumes from the
local community may be of lower quality
but if the performance is good then
people will still buy tickets and revenue
will not be affected. Refreshments only
have a small impact on the theatre as
they are a small proportion of the
overall costs and revenue. So higher
costs and lower revenue due to paying
fair wages is likely to have the biggest
Conclusion
effect on ET.
Costumes produced locally provides
work for the local community, so ET is
more likely to sell all 100 seats for
each performance as local people
have the income to buy the tickets.
Higher revenue from sales will lead to
the biggest effect on ET.
Refreshments purchased from ethical
suppliers will lead to a good reputation
for the theatre and hence attract
customers concerned with the
environment so revenue will be higher
as more tickets are sold for each
performance leading to higher profits
for ET.
© UCLES 2023 Page 20 of 20
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*1495057140*
Paper 1 Short Answer and Data Response May/June 2023
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_11_2023_1.3
© UCLES 2023 [Turn over
2
1 WLT manufactures carpets. It exports 40% of its products. Globalisation has created opportunities
and threats for WLT. Its method of production allows WLT to use specialisation. All of its 60
employees understand that quality assurance is important. WLT’s directors are considering the
best way to increase efficiency.
(a) Define ‘specialisation’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two methods of production.
Method 1: ..........................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two advantages to WLT of using quality assurance.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 06_0986_11_2023_1.3
3
(d) Explain one opportunity and one threat of globalisation for WLT.
Opportunity: ......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Threat: ..............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think improving labour skills is the best way for a manufacturing business to increase
efficiency? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_11_2023_1.3 [Turn over
4
2 LMA is a family-owned restaurant. The business was started 20 years ago and has remained small.
LMA is a partnership. The partners are considering whether LMA should become a private limited
company. The Finance Manager is analysing LMA’s cash-flow forecast. An extract is shown in
Table 2.1.
Table 2.1
Extract from LMA’s cash-flow forecast 2023 ($000)
July August September
Cash inflow 420 300 330
Cash outflow 410 320 360
Net cash flow X (20) (30)
Opening balance 60 70 50
Closing balance 70 50 Y
(a) Identify two reasons why a business might have cash-flow problems.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Calculate X and Y.
X: ......................................................................................................................................
Y: ...................................................................................................................................... [2]
(c) Identify four examples of a cash inflow.
Example 1: ........................................................................................................................
...........................................................................................................................................
Example 2: ........................................................................................................................
...........................................................................................................................................
Example 3: ........................................................................................................................
...........................................................................................................................................
Example 4: ........................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 06_0986_11_2023_1.3
5
(d) Explain one advantage and one disadvantage to LMA of becoming a private limited company.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two reasons why a business might remain small. Which reason is likely to be most
important? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_11_2023_1.3 [Turn over
6
3 DZD is a large parcel delivery business. Many of its employees work part-time. DZD’s directors are
planning to expand the business and have to decide on a suitable source of finance for 20 new
vehicles. DZD will also recruit 60 new employees. The Human Resources Director is preparing a
job description for the new employees. She is considering using Maslow’s hierarchy of needs to
increase the motivation of DZD’s employees.
(a) Define ‘job description’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two levels from Maslow’s hierarchy of needs.
1: .......................................................................................................................................
...........................................................................................................................................
2: .......................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two factors DZD should consider when deciding which applicants to recruit.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 06_0986_11_2023_1.3
7
(d) Explain two sources of finance DZD might use for the new vehicles.
Source of finance 1: ..........................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Source of finance 2: ..........................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think a service business should only employ part-time workers? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_11_2023_1.3 [Turn over
8
4 NLR manufactures a range of branded skincare products including hand cream. Packaging of the
products is important. Like many businesses, NLR makes use of market segmentation. The Marketing
Director knows the stage of the product life cycle can influence NLR’s pricing decisions. He is
analysing market research data. This shows 85% of consumers expect businesses to respond to
environmental pressures.
(a) Identify two factors that might affect the accuracy of market research.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
........................................................................................................................................... [2]
(b) Identify two benefits to a business of using market segmentation.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two ways NLR might respond to environmental pressures.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 06_0986_11_2023_1.3
9
(d) Explain how NLR’s pricing decisions might be affected at two different stages of the product
life cycle.
1: .......................................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
2: .......................................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think promoting the brand image is the most important role of packaging? Justify your
answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_11_2023_1.3
10
BLANK PAGE
© UCLES 2023 06_0986_11_2023_1.3
11
BLANK PAGE
© UCLES 2023 06_0986_11_2023_1.3
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 06_0986_11_2023_1.3
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/12
*4278834047*
Paper 1 Short Answer and Data Response May/June 2023
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_12_2023_1.2
© UCLES 2023 [Turn over
2
1 FBW manufactures watches using job production. It employs 5 full-time production employees.
Each worker is offered regular training. Last year FBW sold 600 watches. The Managing Director
plans to use break-even analysis to help decide whether to increase the price of its products. FBW’s
current break-even chart is shown in Fig. 1.1.
Break-even chart for FBW’s watches
120 000
100 000
total revenue
total costs
80 000
costs and
revenue $
60 000
40 000
20 000 fixed costs
0
0 100 200 300 400 500 600 700 800
number of watches
Fig. 1.1
(a) Identify two reasons why a business might offer training to its employees.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the following values using Fig. 1.1:
Break-even output: ...........................................................................................................
Break-even revenue: ........................................................................................................ [2]
© UCLES 2023 06_0986_12_2023_1.2
3
(c) Outline two possible effects on FBW’s break-even chart if the prices of its products are
increased.
Effect 1: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Effect 2: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
(d) Explain two benefits to FBW of having full-time employees.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_12_2023_1.2 [Turn over
4
(e) Do you think job production is the best method of production for a small business to use?
Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_12_2023_1.2
5
2 Gloria is a sole trader. Her business provides house-cleaning services. Gloria uses telephone calls
to communicate with her 4 employees. She wants to expand the business by offering a repair
service. Gloria plans to carry out some market research. She has been told producing a business
plan can help to reduce risk. Gloria would also like to reduce her workload and is considering taking
on a business partner.
(a) Identify two ways a business plan can help a business to reduce risk.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(b) Identify two possible reasons why a business might want to expand.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) Outline one advantage and one disadvantage to Gloria of using telephone calls as a method
of communication with her employees.
Advantage: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 06_0986_12_2023_1.2 [Turn over
6
(d) Explain two factors Gloria should consider when deciding whether to take on a business
partner.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two methods of primary market research a business could use to find out the demand
for a new product or service. Which would be the best method to use? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_12_2023_1.2
7
3 VVA is a business based in country X. It manufactures school backpacks (bags). VVA uses retailers
as its channel of distribution. The Managing Director knows there are many factors that can affect
demand including the stage of the business cycle and how competitive the market is. VVA imports
45% of its raw materials. The Managing Director is worried that the introduction of import tariffs
and import quotas, as well as an appreciation in country X’s exchange rate, will affect VVA.
(a) Define ‘import tariff’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two reasons why some markets can become more competitive.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) State the four stages of the business cycle.
1: .......................................................................................................................................
...........................................................................................................................................
2: .......................................................................................................................................
...........................................................................................................................................
3: .......................................................................................................................................
...........................................................................................................................................
4: .......................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 06_0986_12_2023_1.2 [Turn over
8
(d) Explain one possible effect of the following changes on VVA when importing raw materials:
Introduction of import quotas in country X: .......................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Appreciation of country X’s exchange rate: ......................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think retailers are the best channel of distribution for a manufacturing business to use?
Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_12_2023_1.2
9
4 CPF is a clothing retailer. It is a private limited company. It has 4 shops and 30 employees. The
Finance Director is concerned about the amount of current assets because working capital is
important. The amount of retained profit is also low. CPF’s directors are planning to expand the
business by opening a new shop. A suitable source of long-term finance will need to be identified.
The plan to expand will affect many of CPF’s stakeholder groups.
(a) Define ‘retained profit’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘current assets’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible reasons why working capital is important for CPF.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 06_0986_12_2023_1.2 [Turn over
10
(d) Explain one way each of the following stakeholder groups might be affected by CPF’s plans
to expand its business.
Employees: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Suppliers: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think it is better for a private limited company to use debt (e.g. a loan) or equity (issuing
more shares) as a source of long-term finance? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 06_0986_12_2023_1.2
11
BLANK PAGE
© UCLES 2023 06_0986_12_2023_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 06_0986_12_2023_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*7306362678*
Paper 2 Case Study May/June 2023
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_21_2023_1.2
© UCLES 2023 [Turn over
2
1 (a) Explain four barriers to communication for a business.
Barrier 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Barrier 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Barrier 3: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Barrier 4: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_21_2023_1.2
3
(b) Consider the following two ways VP can purchase its inventory. Which way should it use?
Justify your answer.
• Head Office purchases the inventory for all the restaurants.
• Restaurant Managers purchase their own inventory from local suppliers.
Head Office purchases the inventory for all the restaurants: ...........................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Restaurant Managers purchase their own inventory from local suppliers: .......................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_21_2023_1.2 [Turn over
4
2 (a) Explain two advantages and two disadvantages of VP’s Restaurant Managers delegating
tasks to their Assistant Managers.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_21_2023_1.2
5
(b) Using Appendix 2 and other information, consider the two countries VP could choose to locate
its new restaurants. Which country should VP choose? Justify your answer.
Country A: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Country B: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_21_2023_1.2 [Turn over
6
3 (a) Explain two possible reasons why VP wants to expand.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_21_2023_1.2
7
(b) Consider the benefits and limitations of the following two ways VP can enter a new market in
another country. Which way should VP choose? Justify your answer.
• Joint venture
• Franchising
Joint venture: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Franchising: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_21_2023_1.2 [Turn over
8
4 (a) Explain, using an example, one reason why VP might need:
• short-term finance
• long-term finance.
Short-term finance: ...........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Long-term finance: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_21_2023_1.2
9
(b) Using Appendix 3 and other information, consider how the following three changes in country
Z may affect VP. Which change is likely to have the greatest effect on VP's profits? Justify
your answer.
• Increase in interest rates.
• Depreciation of country Z’s exchange rate.
• New legal controls which require all restaurants to list the ingredients in their meals.
Increase in interest rates: .................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Depreciation of country Z’s exchange rate: ......................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
New legal controls which require all restaurants to list the ingredients in their meals: .....
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_21_2023_1.2
10
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© UCLES 2023 06_0986_21_2023_1.2
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© UCLES 2023 06_0986_21_2023_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 06_0986_21_2023_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
*3081804448*
Paper 2 Case Study May/June 2023
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_22_2023_1.2
© UCLES 2023 [Turn over
2
1 (a) Explain four characteristics needed for an entrepreneur to be successful.
Characteristic 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 3: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 4: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_22_2023_1.2
3
(b) Consider the advantages and disadvantages of starting up ET as either an unincorporated
business or as a limited company. Which should Zane and Zaara choose? Justify your answer.
Unincorporated business: .................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Limited company: .............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_22_2023_1.2 [Turn over
4
2 (a) Explain one business objective for ET and one other objective that a social enterprise like
Daycare might have.
Business objective for ET: ................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Objective for a social enterprise like Daycare: .................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_22_2023_1.2
5
(b) Using Appendix 2 and other information, consider the two options for the first performance at
the theatre. Which is the best option for Zaara to choose? Justify your answer using suitable
calculations.
Option 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Option 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_22_2023_1.2 [Turn over
6
3 (a) Explain four reasons why it is important that Zane prepares a cash-flow forecast before starting
ET.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 3: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_22_2023_1.2
7
(b) Consider the following three roles of marketing for ET. Which role will be the most important
for ET to be successful? Justify your answer.
• Identifying customer needs
• Satisfying customer needs
• Maintaining customer loyalty
Identifying customer needs: ..............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Satisfying customer needs: ..............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Maintaining customer loyalty: ...........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_22_2023_1.2 [Turn over
8
4 (a) Explain two leadership styles that Zane and Zaara could use when managing ET’s employees.
Leadership style 1: ...........................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Leadership style 2: ...........................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0986_22_2023_1.2
9
(b) Consider the following three ethical issues for the theatre. Which ethical issue is likely to have
the biggest effect on ET? Justify your answer.
• Paying fair wages to employees
• Only buying costumes produced in the local community
• Purchasing all refreshments from suppliers that do not pollute the environment
Paying fair wages to employees: ......................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Only buying costumes produced in the local community: ................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Purchasing all refreshments from suppliers that do not pollute the environment: ............
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0986_22_2023_1.2
10
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© UCLES 2023 06_0986_22_2023_1.2
11
BLANK PAGE
© UCLES 2023 06_0986_22_2023_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 06_0986_22_2023_1.2
Grade thresholds – June 2024
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the June 2024 examination.
Minimum raw mark required for grade:
Maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 46 41 36 30 24 19 15 12 9
Component 12 80 60 54 49 42 36 30 22 15 8
Component 21 80 52 45 39 34 30 25 20 14 9
Component 22 80 47 43 38 33 27 22 18 14 10
The overall thresholds for the different grades were set as follows.
Maximum
Combination of
Option mark after 9 8 7 6 5 4 3 2 1
components
weighting
X 160 11, 21 98 86 75 64 54 44 35 26 18
Y 160 12, 22 107 97 87 75 63 52 40 29 18
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer
Services on +44 (0)1223 553554 or email [email protected]
© Cambridge University Press & Assessment 2024
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study May/June 2024
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*4671073904-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages.
06_0986_21_2024_1.3
© UCLES 2024 [Turn over
2
Exclusive Pottery (EP)
EP is a private limited company set up 40 years ago in country Y. It manufactures pottery products
including plates, cups and bowls. EP has a reputation for producing high-quality products. The Managing
Director is considering the best way to increase the added value of EP’s products by either increasing
prices or reducing raw material costs. Raw materials are currently purchased locally as imported raw
materials are of a lower quality.
EP operates in a very competitive market. Many of EP’s competitors sell lower-quality products at lower
prices. There are many substitutes for pottery products, including products made from plastic or bamboo.
Consumer spending patterns have been changing in country Y and this has affected EP’s sales.
EP currently advertises its pottery in newspapers and magazines. EP does not have a website and only
sells its products to retail shops in country Y. EP needs a new Marketing Manager and the Managing
Director thinks EP should employ someone from outside the business. The new Marketing Manager will
need to consider which of the following three ways EP could use to increase sales:
• Advertising using social media
• Emailing special offers to existing customers
• Setting up a website
The Managing Director wants to increase efficiency in the factory. She is considering either improving
labour skills or introducing more automation and technology. Both methods will need additional finance.
The Managing Director will consider different factors before choosing which source of finance to use.
Appendix 1
Advertisement for EP
We sell a wide range of plates, cups and bowls which are sold in all good retailers.
EP’s products are all high quality and made using materials from local suppliers.
© UCLES 2024 06_0986_21_2024_1.3
3
Appendix 2
Organisational chart for EP
Managing Director
Operations Director Marketing Director Finance Director
Production Manager Marketing Manager Finance Manager
Assistant Manager Assistant Manager Assistant Manager
Production supervisors (10) Marketing employees (7) Finance employees (7)
Production employees (50)
Total employees = 84
© UCLES 2024 06_0986_21_2024_1.3 [Turn over
4
Appendix 3
Email from Managing Director to Operations Director
To: Operations Director
From: Managing Director
Date: 5 March 2024
Re: Which product to stop making
We need to keep our costs low and therefore I suggest we stop making either Product A or Product B.
I have included some data in the table below to help us make the decision.
Demand is forecast to increase in 2024 for both products. Total costs are expected to remain unchanged.
Let me know which product you would choose to stop making and why.
Financial information for Product A and Product B for 2023
Product A Product B
Price per unit $10 $40
Sales volume 20 000 units 10 000 units
Total cost $140 000 $350 000
Profit $60 000 $50 000
Gross profit margin 50% 62.5%
Forecast increase in demand in
10% 20%
2024
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2024 06_0986_21_2024_1.3
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
Paper 2 Case Study May/June 2024
INSERT 1 hour 30 minutes
INFORMATION
• The insert contains the case study.
*3098732281-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Any blank pages are indicated.
06_0986_22_2024_1.1
© UCLES 2024 [Turn over
2
Jems Jewellery (JJ)
JJ is a large manufacturer of jewellery such as bracelets, earrings and rings. JJ was set up 25 years
ago in country X and is a public limited company. One of JJ’s objectives is for the business to expand
and another objective is to increase profit each year.
JJ manufactures all its jewellery in a factory in country X. All raw materials are purchased from local
suppliers. JJ has 60 full-time and 25 part-time employees to make the jewellery. Most of these employees
are skilled.
JJ’s jewellery is beautiful but not expensive and therefore affordable for many people. The business has
many competitors. JJ currently sells 70% of its products in country X through jewellery shops. The other
30% are sold using ecommerce and sold directly to customers in other countries. Demand for JJ’s
jewellery is continuing to increase.
JJ’s Marketing Manager is planning to launch a new item of jewellery in country X and needs to choose
between two products. Information on these two products is shown in Appendix 1. They will also need
to decide the most effective way to promote the new product in country X.
Appendix 1
Information to calculate break-even for Product A and Product B
Product A Product B
Type of product Bracelet Ring
Fixed cost for each product per week $50 000 $50 000
Selling price per product $50 $120
Variable cost per product $25 $40
Forecast sales per week 2500 750
Appendix 2
Newspaper article from Main City News in country X
After several years of economic growth the government is predicting a change in the economy this year.
Unemployment is forecast to increase from 3% to 6% by the end of the year. Increases in unemployment
are expected to continue for the next two years. Many businesses will be affected by this increase.
© UCLES 2024 06_0986_22_2024_1.1
3
Appendix 3
Email from Managing Director to Operations Director
To: Operations Director
From: Managing Director
Date: 1 May 2024
Pressure groups have identified two environmental issues when we manufacture our jewellery.
These two environmental issues are:
• We use coal for fuel in our factory which we know contributes to global warming. Other jewellery
manufacturers also use coal. We know the price of coal is increasing and will continue to increase in
the future. However, the government in country X is encouraging businesses to invest in solar panels
and is providing a 25% grant.
• The gem stones used in our jewellery come from local mines. We have been told that the land around
these mines cannot be returned to agricultural use after the mine is closed. However, pressure groups
have told us that we can buy gems from suppliers that use alternative ways of mining which do not
damage the environment. These mines are further away from our factory.
We need to respond to these issues or our sales and profit may be affected.
© UCLES 2024 06_0986_22_2024_1.1
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2024 06_0986_22_2024_1.1
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer/Data Response 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 26 printed pages.
© Cambridge University Press & Assessment 2024 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2024
PUBLISHED
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.
© Cambridge University Press & Assessment 2024 Page 2 of 26
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2024
PUBLISHED
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.
© Cambridge University Press & Assessment 2024 Page 3 of 26
0986/11 Cambridge IGCSE (9–1) – Mark Scheme May/June 2024
PUBLISHED
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).
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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.
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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0450/7115/0986 Business Studies – Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X 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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
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 Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Define ‘diseconomies of scale’. 2 For two marks candidates must have the idea that ‘business
grows’ and it ‘increases average/unit costs’.
Award 2 marks for a full definition. Award 1 mark for a partial
definition. Do not award examples as this does not define the term.
Factors that lead to an increase in average costs as a
business grows beyond a certain size [2]
OR
Factors that cause average costs to increase as the scale of
operations increases [2]
OR
The disadvantages of a business growing (too large) that
result in an increase in costs per unit [2]
Partial definition e.g. when costs increase because business
grows [1]
OR increase in average unit cost [1]
1(b) Identify two ways a business can use cost data to help 2 Only award the first two responses given.
make decisions.
Allow ‘carry out break-even analysis’.
Award 1 mark for each relevant way (max 2).
Points might include:
Setting prices
Decide whether to stop/continue production/change
production
Decide on the best location
Decide if finance is required/set budgets
Decide which costs need to be reduced/whether to
change suppliers
Setting objectives
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(c) Identify four fixed costs a business might have. 4 Only award the first four responses given.
Award 1 mark per fixed cost (max 4). Do not award: wages/direct labour costs or power.
Points might include: Allow heating/lighting/electricity/water/utilities once.
Rent/rates/storage costs
Insurance
Advertising
Salaries
Interest (on loans)/finance payments
Cleaning/maintenance
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(d) Explain one advantage and one disadvantage to FBM of 6 To use words from the stem as application, the reference
holding a high level of inventory. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant reason (max
2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Boat (building) or related words
Award 1 mark for each relevant explanation (max 2). 100 employees
Skilled (workers)
Points might include: Diseconomies of scale
Advantages: $5000 (variable cost)
Maintain production [k] so able to meet orders on time $600 000 (fixed costs)
[an] of boats [app] 300 (boats)
Benefit from (purchasing) economies of scale [k] leading Total cost 2 100 000
to lower average/unit cost [an]
Able to respond quickly to unexpected order [k] Other appropriate examples can be credited.
increasing customer loyalty [an]
The same analysis can be used for different points but only
Disadvantages: award once.
Space needed to store products [k] increasing (storage)
costs [an] so costs increase above $600 000 [app]
Cash/money tied up in inventory [k] leading to cash
flow/liquidity problems [an]
Risk of damage/waste[k]
Opportunity cost [k]
Insurance [k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(e) Do you think customers have a more important role in 6 This is a general question so there are no marks for
the success of a business than its employees? Justify application.
your answer.
For evaluation to be awarded justification will usually follow
Award up to 2 marks for identification of relevant points. on from relevant analysis of points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to whether
customers have a more important role in the success of a
business than its employees.
Points might include:
Customers:
Buy the products [k] and if ignores their needs the
business will lose revenue/won’t survive [an]
Can share opinions to help improve products [k] which
can help increase market share [an]
Provide recommendations/word of mouth advertising [k]
Employees:
Make the products [k] otherwise there is nothing to sell
[an]
Employees can affect quality [k] which could
damage/improve its reputation [an]
Employees provide customer service [k] which is
important for brand image [an]
Without sufficient employees the business may not be
able to meet demand [k]
Workers can be replaced by machines [k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(e) Justification might include:
Customers are important, they buy the products [k] which
generates revenue [an]. Employees make the goods [k]
without them, there is nothing to sell [an]. However,
customers are more important as without revenue, the
business cannot cover its costs and survive in long term
[eval]. A business can use automation reducing the
importance of employees [eval].
Question Answer Marks Notes
2(a) Define ‘span of control’. 2
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
(Number of) subordinates working directly under a manager
[2]
OR
(Number of) subordinates reporting to each
supervisor/manager [2]
OR
(Number of) subordinates someone has within their
authority/under their control [2]
Partial definition e.g. (number of) staff that a manager is
responsible for [1]
OR subordinates who work under a manager [1]
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Question Answer Marks Notes
2(b) Define ‘autocratic leadership style’. 2 For two marks the candidates need to show awareness that
the decision making is by a leader or manager not a director
Award 2 marks for a full definition. Award 1 mark for a partial or person in the company.
definition.
Leader/manager makes all the decisions [2]
OR
Where the manager expects to be in charge of the business
and to have their orders followed [2]
Partial definitions e.g. employees are simply told what to do
[1]
OR employees have no say in decisions [1]
2(c) Outline two benefits to ADN of having full-time 4 To use words from the stem as application, the reference
employees. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant benefit (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Food or related words
Points might include: 5 (locations)
Shops/retailer
Consistent service [k] at the 5 shops [app] 300 employees
Workers likely to be loyal/less likely to leave [k] the food Tall hierarchical organisational structure
retailer [app] Narrow span of control
Easy to communicate with/update [k] the 300 employees Autocratic leadership style
[app] Planning to expand/internal growth/external growth
Need to recruit/train fewer employees [k]
Other appropriate examples can be credited.
Other appropriate responses should be credited.
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Question Answer Marks Notes
2(d) Explain one benefit and one limitation to ADN of using 6 To use words from the stem as application, the reference
off-the-job training. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant
benefit/limitation (max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Food or related words
Award 1 mark for each relevant explanation (max 2). 5 (locations)
Shops/retailer
Points might include: 300 employees
Benefits: Full-time
Learn the latest/new methods [k] for use in the 5 shops Narrow span of control
[app] so business can remain competitive [an] Autocratic leadership style
Broad range of skills can be taught [k] to the full-time Planning to expand / internal growth / external growth
employees [app] so they can be become more efficient
[an] Other appropriate examples can be credited.
Can learn from experts/specialists [k] which may be
helpful as trying to expand [app]
Can focus 100% on training [k] therefore make less
mistakes [an]
Mistakes when learning don’t affect the business [k]
which can protect the reputation [an] of the food retailer
[app]
Workers do not learn bad habits [k] so mistakes are
avoided [an]
It does not disrupt work of other employees [k]
Increased motivation of employees [k]
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Question Answer Marks Notes
2(d) Limitations:
High cost/expensive [k] as have 300 employees [app]
which increases expenses [an]
Loss of working time [k] leading to less work done/fewer
sales [an]
Not necessarily tailored to individual business [k]
Additional qualifications mean it is easier for the
employee to leave/find another job [k] increasing
time/cost of recruitment [an]
Other appropriate responses should be credited.
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Question Answer Marks Notes
2(e) Do you think it is better for a business to use internal 6 This is a general question so there are no marks for
growth or external growth when planning to expand? application.
Justify your answer.
Advantages of one method can be presented as
Award up to 2 marks for identification of relevant points. disadvantages of the other method but do not award the
Award up to 2 marks for relevant development of points. same point twice as mirror answers are not accepted.
Award up to 2 marks for a justified decision as to whether it
is better for a business to use internal growth or external Do not award general advantages and disadvantages of
growth when planning to expand. growth such as economies of scale as applies to both
methods.
Points might include:
Internal growth: For evaluation to be awarded justification will usually follow
Easier to control/manage growth [k] which can help on from relevant analysis of points.
avoid diseconomies of scale [an]
Lower investment may be needed [k] so less need to
borrow (as much) [an]
Slow method [k] so business may become
uncompetitive/may miss business opportunities [an]
Less risk [k]
External growth:
Quick method [k] so able to take advantage of new
market opportunities [an] which can increase revenue
[an]
Removing a competitor [k] increases market
share/power [an] may be able to set/influence prices [an]
Large amounts of finance may be required [k] which
increases finance costs [an]
Other appropriate responses should be credited.
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Question Answer Marks Notes
2(e) Justification might include:
One advantage of internal growth is it is easier to control the
rate of growth [k] which can help avoid diseconomies of
scale [an]. However, external growth can be faster [k] so the
business can take advantage of opportunities [an]. Overall
external growth is better as by taking over a competitor market
share can be increased [eval] increasing market power
[eval].
Question Answer Marks Notes
3(a) Define ‘mass market’. 2 For two marks candidates must have the idea of a
‘Large number of sales’ and it is for ‘one product’.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
Where there are a large number of sales of a product [2]
OR
A large market containing lots of customers buying similar
products [2]
Partial definition e.g. lots of sales/customers [1]
OR lots of buyers [1]
OR market for goods that are produced in large quantities
[1]
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Question Answer Marks Notes
3(b) Calculate IDT’s working capital in 2023. 2 Award only 1 mark if $140 million is written as part of the
answer but is not given as the final answer.
Award 2 marks for correct answer.
Award 1 mark for correct method but incorrect answer. Award max 1 where candidate calculates working capital for
2022 using the correct method i.e. $130 million [1].
Correct answer: $140 million [2]
For 2 marks the answer must have the right units
Correct method e.g. 420 – 280 [1] i.e. million/m in answer.
OR
Current assets – current liabilities [1]
If correct answer given with no working shown award two
marks.
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Question Answer Marks Notes
3(c) Outline one reason why IDT might need the following 4 To use words from the stem as application, the reference
types of finance: must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant reason (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Multinational company
Points might include: Clothes or related words such as shirts, trousers
Short-term finance: Manufacturer
To pay day-to-day costs/working capital [k] when making Mass market
clothes [app] Factory
Improve cash flow position/liquidity [k] of the 4 countries
multinational company [app] $140 million (working capital)
Meet any unexpected emergencies/opportunities [k] $280 million (current liabilities)
$400 million (non-current liabilities)
Long-term finance:
Fund expansion/growth [k] such as the new factory Other appropriate examples can be credited.
[app]
Purchase non-current assets [k] in one of the 4 countries
[app]
Develop new products [k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
3(d) Explain two ways an increase in non-current liabilities 6 To use words from the stem as application, the reference
might affect IDT. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant way (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2). Multinational company
Clothes or related words such as shirts, trousers
Points might include: Manufacturer
Must pay interest [k] on the $400 m [app] which Mass market
increases expenses/cash outflows [an] Factory
Difficult to raise additional finance/more collateral 4 different countries
required [k] as lenders may worry whether the business Working capital / $140 million
will be able to repay [an] despite being a multinational $400 million (non-current liabilities)
company [app] $280 million (current liabilities)
More difficult to repay loans/more debt to pay back [k] $420 million (current assets)
increases financial risk [an] for this clothing retailer [app]
Other appropriate examples can be credited.
Other appropriate responses should be credited.
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Question Answer Marks Notes
3(e) Explain two advantages to a business of being a 6 This is a general question so there are no marks for
multinational company. Which advantage do you think is application.
likely to be the most important? Justify your answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to which is
likely to be the most important advantage to a business of
being a multinational company.
Points might include:
Increase sales/new customers/access new markets [k]
increasing revenue [an]
Improve brand image/reputation [k] to help
increase/maintain customer loyalty [an]
Spreading risk [k] as not reliant on one market for all its
sales/fall in sales in one country can be offset by
increase in another [an]
Economies of scale [k] leading to lower average/unit
costs [an]
Easier access to/cheaper raw materials [k] reducing
transport costs [an]
Lower cost of labour (in some countries) [k] improving
profit margin [an]
Avoid import quotas/tariffs [k]
Lower/favourable tax rates/government grants/subsidies
[k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
3(e) Justification might include:
An advantage is access to new markets [k] increasing
revenue [an]. Also easier access to raw materials [k] may
reduce transport costs [an]. Access to raw materials is more
important because lower costs may lead to lower prices
helping the business be more competitive [eval] and improve
their market share [eval].
Question Answer Marks Notes
4(a) Define ‘social enterprise’. 2
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
An organisation that has social objectives as well as an aim
to make a profit to reinvest back into the business [2]
OR
A business with social objectives that reinvests most of its
profits back into the business/into benefiting society at large
[2]
OR
A business that seeks to raise income, which it invests in a
specific social or environmental issue [2]
OR
A business set up to help society/a community rather than
make a profit [2]
Partial definition e.g. a business that aims to help/benefit
society [1]
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Question Answer Marks Notes
4(b) Identify two ways legal controls over marketing might 2 Only award the first two responses given.
affect a business.
Award 1 mark per way (max 2).
Points might include:
No misleading promotion/advertising
No price fixing/charging very high prices where there is
little or no competition
No selling faulty/dangerous goods/certain ingredients
Ensure products are fit for purpose
Price reductions must be genuine
Increased costs to meet the legal controls/pay fines
Spend longer time ensuring they meet the legal controls
May need to alter packaging
Restrictions on advertising certain products to some age
groups/places.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(c) Outline one advantage and one disadvantage to CFG of 4 To use words from the stem as application, the reference
using skimming as its pricing method. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant advantage/disadvantage
(max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Social enterprise
Cocoa beans
Points might include: Local farmers
Advantages: Chocolate (bar)
Helps establish a high-quality image/customers may Retailers
think it is a good quality [k] which may also help as want Ethical
to be ethical [app] (Developed) a new product
Can quickly recover research/development costs [k] which Legal controls over marketing
is important as developed a new product [app]
Higher revenue per item [k] for its chocolate [app] Other appropriate responses can be credited.
May have a lower break-even output [k]
Disadvantages:
High price might discourage (potential) customers [k] for
this social enterprise [app]
High prices/profitability could encourage competitors to
enter market [k] so may not be able to support local
farmers [app]
Other appropriate responses should be credited.
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Question Answer Marks Notes
4(d) Explain one advantage and one disadvantage to CFG of 6 To use words from the stem as application, the reference
using retailers as its distribution channel for the new must be appropriate (i.e. make sense) in relation to the point
product. being made.
Award 1 mark for identification of each relevant The following words are likely to be appropriate for this
advantage/disadvantage (max 2). question:
Award 1 mark for each relevant reference to this business Social enterprise
(max 2). Cocoa beans
Award 1 mark for each relevant explanation (max 2). (Make) bars of chocolate
Ethical
Points might include: (Local) farmers
Advantages: Legal controls over marketing
Producers can sell in large quantities to retailers [k]
increasing revenue [an] from its new product [app] Other appropriate responses can be credited.
Reduced costs (compared to selling direct to
consumers) [k] increasing profit margin [an] in this
social enterprise [app]
Retailer shares the cost of holding inventory [k] lowering
expenses [an]
Retailers will promote the product [k] reducing the cost of
promotion/increasing sales [an]
Access wider range of customers [k]
Disadvantages:
No direct contact with consumer [k] about its chocolate
bar [app] so may not adapt to changing needs [an]
Final price (paid by consumer) is often high [k] so may
be uncompetitive [an]
Retailer takes some of profit away from the producer [k]
Producer loses some control of marketing mix [k]
Retailers usually sell competitors’ products as well [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Do you think being ethical will always lead to lower 6 This is a general question so there are no marks for
profit for a business? Justify your answer. application.
Award up to 2 marks for identification of relevant points. Increase cost can be awarded as [k] once where candidates
Award up to 2 marks for relevant development of points. do not refer to specific examples of costs.
Award up to 2 marks for justified decision as to whether
being ethical will always lead to lower profit for a business. Do not credit answers which relate to the costs of being
unethical as this is NAQ.
Points might include:
Limited/fewer sources of materials [k] leading to less
output [an]
Higher cost of materials [k] leading to higher variable
costs/cost of goods [an] which lowers gross profit
margin [an]
Workers may have to be paid more/fair pay [k]
increasing labour costs [an]
May take time to source ethical supplies [k] which could
delay production [an]
Good image/reputation [k] so can charge high(er) prices/
lead to customer loyalty [an]
High(er) demand / increase sales / enter new market /
more customers [k] which could increase revenue [an]
Help recruit/motivate/retain workers [k] leading to lower
absenteeism/increased productivity [an]
Investors more likely to invest [k]
Can help create better supplier relations (by paying a
fair price) [k]
Less opposition from pressure groups [k]
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Question Answer Marks Notes
4(e) Justification might include:
Being ethical could mean having to pay more to suppliers [k]
increasing variable costs [an]. However, this could improve
the business’s reputation [k] allowing them to increase prices
[an]. Being ethical will not always mean lower profit because
a better reputation is likely to attract more customers [eval],
and the extra revenue gained could cover the costs
increasing profit overall [eval].
© Cambridge University Press & Assessment 2024 Page 26 of 26
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/12
Paper 1 Short Answer/Data Response 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 24 printed pages.
© Cambridge University Press & Assessment 2024 [Turn over
0986/12 Cambridge IGCSE (9–1) – Mark Scheme May/June 2024
PUBLISHED
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.
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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).
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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.
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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0450/7115/0986 Business Studies – Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.
BOD Benefit of Used when the benefit of the doubt is given in order to reward a response.
doubt
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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
OFR Own figure If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for subsequent
rule calculations.
SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Identify two reasons why a government might support 2 Only award the first two responses given.
business start-ups.
Award 1 mark per reason (max 2).
Points might include:
Create jobs/reduce unemployment
Increase/contribute to output/GDP
Gain more taxes/revenue (for the country)
Bring ideas for/provide goods/services/ innovation
Increase competition/increase choice/motivate other
businesses to start up
To benefit society
Other appropriate responses should be credited.
1(b) Identify two ways a business can build customer 2 Only award the first two responses given.
relationships.
Award 1 mark per reason (max 2).
Points might include:
Offer good quality services/products
Provide special offers or discounts to regular
customers/loyalty schemes
Market research/find out what customers want/ask for
feedback
Communicate with customers e.g. send newsletters
Respond to complaints/offer refunds
Provide extra services such as credit/delivery/after sales
service
Build brand image
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(c) Outline one benefit and one limitation to Nicky’s 4 To use words from the stem as application, the reference
business of operating in a niche market. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant benefit/limitation (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Entrepreneur
Points might include: Start-up/new business
Benefits: Building customer relationships
Less/low competition [k] for her start-up business [app] (Walking) holidays/tickets
Needs of customers can be focused on/help to target Travel business/tourism
customers [k] for her holidays [app] Business plan
Builds up specialist skills/knowledge [k] which can help Decision-making
build customer relationships [app] Government support
Can often charge a higher price [k] influencing decision-
making [app] Other appropriate examples can be credited.
Limitations:
Lack of economies of scale [k] which can affect
business plan [app]
Limited sales/revenue/customers/target market is small
[k] for this entrepreneur [app]
Does not spread risks/relying on one product [k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(d) Explain one way each of the following sections in the 6 To use words from the stem as application, the reference
business plan might be helpful to Nicky. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant way (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2). • Entrepreneur
• Start-up/new business
Points might include: • (Walking) holidays/tickets
Business objectives: • Travel business/tourism
Can act as a goal/target/sense of direction [k] for the • Niche market
travel business [app] which she can use to • Government support
measure/monitor progress/to provide motivation [an] • Building customer relationships
Improved decision-making/planning [k] so fewer
errors/chance of failure/increase efficiency/save Other appropriate examples can be credited.
cost/saves time/increase sales [an] of the new business
[app] K can be awarded for identifying what the section shows or
Act as a measure of success [k] so able to check how it can be used.
progress [an] to know whether she is a successful
entrepreneur [app]
Data about the market:
Show size of market/can spot trends/gaps [k] so know
level of demand [an] in this niche market [app]
Show whether/where there is sufficient demand [k]
which will affect sales/revenue/location [an] for her
walking holidays [app]
Information about her target market [k] so decide how
to promote the business [an] which can help build
customer relationships [app]
Information about competitors/level of competition [k] so
help decide on a suitable method of pricing [an]
Help set prices/make marketing decisions [k] increasing
sales [an]
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(e) Explain two characteristics of a successful 6 This is a general question so there are no marks for
entrepreneur. Which characteristic is likely to be the application.
most important? Justify your answer.
[k] can only be awarded for identifying characteristics.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points. [an] is awarded for explaining the characteristic or explaining
Award up to 2 marks for a justified decision as to which why it is important.
characteristic is likely to be the most important.
To access [eval], must discuss two valid characteristics. The
Points might include: second [eval] mark must be awarded for a comparison
Creative [k] have (new/unique) ideas / make a business between two valid characteristics.
stand out from its competitors [an] therefore help gain
sales [an]
Risk-taker [k] as investment may be lost [an]
Perseverance/determination/resilience/self-motivated [k]
as will need to be prepared to keep going when faced
with problems [an]
Effective communicator [k] as may need to convince its
suppliers/banks/customers to provide goods/lend/buy
products [an]
Good decision-maker/manager [k] as changes in market
may require action [an]
Hard-working [k] as must be ready to do everything
themselves [an]
Independent [k] as be able to work without any help [an]
Optimistic [k] so always think they will succeed [an]
Self-confident [k] so convince people/banks to invest
[an]
Innovative [k] able to put ideas into practice in
new/different ways [an]
(Multi-)skilled [k] may not need to recruit employees for
specific roles [an]
Other appropriate responses should be credited.
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Question Answer Marks Notes
1(e) Justification might include:
Creative [k] as ideas can make a business stand out from
competitors [an]. A risk-taker [k] as investment may be lost
[an]. A risk-taker is likely to be most important because if
they do not take risks, they may miss out on the opportunity
to make sales [eval] and therefore may never know whether
the new idea could be successful or not [eval].
Question Answer Marks Notes
2(a) Define ‘tertiary sector’. 2 1st mark is for understanding it provides services.
Award 2 marks for a full definition. Award 1 mark for a partial 2nd mark for reference to whom services are provided.
definition.
Provides services to consumers/other sectors of industry [2]
OR
Firms that supply a service to consumers/other businesses
[2]
Partial definition e.g. business that provides services [1]
OR service sector business [1]
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Question Answer Marks Notes
2(b) Calculate GTB’s Return on Capital Employed (ROCE). 2 Answer must be shown as a percentage (%) to gain both
Show your working. marks.
Award 2 marks for the correct answer. Award only 1 mark if 20% is written as part of the answer but
is not given as the final answer.
Award 1 mark for correct method but incorrect answer.
Correct answer: 20% [2]
Correct method but incorrect answer e.g.
Profit/capital employed 100 [1]
OR 150 000 / 750 000 100 [1]
OR 20 [1]
If correct answer given with no working shown, award 2
marks.
2(c) Outline two ways GTB could improve its profit margin. 4 To use words from the stem as application, the reference
must be appropriate (i.e. make sense) in relation to the point
Award 1 mark for each relevant way (max 2). being made.
Award 1 mark for each relevant reference to this business
(max 2). The following words are likely to be appropriate for this
question:
Points might include: Café
Increase price [k] of the food [app] Selling food/drinks or examples such as coffee
Lower/control fixed costs (or examples such as lower 5 (cafes)
rent) [k] of its cafes [app] 25% (profit margin)
Lower/control variable costs (or examples) [k] which $ 600 000 (revenue)
could help increase the profit margin of 25% [app] $ 150 000 (profit)
$ 750 000 (capital employed)
Other appropriate responses should be credited. Social media for promotion
Other appropriate examples can be credited.
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Question Answer Marks Notes
2(d) Explain two advantages to GTB of using social media as 6 To use words from the stem as application, the reference
its method of promotion. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant advantage
(max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Café
Award 1 mark for each relevant explanation (max 2). Selling food/drinks or examples such as coffee
• 5 (cafés)
Points might include: • 25% (profit margin)
Can target specific groups of customers [k] which could • Improve profit margin
help encourage brand loyalty [an] at each of the 5 • $ 600 000 (revenue)
locations [app] • $ 150 000 (profit)
Low-cost [k] so fewer cash outflows/lower expenses [an] • $ 750 000 (capital employed)
which could help improve the profit margin of 25% [app] • Tertiary sector
Cover wide area/seen by many people [k] increasing
sales/revenue/attract customers [an] for the cafe [app] Other appropriate examples can be credited.
Quick to update [k] so can spend time on other tasks
[an] such as analysing the financial statements [app] Advantages must be to the business not the customer.
Can reach groups that are difficult to reach any other
way [k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
2(e) Do you think banks are the main external users of the 6 This is a general question so there are no marks for
accounts of a business? Justify your answer. application.
Award up to 2 marks for identification of relevant points. Some points can be [k] or [an] but do not award the same
Award up to 2 marks for relevant development of points. point twice.
Award up to 2 marks for a justified decision as to whether
banks are the main external users of the accounts of a [K] can be awarded for identifying what information the user
business. is looking for, or how they would use the accounts.
Points might include: Some points can be awarded for different external users but
Banks: only award once.
Whether to give a bank loan [k] to see if a business can
repay [an]
Whether a business can repay loans/overdraft [k] as this
will influence the terms/interest rate/period of the loan
[an]
To help decide the interest rate to set [k] to reflect the
level of risk [an]
To decide the amount to lend [k]
Check interest payments can/are being made [k]
Other users might include:
Government [k]:
Want to check the profit [an] / to know the correct
amount of tax has been paid/will be paid [an]
Suppliers/Trade payables [k]:
Assess/shows liquidity position [an] to know whether the
business is likely to be able to repay them [an]
See level of debt [an]
Other appropriate responses should be credited.
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Question Answer Marks Notes
2(e) Justification might include:
Banks will use the accounts to check whether a business
can repay loans [k] as this is likely to influence the interest
rate offered [an]. Suppliers [k] will want to know the liquidity
position of a business [an]. Banks are likely to be the main
external users of accounts because banks often lend large
sums of money [eval], whereas suppliers may be less
interested in the accounts if orders are small [eval].
Question Answer Marks Notes
3(a) Define ‘laissez-faire leadership style’. 2 For both marks need the idea that it links to decision making
– and it is the employees/workers who make them.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
Makes the broad objectives of the business known to
employees, but then they are left to make their own
decisions and organise their own work [2]
OR
A style of leadership that supports employees in achieving
targets at the same time as allowing them the freedom to
decide how to meet the targets [2]
Partial definition e.g. managers do not tell workers what to
do/how to organise work [1]
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Question Answer Marks Notes
3(b) Identify two roles of a manager. 2 Only award the first two responses given.
Award 1 mark per role (max 2). Accept any tasks that managers are likely to do.
Points might include: Do not award:
Planning Managing activities on own e.g. managing finance
Controlling
Organising
Leading/commanding/directing/give instructions/tasks
Coordinating
Motivating/inspiring others
Decision-making/solve problems
Communicating/give feedback
Delegating
Other appropriate responses should be credited.
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Question Answer Marks Notes
3(c) Outline one external cost and one external benefit 4 To use words from the stem as application, the reference
RBG’s business activities might create. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for each relevant external cost/benefit (max
2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). • Oil
• 6 countries
Points might include: • Pressure groups
External costs: • 2000 employees
Loss of space/land [k] from its operations in 6 countries • 60 managers
[app] • IT based methods
Pollution/waste or examples such as gas emissions [k]
which is why it must respond to pressure groups [app] Other appropriate examples can be credited.
Congestion/traffic [k]
Deplete/exploit natural/non-renewable resources [k]
Use of energy [k]
External benefits:
Employment opportunities/lower unemployment [k] as
may recruit more than 2000 employees [app]
Taxes will be paid to governments [k] from extracting oil
[app]
Improved infrastructure/better transport systems [k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
3(d) Explain two methods of IT based communication RBG 6 To use words from the stem as application, the reference
might use with its employees. must be appropriate (i.e. make sense) in relation to the point
being made.
Award 1 mark for identification of each relevant method
(max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). • Oil
Award 1 mark for each relevant explanation (max 2). • 6 countries
• 2000 employees
Points might include: • 60 managers
Email [k] written record [an] for all 2000 employees • Laissez-faire
[app]
Text messages/SMS/DM [k] saves time/quick [an] for Other appropriate examples can be credited.
the 60 managers [app]
Website/social media or examples e.g. Can award the following as [an] for different methods but
Facebook/X/Twitter [k] seen by many people at once only award once:
[an] in the 6 countries [app] Low cost
Video conferencing or examples e.g. Zoom/Teams/ Quick
online meeting [k] as can see body language [an] Send to many people at once
Phone/mobile (call) [k] at the oil company [app] as able Send large amounts of information/able to send
to get feedback/allows for two-way communication [an] attachments
Written record/can refer to later
Other appropriate responses should be credited. Able to get (instant) feedback
Do not have to travel
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Question Answer Marks Notes
3(e) Explain two ways a pressure group might try to 6 This is a general question so there are no marks for
influence business decisions. Which way do you think application.
is likely to be the most effective? Justify your answer.
Some points of analysis can be used for different ways but
Award up to 2 marks for identification of relevant points. do not award the same development twice.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for a justified decision as to which is To access [eval], must discuss two valid ways.
the most effective way for a pressure group to try to
influence business decisions.
Points might include:
(Customer) boycotts/encourage customers not to buy [k]
leading to fewer sales [an] and possibly less revenue
[an]
Raise/increase awareness or examples such as cause
negative publicity / publish information / write to
newspaper / publicity stunts [k] which could damage the
business’ reputation [an]
Lobbying (politicians)/send letters to government [k]
which could lead to changes in the law / which could
take time [an]
Demonstrations/protests [k] which could lead to fewer
people willing to invest in the business [an]
Arrange petitions [k]
Take legal action [k] but may increase costs [an]
Other appropriate responses should be credited.
Justification might include:
A pressure group could organise boycotts [k] leading to
fewer sales [an]. It could lobby politicians [k] which could
influence government decisions [an]. A boycott is the most
effective way because fewer sales could mean less revenue
which directly affects the business [eval], whereas lobbying
may not achieve anything other than raising awareness
[eval].
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Question Answer Marks Notes
4(a) Define ‘import quota’. 2 To award both marks the answer must include the idea of
limit on number/quantity of goods and the idea of
Award 2 marks for a full definition. Award 1 mark for a partial imported/into the country.
definition.
Do not award:
Physical limit on the number/amount of goods that can be answers which confuse the term with a tariff.
imported/allowed into a country [2]
OR
Restriction on the quantity of a product than can be imported
[2]
Partial definition e.g. limit on number/quantity of goods [1]
OR limit on imports [1]
4(b) Identify two benefits to a business of lower rates of 2 Only award the first two responses given.
taxation.
Award 1 mark per benefit (max 2).
Points might include:
• May encourage investment/growth
• Increase sales/revenue/income
• Lower costs/less cash outflow/lower expenses/cheaper
raw materials/cheaper imports
• More (retained) profit
• Higher profit margin
Other appropriate responses should be credited.
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Question Answer Marks Notes
4(c) Identify four legal controls over employment. Only award the first four responses given.
Award 1 mark per legal control (max 4). Allow examples of discrimination only once.
Points might include: Do not award:
Ethical points such as fair pay.
Unfair dismissal
Discrimination/equal opportunities
(Health and) safety/working conditions/working
environment
Minimum wage
Contract of employment or examples such as sickness
policy / holiday entitlement / notice period / rate of
pay/salary / pension entitlement
Redundancy
Working hours/provide breaks
Legal working age/child labour
Other appropriate responses should be credited.
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Question Answer Marks Notes
4(d) Explain one reason why DLT needs to consider each of 6 To use words from the stem as application, the reference
the following factors when deciding where to relocate in must be appropriate (i.e. make sense) in relation to the point
country X: being made.
Award 1 mark for identification of each relevant reason (max The following words are likely to be appropriate for this
2). question:
Award 1 mark for each relevant reference to this business Cups/plates
(max 2). Flow production
Award 1 mark for each relevant explanation (max 2). (30%) exported
Factory
Points might include:
75 employees
Suppliers:
Increased demand (for its products)
Distance [k] if closer to the factory [app] may reduce
transport costs/may be able to get resources quicker
Other appropriate examples can be credited.
[an]
May need to change supplier/can they still use current
supplier [k] leading to delays [an] so cannot meet
increase in demand [app]
Quality/range of materials [k] could damage its
reputation [an] of its cups/plates [app]
Cost [k] which could lower its profit margin [an]
Suitability of land:
May need a large area/space [k] otherwise this could
limit production/so able to expand [an] for its exports
[app]
Access to power/water/electricity [k] as using flow
production [app] so need continuous supply to operate
24 hours a day [an]
Cost of land/rent [k] as may increase fixed costs [an]
Links to transport/accessible [k] to ensure deliveries can
be made on time [an]
Environmental impact [k]
Government influence or examples such as taxes [k]
Other appropriate responses should be credited.
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Question Answer Marks Notes
4(e) Do you think the advantages for a manufacturing This is a general question so there are no marks for
business of using flow production are greater than the application.
disadvantages? Justify your answer.
Analysis:
Award up to 2 marks for identification of relevant points. Some [an] can be used for different points but only
Award up to 2 marks for relevant development of points. award once.
Award up to 2 marks for a justified decision as to whether [An] of economies of scale [k] must be lowers
the advantages to a manufacturing business of using flow unit/average costs, and not simply lowers costs.
production are greater than the disadvantages. Lower cost can be [an] but only award once unless
clearly specify two different costs e.g. labour and
Points might include: training costs.
Advantages:
Benefit from economies of scale [k] lowering To access [eval] must discuss a valid advantage and a valid
unit/average costs [an] disadvantage.
Capital intensive [k] so can lower the labour/wage costs
[an]
Output can be produced 24 hours a day/continuous [k]
Workers can specialise/little training may be needed [k]
Disadvantages:
Inflexible/difficult to change/cannot customise products
[k] so may not meet customer needs [an]
Demotivate employees [k] raises absenteeism/labour
turnover [an]
If one machine breaks down the whole production line
will stop [k] so delays output [an]
Requires high level of raw materials/inventory [k]
increasing storage space/cost [an]
Other appropriate responses should be credited.
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Question Answer Marks Notes
4(e) Justification might include:
One advantage is economies of scale [k] which lowers unit
costs [an]. This method is inflexible [k] so the business may
not meet customer needs [an]. The advantages are greater,
as the lower unit costs could result in lower prices [eval]
which can increase demand. If the product has high sales
this could reduce the need for flexibility [eval].
© Cambridge University Press & Assessment 2024 Page 24 of 24
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
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 21 printed pages.
© Cambridge University Press & Assessment 2024 [Turn over
0986/21 Cambridge IGCSE (9–1) – Mark Scheme May/June 2024
PUBLISHED
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 drawbacks for EP of having a tall organisational structure. 8
Award 1 mark for each drawback (max 2).
Award a maximum of 3 additional marks for each explanation of the drawback
of having a tall organisational structure – one of which must be applied to
this context.
Relevant drawbacks might include:
Communication is slower – as a long chain of command – takes longer
for messages to pass from senior managers to lowest level employees
Misunderstandings may occur – as more people for messages to be
passed through – more chance of errors being passed on
Senior managers are more remote from lower levels in the hierarchy –
these managers are less aware of the views of employees – more likely
for employees to feel demotivated
Decision making can be slower/weaker – as more levels to discuss
issues and pass on decisions – react to customer changes more slowly
May have a narrow span of control – which may reduce the opportunities
for delegation – employees feel less trusted with more direct control
Increasing managerial/supervisor costs – as likely to need more
managers as there are more levels in the hierarchy
For example: Communication is slower (1) as more employees for messages
to be passed through (1) giving more chance of errors in the messages (1)
about the production of pottery (app).
Application could include: pottery; cups; plates; bowls; trading for 40 years;
new Marketing Manager; Managing Director; 84 employees; 6 levels; external
recruitment/recruitment from outside the business; high-quality products; want
to increase efficiency; private limited company; information from Appendix 2.
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Question Answer Marks
1(b) Consider the following two ways EP could use to increase added value. 12
Which way should EP use? Justify your answer.
Increasing prices
Reducing raw material costs
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of both ways.
Well-justified recommendation.
Candidates discussing both ways in detail, in context
and with a well-justified recommendation including
why the alternative way 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 way.
Judgement with some justification/some evaluation of
choice made.
Candidates discussing at least one way 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 ways with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining both 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
1(b) Relevant points might include:
Improve the quality even more – of the pottery
– then customers will be willing to pay a higher
price – but it depends on the prices charged by
competitors for their pottery products – may
lose sales
Improve the brand image further – advertise
the pottery – makes the products more well-
known and hence EP may be able to raise
Increasing prices prices as customers like to buy more well-
known branded products
Provide extra services – such as gift wrap the
cups and plates to give as a gift – customers
will be willing to pay a higher price if the
product is made to appear more attractive in its
packaging
Higher prices may lead to lower demand for
pottery – possibly reducing revenue
Buying cheaper raw materials by changing
supplier/buying in bulk to gain a
discount/negotiating cheaper price – but
customers may find the pottery products are
of lower quality – unhappy customers may give
EP a bad reputation – lower sales
Source cheaper raw materials from imports
Reducing raw
instead of domestic raw materials – input
material costs
costs reduce – but quality may be lower – lose
sales
Reduce the amount of raw materials in each
pottery item – makes pottery items smaller –
will reduce amount of raw materials needed if
output remains the same – may not be noticed
by customers so no effect
Increasing prices is the best way to increase
added value because EP has a reputation for
high-quality pottery products and customers
are likely to be willing to pay higher prices.
This is safer than potentially getting a bad
reputation for poor quality products which
might happen if lower quality raw materials are
Recommendation
purchased.
Reducing input/raw material costs is the best
way to increase added value as customers
may not notice this as long as the quality of the
raw materials is not much lower reducing the
quality of the products such as plates and
bowls.
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Question Answer Marks
2(a) Explain two advantages and two disadvantages of using external 8
recruitment to find EP’s new manager.
Award 1 mark for each relevant advantage/disadvantage (max 2 advantages
and max 2 disadvantages).
Award 1 additional mark for each explanation of the advantage or
disadvantage in context.
Relevant advantages might include:
There will be new ideas in the business – which may make the business
more competitive with other pottery manufacturers
There may be no rivalry between the new manager and existing
employees – there will not be jealousy amongst the 7 marketing
employees who did not get the promotion
The quality of the candidates may be high/more experienced/more skilled
Wider choice of applicants to choose from
There will be no new vacancy to replace the internal applicant
Relevant disadvantages might include:
Recruitment may take longer – as advertisements are needed which may
take time to be read and respond to applicants/interviewing applicants for
the job of Marketing Manager
The person is not known to the business – risk of employing someone
who does not have the skills and expertise required to understand the
production of products such as cups and bowls
May be more expensive than internal recruitment
May be less effective for a time after first being employed – as the new
person will take time to understand the tall organisational structure of EP
It may be demotivating for existing employees as not able to be promoted
For example: There may be a wider choice of applicants (1) who have more
experience in the production of pottery products (app).
Application could include: pottery; cups; plates; bowls; high-quality products;
private limited company; trading for 40 years; new Marketing Manager;
Managing Director; want sales to increase; plastic or bamboo products;
information from Appendix 2.
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Question Answer Marks
2(b) Consider the following three ways EP could use to increase the sales of 12
its products. Which would be the best way for EP to use? Justify your
answer.
Advertising using social media
Emailing special offers to existing customers
Setting up a website
Level Description Mark
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more ways.
Well-justified recommendation.
Candidates discussing the 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 two or more 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 the 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
Can target specific Can easily be
demographic groups ignored as there
such as higher are a lot of adverts
income earners on social media
Viral marketing/share Can be expensive
information with family for EP to pay for
and friends enables pop-ups to ensure
recommendations for its pottery is seen
plates and cups to by a large group of
be spread quickly and people
to a large group of Potential customers
Advertising using potential customers may not use social
social media Potential customers media and
will see an advert for therefore they will
the shops to look for not be aware of
EP’s pottery when EP’s products
they go to sites such Easier to leave bad
as Facebook, which reviews can lead to
increases awareness fewer purchases of
of EP’s products cups and the bad
Social media widely reviews may be
used by consumers – unfair if only a small
large scale exposure proportion of
reviews are bad
Low cost/cheaper way Email may go into
to get information to a spam and so be
lot of existing pottery ignored
customers No guarantee the
Emails go direct to email address is
existing customers, correct and
who may be more therefore will not be
likely to purchase seen by all EP’s
EP’s products due to customers
the high-quality Existing customers
Emailing special
May be used to direct of plates may see
offers to existing
customers to retailers’ this as annoying
customers
websites – by and get a negative
including links in the view of EP
email Only sent to
existing
customers/some
customers may not
have email so not
targeting new
customers/may be
less effective
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Question Answer Marks
2(b)
Makes information Increased costs of
about EP’s pottery paying for a
more accessible to specialist to set up
potential customers the website/
searching for its improvements
products – makes Cost of postage
them more likely to and packaging
purchase a set of On-going costs of
dinner plates maintenance of the
Have complete control website, e.g.
over the way its updating prices of
pottery is shown in plates
Setting up a the adverts Search engines
website Prices can be quickly may not bring up
updated EP’s products on
Can include the first page of a
interactive search unless EP
adverts/videos, which pays for this which
are more attractive to can be expensive
customers Relies on people
Website can be used finding the
for online ordering – website/may be
more accessible for relatively unknown
customers living
further away from
retailers
Justification might include:
Social media is the best way to choose as the
advert for pottery is more likely to be seen than
on a website, which has to be searched for and
social media will appear immediately. Viral
marketing means that people using social media
can more quickly spread information than the
website and emails to existing people about EP’s
products and may not increase sales as these
customers already have EP pottery.
Using emails is the best way to choose as an
Recommendation
email is less likely to be ignored and targets
people who have already been a customer and
therefore may be more likely to read the email
and purchase additional products to match their
existing pottery plates.
Setting up a website is the best way to choose
as it can include a lot of information about EP’s
high-quality products which the other two
alternatives do not. It can include interactive
sections that may be attractive to potential
customers and therefore increase sales.
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Question Answer Marks
3(a) Explain four reasons why consumer spending patterns for a product 8
might change.
Award 1 mark for each reason why consumer spending patterns may have
changed (max 4).
Award a maximum of one additional mark for each explanation of the reason.
There are no application marks for this question.
Relevant reasons might include:
Changes in consumer tastes and fashions – increased/decreased
demand for the products
Products no longer meet customer needs – choose to buy alternative
products instead
Changes in incomes – now/no longer able to afford better quality
products
The price of a product changes – higher prices usually lead to lower sales
Changes in the prices of competitors’ products – if competitors’ products
are cheaper then customers will buy from them instead
Spending on advertising and promotional activities – if effective then is
likely to result in sales increasing for the successfully advertised product
Changes in the population/age structure of the population – an increase
in the number of older people in the population will increase demand for
products that are popular with them
New technology means new products become available – this will
increase demand for these products/demand for old technology products
decreases
For example – There are changes in consumer tastes and fashions (1) so if a
product becomes less fashionable then demand for these products will
decrease (1).
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Question Answer Marks
3(b) Consider the following two ways EP could increase efficiency in its 12
factory. Which would be the best way for EP to use? Justify your
answer.
Improving labour skills
Introducing more automation and technology
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of both ways.
Well-justified recommendation.
Candidates discussing both ways in detail, in context
and with a well-justified recommendation, including
why the alternative way 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 way.
Judgement with some justification/some evaluation of
choices made.
Candidates discussing at least one way 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 ways with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choices made.
Candidates outlining both 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
3(b) Relevant points might include:
Advantages Disadvantages
Improving labour Increases motivation Increases costs
skills of the 50 production from training the
employees – made to 50 production
feel more valued as employees – in
training given to them the short-term
– investment in the may reduce
employees profitability – if
May enable increase in costs
employees to work is greater than
more quickly – output increase in
of pottery is produced revenue when
in a shorter time the employees
Output per worker are being trained
increases – increases Output of cups
productivity – fewer may be reduced
inputs for a given whilst employees
output are being trained
Employees may – depends on
become more flexible whether it is off-
– could cover for the-job or on-the-
absent colleagues – job training
keeps the factory Skilled
running employees may
smoothly/fewer be tempted to
interruptions in output leave and work
Increases skills of for a competitor
employees which that makes high-
decreases waste/ quality products
leads to fewer – then costs of
mistakes training wasted –
it takes time to
recruit new
employees
reducing
efficiency
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Question Answer Marks
3(b)
Advantages Disadvantages
Introducing more May require fewer full- May result in
automation and time employees on redundancy
technology the production line – payments –
reduces wage costs increases costs
Output can be in the short-term
produced more – legal
quickly – reduces unit requirements for
costs – may allow redundancy
prices to be reduced – payments may
price of pottery be high
products may be Cost of
more competitive – purchasing
increasing sales equipment and
Changes in pottery maintenance
design may be made costs of the
more quickly – quicker technology may
to react to changes in be high –
customer preferences increases total
costs of making
pottery
products/may
need to be
updated –
increases costs
Increased
training costs if
employees need
training how to
use the
equipment/may
need to employ
new skilled
workers to
operate the
equipment –
increased
recruitment costs
Could lead to a
demotivated
workforce - fear
of change to job
roles
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Question Answer Marks
3(b)
Recommendation Justification might include:
Improving labour skills is the best way to
increase efficiency at EP’s factory. The 50
production employees will learn more skills
which will enable them to produce more output
per worker than previously. This will motivate
the employees to work harder and produce
more output. Automation is very expensive and
unless sales increase EP may find it difficult to
raise sufficient funds for the investment.
Introducing automation and technology in the
factory to make pottery products such as
plates is the best way to increase efficiency.
Technology will mean fewer production
workers will be needed so saving on wage
costs and greatly increasing output for each
remaining employee in the factory.
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Question Answer Marks
4(a) Explain two factors EP should consider when choosing a source of 8
finance.
Award 1 mark for each factor (max 2).
Award a maximum of 3 additional marks for each explanation of a factor that
affects which source of finance to choose – one of which must be applied
to this context.
Relevant answers might include:
Legal form of business – EP is a private limited company so share issue
is an option – and new shares can be sold to raise finance
Amount required – if the finance is required to improve cash flow then it
may not be a very large amount – and it is likely sources such as an
overdraft will provide sufficient funds
Length of time to repay – if the finance is required for a short length of
time then trade credit might be suitable – as this is repaid to the supplier
within 30/60 days – if needed for long period of time then other sources
may be more suitable
Existing loans – if the business already has several loans, then this may
not be an option – due to the already high expense of interest payments
on the loans
Control of the business – the original owners may not want to lose control
and therefore may not choose to sell more shares – so the control and
ownership of the business remains with the original owners
Purpose for using the finance
Size of business
The interest cost involved with some sources of finance – which will
increase costs and lower profit margins
For example: The purpose for using the finance. (1) If the finance is required
for ways to improve efficiency at EP (app) then a source such as a bank loan
could be chosen (1) as this finance can be used to increase efficiency and
then repaid over a longer period of time as unit costs are reduced and
profitability increases (1).
Application could include: pottery; cups; plates; bowls; trading for 40 years;
private limited company; high-quality products; want sales to increase; plastic
or bamboo products; wants to increase efficiency; improving labour skills;
more automation and technology; information from Appendix 2.
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Question Answer Marks
4(b) Using Appendix 3 and other information, consider the following two 12
products EP makes. Which product should EP stop making? Justify
your answer.
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 of
which product to stop making, 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
choices 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 choices 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
4(b) Relevant points might include:
Advantages Disadvantages
Product A Sales in volume terms Price is lower by
are much higher than $30 per product
Product B at $40 per unit
Total cost is lower GPM is lower by
than for Product B by 12.5%
$210 000 Sales are
PM is higher at 30% increasing at the
Profit is higher at lower rate of 10%
$60 000 but from a per year than for
lower number of sales Product B – so
so the profit margin revenue is not
must be higher likely to increase
Demand is increasing as much as for
by 10% each year so Product B
future sales are likely
to be higher – may
become even more
profitable in the future
as revenue is likely to
increase and total cost
stays the same
Product B GPM is higher at PM is lower at
62.5% 12.5%
Price per unit is higher Sales are lower
at $40 per unit – at 10 000 units
leading to higher per year
revenue Profit in 2023 is
Revenue is higher at lower by $10 000
$400 000
Demand is increasing
at double the rate of
Product A each year –
so sales are likely to
increase to 12 000
units leading to higher
revenue of $480 000
in the future
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Question Answer Marks
4(b)
Recommendation Justification might include:
EP should stop producing Product A because
demand is growing at only 10% per year
whereas demand for Product B is growing at
20% so will increase revenue at a faster rate
hence profit should overtake the $60 000
profit made from Product A.
EP should stop producing Product B because
the total cost is much higher at $350 000, and
the Managing Director wants to keep costs
low. Product B also makes a lower profit of
$50 000 in 2023.
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Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/22
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
0986/22 Cambridge IGCSE (9–1) – 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.
© Cambridge University Press & Assessment 2024 Page 4 of 18
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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.
© Cambridge University Press & Assessment 2024 Page 5 of 18
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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
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*2921634381*
Paper 1 Short Answer and Data Response May/June 2024
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_11_2024_1.2
© UCLES 2024 [Turn over
2
1 FBM is a boat building business. It has 100 skilled employees. The Operations Director is concerned
that FBM holds a high level of inventory. She is also concerned that the business is starting to
experience diseconomies of scale. The Finance Director has been asked to analyse FBM’s cost
and output data. An extract is shown in Table 1.1.
Table 1.1
Extract from FBM’s cost and output data
Variable costs per unit $5000
Fixed costs per year $600 000
Number of boats made each year 300
(a) Define ‘diseconomies of scale’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two ways a business can use cost data to help make decisions.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(c) Identify four fixed costs a business might have.
Fixed cost 1: .....................................................................................................................
...........................................................................................................................................
Fixed cost 2: .....................................................................................................................
...........................................................................................................................................
Fixed cost 3: .....................................................................................................................
...........................................................................................................................................
Fixed cost 4: .....................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_11_2024_1.2
3
(d) Explain one advantage and one disadvantage to FBM of holding a high level of inventory.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think customers have a more important role in the success of a business than its
employees? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_11_2024_1.2 [Turn over
4
2 ADN is a food retailer. It has 5 shops and 300 full-time employees. All ADN’s employees receive
off-the-job training. ADN has a tall hierarchical structure. Managers have a narrow span of control
and all use an autocratic leadership style. ADN’s directors are planning to expand the business
and cannot decide whether it is better for a business to use internal growth or external growth.
(a) Define ‘span of control’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘autocratic leadership style’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two benefits to ADN of having full-time employees.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_11_2024_1.2
5
(d) Explain one benefit and one limitation to ADN of using off-the-job training.
Benefit: .............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Limitation: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think it is better for a business to use internal growth or external growth when planning
to expand? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_11_2024_1.2 [Turn over
6
3 IDT manufactures clothes for the mass market. It is a multinational company with factories in 4
countries. IDT has short-term and long-term financial needs. The Finance Director is analysing
IDT’s statement of financial position. An extract is shown in Table 3.1. He has been asked to
calculate working capital and to explain how an increase in non-current liabilities might affect IDT.
Table 3.1
Extract from IDT’s statement of financial position ($ million)
2022 2023
Current assets 380 420
Current liabilities 250 280
Non-current liabilities 300 400
(a) Define ‘mass market’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate IDT’s working capital in 2023.
Working: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Final answer: .................................................................................................................... [2]
(c) Outline one reason why IDT might need the following types of finance:
Short-term finance: ...........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Long-term finance: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_11_2024_1.2
7
(d) Explain two ways an increase in non-current liabilities might affect IDT.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two advantages to a business of being a multinational company. Which advantage
do you think is likely to be the most important? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_11_2024_1.2 [Turn over
8
4 CFG is a social enterprise. It buys cocoa beans from local farmers and then uses the beans to
make chocolate. Being ethical is important to the business. CFG has developed a new chocolate
bar. The Marketing Manager plans to use skimming as its pricing method, and retailers as its
distribution channel for the new product. He knows there are many legal controls over marketing
that might affect a business.
(a) Define ‘social enterprise’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two ways legal controls over marketing might affect a business.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(c) Outline one advantage and one disadvantage to CFG of using skimming as its pricing method.
Advantage: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_11_2024_1.2
9
(d) Explain one advantage and one disadvantage to CFG of using retailers as its distribution
channel for the new product.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think being ethical will always lead to lower profit for a business? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_11_2024_1.2
10
BLANK PAGE
© UCLES 2024 06_0986_11_2024_1.2
11
BLANK PAGE
© UCLES 2024 06_0986_11_2024_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2024 06_0986_11_2024_1.2
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/12
*3079967508*
Paper 1 Short Answer and Data Response May/June 2024
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
06_0986_12_2024_1.3
© UCLES 2024 [Turn over
2
1 Nicky wants to be a successful entrepreneur. She plans to start up a travel business specialising
in walking holidays. Nicky will be operating in a niche market. She is preparing a business plan to
help with her decision-making. Nicky has been told government support is available for business
start-ups. She knows building customer relationships will be important.
(a) Identify two reasons why a government might support business start-ups.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Identify two ways a business can build customer relationships.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(c) Outline one benefit and one limitation to Nicky’s business of operating in a niche market.
Benefit: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Limitation: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_12_2024_1.3
3
(d) Explain one way each of the following sections in the business plan might be helpful to Nicky.
Business objectives: .........................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Data about the market: .....................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two characteristics of a successful entrepreneur. Which characteristic is likely to be
the most important? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_12_2024_1.3 [Turn over
4
2 GTB is a business which operates in the tertiary sector. It owns 5 cafés selling food and drinks.
The business uses social media as its method of promotion. The Finance Manager, Moeen, is
analysing GTB’s financial statements. An extract is shown in Table 2.1. He is considering ways to
improve GTB’s profit margin. Moeen knows there are other users that are interested in the accounts
of a business.
Table 2.1
Extract from GTB’s financial statements 2023
Revenue $600 000
Profit $150 000
Capital employed $750 000
Profit margin 25%
(a) Define ‘tertiary sector’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate GTB’s Return on Capital Employed (ROCE). Show your working.
Working: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Final answer: .................................................................................................................... [2]
(c) Outline two ways GTB could improve its profit margin.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_12_2024_1.3
5
(d) Explain two advantages to GTB of using social media as its method of promotion.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think banks are the main external users of the accounts of a business? Justify your
answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_12_2024_1.3 [Turn over
6
3 RBG is an oil company. It has operations in 6 countries. RBG has 2000 employees including 60
managers. Some of its managers use a laissez-faire leadership style. All of RBG’s internal
communication uses information technology (IT) based methods. The Managing Director knows
RBG’s business activities can create external costs and external benefits. She says: ‘Pressure
groups often try to influence business decisions.’
(a) Define ‘laissez-faire leadership style’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two roles of a manager.
Role 1: ..............................................................................................................................
...........................................................................................................................................
Role 2: ..............................................................................................................................
........................................................................................................................................... [2]
(c) Outline one external cost and one external benefit RBG’s business activities might create.
External cost: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
External benefit: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_12_2024_1.3
7
(d) Explain two methods of IT based communication RBG might use with its employees.
Method 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two ways a pressure group might try to influence business decisions. Which way do
you think is likely to be the most effective? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_12_2024_1.3 [Turn over
8
4 DLT manufactures cups and plates in country X. Its factory uses flow production and has 75
employees. The Human Resources Director is aware that there are many legal controls over
employment. DLT exports 30% of its products to country Y where it benefits from lower rates of
taxation and no import quotas. DLT’s Managing Director is considering relocating its factory to
another part of country X to meet the increased demand for its exports.
(a) Define ‘import quota’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two benefits to a business of lower rates of taxation.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
........................................................................................................................................... [2]
(c) Identify four legal controls over employment.
Legal control 1: .................................................................................................................
...........................................................................................................................................
Legal control 2: .................................................................................................................
...........................................................................................................................................
Legal control 3: .................................................................................................................
...........................................................................................................................................
Legal control 4: .................................................................................................................
........................................................................................................................................... [4]
© UCLES 2024 06_0986_12_2024_1.3
9
(d) Explain one reason why DLT needs to consider each of the following factors when deciding
where to relocate in country X:
Suppliers: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Suitability of land: .............................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think the advantages for a manufacturing business of using flow production are greater
than the disadvantages? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2024 06_0986_12_2024_1.3
10
BLANK PAGE
© UCLES 2024 06_0986_12_2024_1.3
11
BLANK PAGE
© UCLES 2024 06_0986_12_2024_1.3
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2024 06_0986_12_2024_1.3
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*4671073904*
Paper 2 Case Study May/June 2024
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_21_2024_1.3
© UCLES 2024 [Turn over
2
1 (a) Explain two drawbacks for EP of having a tall organisational structure.
Drawback 1: ......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Drawback 2: ......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 06_0986_21_2024_1.3
3
(b) Consider the following two ways EP could use to increase added value. Which way should
EP use? Justify your answer.
• Increasing prices
• Reducing raw material costs
Increasing prices: .............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reducing raw material costs: ...........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2024 06_0986_21_2024_1.3 [Turn over
4
2 (a) Explain two advantages and two disadvantages of using external recruitment to find EP’s new
manager.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 06_0986_21_2024_1.3
5
(b) Consider the following three ways EP could use to increase the sales of its products. Which
would be the best way for EP to use? Justify your answer.
• Advertising using social media
• Emailing special offers to existing customers
• Setting up a website
Advertising using social media: ........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Emailing special offers to existing customers: ..................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Setting up a website: ........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2024 06_0986_21_2024_1.3 [Turn over
6
3 (a) Explain four reasons why consumer spending patterns for a product might change.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 3: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 06_0986_21_2024_1.3
7
(b) Consider the following two ways EP could increase efficiency in its factory. Which would be
the best way for EP to use? Justify your answer.
• Improving labour skills
• Introducing more automation and technology
Improving labour skills: .....................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Introducing more automation and technology: .................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2024 06_0986_21_2024_1.3 [Turn over
8
4 (a) Explain two factors EP should consider when choosing a source of finance.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 06_0986_21_2024_1.3
9
(b) Using Appendix 3 and other information, consider the following two products EP makes. Which
product should EP stop making? Justify your answer.
• Product A
• Product B
Product A: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Product B: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2024 06_0986_21_2024_1.3
10
BLANK PAGE
© UCLES 2024 06_0986_21_2024_1.3
11
BLANK PAGE
© UCLES 2024 06_0986_21_2024_1.3
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2024 06_0986_21_2024_1.3
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/22
*3098732281*
Paper 2 Case Study May/June 2024
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
06_0986_22_2024_1.1
© UCLES 2024 [Turn over
2
1 (a) Explain two reasons why setting business objectives is important to JJ.
Reason 1: .........................................................................................................................
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(b) Using Appendix 1 and other information, consider the two new products JJ could produce.
Which product should JJ choose? Justify your answer using break-even calculations.
• Product A
• Product B
Product A: .........................................................................................................................
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2 (a) Explain two benefits and two limitations for JJ of employing part-time workers in its factory.
Benefit 1: ..........................................................................................................................
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(b) Consider the advantages and disadvantages of the following three ways 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
Advertising in fashion magazines: ....................................................................................
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3 (a) Explain four reasons why profit is important to a business.
Reason 1: .........................................................................................................................
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© UCLES 2024 06_0986_22_2024_1.1
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(b) Consider the opportunities and threats of ecommerce for JJ. Which is likely to have the most
effect on JJ? Justify your answer.
Opportunities: ...................................................................................................................
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4 (a) Using Appendix 2 and other information, explain two ways JJ may be affected by the forecast
increase in unemployment in country X.
Way 1: ...............................................................................................................................
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9
(b) Using Appendix 3 and other information, consider the following two 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
Using coal for fuel in its factory: ........................................................................................
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To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
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at www.cambridgeinternational.org after the live examination series.
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© UCLES 2024 06_0986_22_2024_1.1
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies November 2020
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/11
Short Answer/Structured Response
Key messages
This was the first examination paper for this variant following the introduction of the new syllabus. There
have been slight changes to the way some questions are marked which was not always clearly understood
by candidates.
Candidates should be made aware that there are application marks available in most part (c) questions, in
this paper, Questions 1, 2 and 4. Stating the name of the business in the question is a signal that points
should be applied to this business. Part (e) of each question has two knowledge, two analysis and two
evaluation marks available. Candidates will not gain credit for application points in part (e) questions.
The lack of effective evaluation continues to be an issue in many scripts. Candidates should be reminded
that evaluation must include a justified decision that follows from the points raised in the answer, not a
repetition of points already explained. The mark scheme for each part (e) question gives an example of how
this may be displayed in the answer.
General comments
It was good to see an increasing number of candidates attempting to apply their answers to the relevant
business.
There was some evidence that this question paper tested areas of the syllabus that candidates did not fully
understand. Areas of confusion include:
• the business cycle,
• levels of hierarchy,
• quotas and tariffs,
• takeovers and mergers,
• stakeholders and shareholders.
In some cases, candidates needed to carefully read the question to have the correct focus in their answer.
Issues were seen in Question 2b where candidates discussed technology, and Question 4d where internal
rather than external stakeholders were often explained.
Candidates should be encouraged to:
• Learn precise definitions for all key terms in the syllabus.
• Practise developing points of knowledge to show the possible impact on a business.
• Refer directly to the information within the stem of the question throughout answers to ensure that
points raised are appropriate for that organisation.
• Ensure that a different point of application is used for each separate point made.
• Provide a conclusion in each part (e) question justifying the decision made with a point that has not
been discussed earlier in the answer.
© 2020
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies November 2020
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) Precise definitions were provided by many candidates. Some less successful candidates referred
to a group of people rather than workers. Weaker candidates identified this as a union of different
businesses.
(b) For many candidates this was one of the most challenging questions. Only the most successful
gained both marks by providing a precise definition. An error made by many was to explain a
hierarchical organisational structure, rather than one level of that structure.
(c) A small but significant number of candidates did not attempt this question. The most frequently
presented correct answers included the reduction in workload for managers and possible
motivation for workers. Many candidates then needed to apply their answers to a bank to achieve
application marks. Some candidates stated, incorrectly, that delegation would lead to improved
communication.
(d) Many candidates were able to identify two factors. Some then needed to explain why these factors
should be considered. Candidates who focused on the skills/performance of the manager and the
amount of time they had been employed were most successful in achieving analysis marks. The
strongest candidates linked their point to the banks need to save $1 m when faced with increasing
competition.
(e) Candidates clearly understood this topic and showed strong knowledge particularly of advertising.
Many applied this knowledge to the material provided, although no application marks are available
for part (e) questions. The strongest candidates explained a benefit of each option before making a
justified choice by explaining a disadvantage of the option not chosen. The weakest answers
provided lists of knowledge. Some candidates explained in detail the type of advertising a business
might use. These answers could gain no credit as they did not answer the question set.
Question 2
(a) Many candidates were aware that the flow production method leads to high output but needed to
show that production is continuous. Some candidates confused flow with batch production.
(b) The majority of candidates were able to identify two correct methods. Several candidates lost
marks by ignoring the instruction to identify methods other than technology. A common error was to
state that employing more staff would improve efficiency.
(c) This question clearly differentiated between candidates. Most candidates were aware of
appropriate sources of finance. Only the most successful achieved full marks by using two different
pieces of application. The weakest candidates stated short term sources, which would not be
appropriate for purchasing new technology.
(d) This question was divided into two parts. Candidates showed better understanding of the lack of
local knowledge than of import quotas. A significant number of candidates concentrated upon the
general problems of entering new markets rather than problems caused by lack of local knowledge.
These candidates often discussed the problems caused by language difficulties which was not
rewarded. Quotas were often confused with tariffs.
(e) Many answers consisted of lists of knowledge with no appropriate development of points.
Candidates generally did not attempt to provide evaluation. Those that did attempt to conclude
often repeated points made earlier in the answer. The strongest answers explained how gaining
local knowledge and reduced competition would benefit a business. Common errors were to
explain in detail how language barriers could be avoided or confused a joint venture with a merger.
© 2020
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies November 2020
Principal Examiner Report for Teachers
Question 3
(a) The majority of candidates provided a precise definition. Some candidates confused a sole trader
with an entrepreneur.
(b) Generally, a well answered question. A small number of candidates correctly calculated the figures
but placed them next to the wrong letter in their answer. Unfortunately, the Examiner could not
award marks to these answers.
(c) This question was the only part C question which did not require application. Many answers were
awarded two marks as candidates struggled to identify four different factors. Candidates who lost
marks often repeated costs or stated the size of the market.
(d) Candidates clearly had a good understanding of niche markets. Many answers contained a
definition of the term which could not be rewarded as candidates needed to explain an advantage
or disadvantage. The most successful answers explained the benefits of possible higher prices and
problems of lack of economies of scale. Candidates did not always develop their answers
sufficiently to gain the application and analysis marks available. Application was often limited to
stating the type of products sold. A small, but significant, number of candidates discussed higher or
lower profits rather than profit margins. These answers were too vague to be credited.
(e) Candidates found this question straightforward. Many were able to demonstrate analysis with a
wide range of correct calculations. The strongest answers used the advice in the question and
calculated the gross profit and profit ratios. Only the very strongest candidates were able to make
an evaluative conclusion answering the question set. To gain knowledge marks candidates were
required to show understanding of whether the figures had improved or worsened over the period
shown. Weaker candidates often either repeated the figures from Table 3.1 or presented
calculations without comment. These answers gained no credit as the candidate had not shown
understanding of what the figures meant.
Question 4
(a) This question was the most challenging on the paper for many candidates. A large number of
candidates confused the business cycle with the product life cycle or simply listed the terms used in
the business cycle chart.
(b) Many candidates gained full marks on this question by stating two distinctly different reasons. A
common error was to repeat the same point, for example, stating two changes in economic
conditions. Some candidates did not understand the question and stated two possible objectives
rather than the reasons why they may change.
(c) The advantages of a takeover were understood but candidates often struggled to explain any
disadvantages. The strongest candidates were able to explain points such as those listed in the
mark scheme. The weakest candidates simply stated that the business would gain more customers
after the takeover. Application was noticeably weak in this question. Some candidates were able to
gain one application mark by stating that the business produced building materials.
(d) Stakeholder groups were not well understood. Several candidates did not attempt this question.
Some candidates confused internal and external stakeholders and a significant number thought
that stakeholders were shareholders. Candidates who could correctly identify two external
stakeholders often struggled to fully develop their answers. The best candidates explained the
impact on customers, suppliers, and banks. Even the most able candidates struggled to provide
two distinctly different points of application.
(e) Candidates found the analysis and evaluation part of this question particularly challenging. The
effect legal controls and interest rates would have on business were not always fully understood.
This made evaluation difficult for candidates. The strongest candidates recognised that legal
controls would limit what a business would be allowed to do, and interest rates would add to the
cost of loans. The weakest candidates confused interest rates with taxes and thought that legal
controls could be ignored.
© 2020
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2020
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/21
Case Study
Key messages
This is the first November paper for the new syllabus. The style of the question paper has remained broadly
the same. However, the differences in the weighting of the assessment objectives have resulted in small
changes to the mark scheme. This has meant the (a) questions have more analysis marks awarded and
fewer application marks. The (b) questions have had no change to the weighting of the assessment
objectives but have had the level descriptors amended slightly. This has not changed the awarding of marks
on the 12-mark questions. These small changes have not made any significant difference to the marks
achieved; in fact, for some candidates, they may have raised their marks.
Candidates should still be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is except for one of the
(a) questions that will now usually be generic. This will ensure responses are appropriate for each given
situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a jewellery retailer.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case, and compare options including reference to
why the alternatives were rejected.
General comments
Candidates had generally been well prepared for this examination. Many candidates are developing a strong
examination technique and clearly understand what is expected of them. The context of GJ, a jewellery
retailer, provided an accessible scenario for candidates. Those who applied their skills to the context of GJ
were the most successful.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Many candidates
showed good knowledge and understanding of the full range of the syllabus that was assessed, but in a
minority of cases it was clear that some topics were not well understood. These included the purpose of
business objectives, recruitment, the concepts of liquidity and profitability, sales promotion and external
influences on business operations. Candidates should ensure they are prepared to respond to questions on
the whole syllabus, as they could earn marks by using business terms confidently.
Overall, many good scripts were seen; very weak ones were less common. Application marks were often
gained but candidates should make sure that different examples of application are included in the (a)
questions and the conclusion/recommendation in the (b) questions should also be applied. Candidates
should aim to consider the consequences/implications/long-term/short-term/balance issues of the decisions
to secure Level 2 and Level 3 marks.
© 2020
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2020
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) The majority of candidates demonstrated good knowledge of the purpose of business objectives.
Strong responses focused on discussion of goals and giving the business a sense of direction.
There were several ways of developing the answer, for example, making links to strategy and
decision-making. Application marks were awarded to candidates who referred to the case study,
noting Gemma’s aim to increase sales and market share. Weaker candidates tended to describe
business objectives rather than explain the reason for them.
(b) Many candidates were confident in their knowledge of franchise operations. They were able to
explain benefits such as a well-established business reputation and support from the franchisor
with regard to advertising and training. The best answers then gave a balanced discussion about
the disadvantages of not being able to make significant decisions or operate independently.
Candidates who achieved Level 3 marks were able to make a supported decision about using a
franchise agreement, often mentioning that Gemma would be the only business in the area selling
Beautywise jewellery and that the help from the franchisor reduced the risk of business failure.
Question 2
(a) This question required candidates to consider the job specification for the new shop manager.
Relevant points included experience of selling jewellery, communication skills to ensure excellent
customer service and product knowledge appropriate to the jewellery business. The strongest
answers identified these requirements and then applied them to the context of selling high-priced
rings and bracelets and knowledge of gem stones. Some candidates confused job specification
with job description and listed the shop manager’s responsibilities.
(b) The information in Appendix 3 provided the data needed to compare the three possible locations
for a new shop in Town A, B or C. Too often there were detailed answers merely copying figures
from the case study for rent, running costs and estimated gross profit. Candidates needed to use
the data to make comparisons and calculate potential net profit. Better responses not only included
net profit calculations for each location but also concluded that by choosing Town A, Gemma would
make nearly twice as much net profit as Town B and over five times as much as Town C.
Successful calculations in this response produced effective analysis and given candidates access
to Level 2 and then Level 3. Candidates should always prepare for a question that tests numeracy
skills using data from the case study.
Question 3
(a) This was a generic question testing candidates’ knowledge of liquidity and profitability as well as
their ability to explain their importance to a business. No application marks were available in this
question. Good responses explained that liquidity was important to enable short-term debts to be
repaid to avoid selling business assets. Sometimes reference was made to calculating current and
acid test ratios to judge the liquidity position. Amongst the responses about profitability, the best
answers identified how to calculate profit margins or ROCE and then explained the importance of
being able to use these to analyse business performance and hopefully secure bank loans or
attract investment from new shareholders.
(b) Many candidates found this question accessible at the lower end of the mark range. They could
explain that reducing the price of a second purchase or offering a discount of 10% on all stock
would likely increase sales. The majority of candidates then needed to develop their analysis to
discuss the impact that such price reductions would have on gross profit and the quality image of
the jewellery being sold. Candidates were generally more successful in considering the advantages
and disadvantages of paying a celebrity to open the new shop. Well-balanced answers mentioned
the expense of inviting a famous celebrity to be offset against the extra sales revenue that might be
earned from increased numbers of customers. Responses which judged the most effective
promotion to maximise revenue over the longest time period achieved Level 3.
© 2020
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2020
Principal Examiner Report for Teachers
Question 4
(a) This question required candidates to consider the external influences of exchange rate depreciation
and increases in income tax. Better candidates could explain that a depreciation in the exchange
rate would result in higher costs for importing the jewellery. This might require prices to be
increased to maintain profit margins which would, in turn, cause demand for Gemma’s Jewels to
fall. On the other hand, export prices would become more competitive so GJ might experience
increased sales from overseas customers, especially now that Gemma has a website for online
ordering. The discussion about the impact of an increase in income tax most often referred to
decreases in disposable income, reducing spending power and a consequent fall in sales of luxury
items like jewellery.
(b) Many candidates realised that GJ’s jewellery is ethically sourced so stating the country where the
product has been made would likely improve the reputation of GJ and boost sales and profit.
Features of a boom phase include higher levels of income and increased consumer confidence,
both of which would make higher sales of jewellery more likely. There would be an opportunity to
raise prices and hence increase profit at the same time. The impact of increased mobile (cell)
phone usage was discussed effectively by many candidates, mentioning Gemma’s new website
and phone app for ordering items from GJ across a wider market. Better candidates explained the
disadvantages of each of these changes and included a conclusion that made a judgement about
which change resulted in the greatest effect on GJ’s profit without simply repeating earlier points,
and then went on to justify why this would have a greater effect than the two other changes.
Application, particularly in the conclusion enabled candidates to achieve higher marks.
© 2020
Grade thresholds – November 2020
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the November 2020 examination.
minimum raw mark required for grade:
maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 51 45 39 34 29 23 18 13 9
Component 21 80 51 44 37 31 25 20 16 12 8
The maximum total mark for this syllabus, after weighting has been applied, is 160.
The overall thresholds for the different grades were set as follows.
Combination of
Option 9 8 7 6 5 4 3 2 1
Components
X 11, 21 102 89 76 65 54 43 34 25 17
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email [email protected]
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2020
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*5395313548-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Blank pages are indicated.
11_0986_21_2020_1.2
© UCLES 2020 [Turn over
2
Gemma’s Jewels (GJ)
Gemma set up GJ as a sole trader 5 years ago in country Z. She started by selling rings and
bracelets from a rented shop. She used her own savings to start the business. The first year was
successful. After this first year Gemma decided to expand by selling more expensive items of
jewellery. Gemma thinks it is important to set clear business objectives. She wants her business
to increase sales by 10% each year and to increase market share.
As the business grew Gemma needed more finance for a computer, inventory and working capital
to avoid liquidity problems. She decided to convert the business to a private limited company and
sell shares to members of her family. Gemma still owns more than 50% of the shares in GJ.
In 2019, Gemma purchased a franchise from Beautywise Jewellery. This means GJ is now only
able to sell Beautywise products in its shop. GJ has to purchase all of its inventory from Beautywise
and in addition pay 20% of gross profit to Beautywise. More details about the franchise are in the
advertisement in Appendix 1.
Gemma has developed a website so customers can order online. Customers can also download
a mobile (cell) phone app to view and order jewellery.
Gemma plans to open a second shop as a Beautywise franchise in a nearby town. She has to
decide which method of sales promotion to use. GJ needs to recruit a manager for the new shop.
The manager will be responsible for operating the shop and making most of the decisions about
which items of inventory to buy. The manager will also need to ensure excellent customer service
is provided and that the new employees are motivated and working efficiently.
Appendix 1
Advertisement for Beautywise Jewellery Franchise
Become a franchisee to sell Beautywise Jewellery and improve your chances of success!!
What we offer you:
• Be the only shop in your area that sells Beautywise jewellery
• Beautywise will advertise nationally on television and in newspapers
• Help and advice on decoration of the shop and training for employees and the franchisee
• Ethically sourced jewellery imported especially for Beautywise
• The franchise fee is just $50 000 per year!
© UCLES 2020 11_0986_21_2020_1.2
3
Appendix 2
Newspaper article- Daily News
External factors affecting the jewellery market in country Z
The demand for jewellery in country Z is likely to be affected by some recent changes. Consumers
are becoming more aware of the ethical issues involved in jewellery production in some countries.
The exchange rate of the currency of country Z is likely to depreciate over the next 12 months. The
Government is planning changes to tax rates which might reduce the effects of the current economic
boom.
Appendix 3
Information on three possible locations for the new shop
Annual costs Town A Town B Town C
$45 000 per year for 5 $35 000 per year for 10 $20 000 per year for 15
Shop rent
years years years
Wages and salaries $80 000 $70 000 $60 000
Heating and lighting $5 000 $5 000 $3 000
Estimated gross profit $400 000 $300 000 $200 000
Note: Franchise fee is $50 000 per year and 20% of gross profit is paid to Beautywise.
© UCLES 2020 11_0986_21_2020_1.2
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 11_0986_21_2020_1.2
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer/Structured Response October/November 2020
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 October/November 2020 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 20 printed pages.
© UCLES 2020 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme October/November 2020
PUBLISHED
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 descriptors 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.
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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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Question Answer Marks Notes
1(a) Define ‘trade union’. 2 Do not award pressure group as this does not
answer the question.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
Group of workers who join together to ensure their interests are
protected [2]
Organisation that represents the workers and fights for improvements
to pay and conditions [2]
An organisation that exists to provide workplace support for its
members [2]
Partial definition – e.g. Group of workers who join together [1]
Group of people who act together to protect their rights [1]
1(b) Define ‘level of hierarchy’ 2 Note: To gain 2 marks the answers should show
that workers are on a similar level and are within
Award 2 marks for a full definition. Award 1 mark for a partial one organisation.
definition.
Managers/supervisors/other employees who are given a similar level
of responsibility in an organisation [2]
A level of authority in a business structure [2]
Partial definition e.g. People all at the same rank [1]
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Question Answer Marks Notes
1(c) Outline two advantages of SRB using delegation. 4 Points can relate to employees or the business.
Award 1 mark for each relevant advantage. Note: To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for each relevant reference to this business. sense) in relation to the point being made.
Points might include: The following words are likely to be appropriate for
• Workload spread more evenly/reduced workload for managers [k] this question:
in its 80 branches [app]
• Management can focus on more important matters [k] such as • Business customers
responding to increased competition [app] • 100 managers
• Motivates employees/gives sense of responsibility [k] so less • 80 branches
problems with trade unions [app] • Removing one level of the hierarchy
• Improved efficiency/better quality of work (because workers are • Saving $1m in costs
specialised) • Increased competition
• Career opportunities [k] as able to do similar work to the 100 • Bank (services) or related words such as
managers [app] loans
• Management can measure the success of staff more easily [k] • Develop new products and services
• Can assist with training [k] • Trade union
Other appropriate responses should also be credited. Other appropriate examples in context can still be
credited.
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Question Answer Marks Notes
1(d) Explain two factors SRB should consider when deciding which 6 Note: To use words from the stem as application,
managers to make redundant. the reference must be appropriate (i.e. Make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant factor (max 2).
The following words are likely to be appropriate for
Award 1 mark for each relevant reference to this business (max 2). this question:
Award 1 mark for each relevant explanation (max 2). • Business customers
• 100 managers
Points might include: • 80 branches
• Importance of the role being performed [k] to maintain contact • Removing one level of the hierarchy
with business customers [app] to ensure good customer service • Saving $1m in costs
[an] • Increased competition
• Performance/experience/skills/flexibility [k] such as not able to use • Bank (services) / give loans
delegation [app] so not able to do the job required [an] • Delegation.
• Length of time worked/redundancy costs [k] may be cheaper to
choose people who have not been there for a long time [an] Other appropriate examples in context can still be
• Attitude/attendance/disciplinary record [k] will want to lose poor/ credited.
bad workers [an] from the 80 branches [app]
• Wages/salary [k] as removing higher paid employees would help Do not accept reduced costs alone as [k] or [an]
reduce costs long term [an] helping to reach the cost reduction of as this is [tv].
$1m [app]
• Which departments need to lose/retain workers [k]
• Number of customers [k] at the branch [app]
• The number of subordinates under each manager [k] as workers
may become inefficient if poorly supervised [an]
• Those who volunteer [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think that more advertising is a better way for a business 6 This is a general question so there are no marks
to respond to increased competition than introducing new for application.
products? Justify your answer.
Some points could be awarded for different
Award up to 2 marks for identification of relevant issues. options, but do not award the same point twice.
Award up to 2 marks for relevant development of points. For evaluation to be awarded justification will
usually follow on from relevant analysis of points.
Award 2 marks for justified decision as to whether more advertising is
a better way for a business to respond to increased competition than For the second evaluation mark the candidate
introducing new products. must address that there is increased competition.
Points might include:
Advertising:
• To raise awareness of its products [k] to increase revenue [an] but
products might not be what customers want which will limit
effectiveness [an]
• No guarantee that target customers may see it [k] so sales may
not rise [an]
• More advertising will increase costs [k]
• Widen target market/appeal to more potential customers [k]
Introducing new products:
• Widen target market/appeal to more potential customers [k]
• May not appeal to customers [k]
• High cost of development [k] which will add to expenses [an]
• Allows access to new markets [k] which helps spread risk [an] and
increases potential sales [an].
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Justification might include:
Increased advertising will raise awareness of products [k] potentially
increasing revenue. [an] Introducing new products might appeal to a
wider target market [k] so helping to spread risk. [an]
It depends on reason for increased competition, if customers dislike
your products then advertising may not be effective. [eval] Developing
products may be more expensive but the business could have little
choice if it wants to remain competitive. [eval]
Question Answer Marks Notes
2(a) Define ‘flow production’. 2
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
Where large quantities of a product are produced in a continuous
process [2]
Mass production using a production line [2]
Partial definition e.g. ‘Makes lots of the same thing’ [1]
Large quantities of a standardized product [1]
Large-scale production/large volumes, continuous production [1]
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Question Answer Marks Notes
2(b) Identify two methods (other than technology) a business can use 2 Only award the first two responses given.
to improve efficiency.
Accept practical examples such as examples of
Award 1 mark per method. performance related pay as motivation methods.
Points might include: Do not accept employ more workers as this will
• Reorganise layout/reduce waste/Kaizen/JIT/lean production not improve efficiency.
• Training/improve employee skills/employ more skilled workers
• Improve motivation/communication
• Specialisation
Other appropriate responses should also be credited.
2(c) Outline two sources of finance YMG could use for the new 4 Long term sources are required for this
technology. investment.
Award 1 mark for each relevant source of finance. Note: To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for each relevant reference to this business. sense) in relation to the point being made.
Points might include: The following words are likely to be appropriate for
this question:
• Sell shares/owners capital [k] as a private limited company [app]
• Bank loan [k] as need $60m [app] • Private limited company/sell shares to family
• (Retained) profits [k] as likely to have funds as it is the largest and friends
manufacturer [app] • Flow production
• Leasing [k] as move into new markets overseas may not be • $60m.
successful [app] • New markets
• Hire purchase [k] • The largest manufacturer
• Owners savings [k] • 3 billion litres
• Sell unwanted assets [k] • Soft drinks
• Crowdfunding [k]
Other appropriate examples in context can still be
Other appropriate responses should also be credited. credited.
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Question Answer Marks Notes
2(d) Explain how each of the following problems might affect YMG 6 Note: To use words from the stem as application,
when entering new markets in other countries. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant problem (max 2).
The following words are likely to be appropriate for
Award 1 mark for each relevant reference made to this business this question:
(max 2). • Private limited company
• Flow production
Award 1 mark for each relevant explanation (max 2). • $60m.
• The largest manufacturer
Points may include: • 3 billion litres
• New technology
Lack of local knowledge: • Soft drinks
• May not be aware of competitors actions [k] leading to fewer sales • Expanding production
/lower revenue [an] of soft drinks [app]
• May not understand customer buying habits [k] so must spend Other appropriate examples in context can still be
more money developing new products [an] rather than investing credited.
$60m in new technology [app]
• Customers may not like [K] the soft drinks [App] Do not accept answers which clearly refer to
tariffs.
Import quotas:
• This limits the number of items that can be brought into the Do not accept the same analysis point for both
country [k] so fewer litres needed [app] which could lead to higher problems.
prices[an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Do you think a joint venture is the best way for a business to 6 This is a general question so there are no marks
enter a new market in another country? Justify your answer. for application.
Award up to 2 marks for identification of relevant points. For evaluation to be awarded justification will
usually follow on from relevant analysis of points.
Award up to 2 marks for relevant development of points.
Answers which only discuss alternative options
Award 2 marks for justified decision as to whether a joint venture is cannot be awarded evaluation marks.
the best way for a business to enter a new market in another country.
Joint venture
• Allows the business to gain important local information about
customers [k] so better able to meet customer requirements [an]
ensuring sales [an]
• Wider range of contacts/better access to resources [k] so may be
able to obtain cheaper resources [an] reducing production costs
[an]
• Less competition [k] as working with local business [an] helping to
increase its market share [an]
• Can provide access to other specialist staff and technology [k]
• Clash of management styles [k] lead to conflict/problems with
decision making [an]
• Must share profits [k]
Other options may include:
• Franchising [k] which will reduce the problem of a lack of local
knowledge [an] may negatively affect reputation [an]
• Licensing [k] losing control over the production [an]
• Expand themselves [k] allowing them to retain all the profits [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Justification might include:
• A joint venture allows the business to gain important local
information about customers [k] so they are better able to meet
customer requirements [an] ensuring sales [an]. Expanding on
their own would require them to raise more capital [k]. If they are
happy to share control a joint venture is the best way as it helps
reduce the risks of setting up in a new country[eval]. Since
expanding on their own maybe too expensive. [eval]
Question Answer Marks Notes
3(a) Define ‘sole trader’. 2 Do not accept features such as unlimited liability
as this is NAQ.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
Ownership of business in the hands of one individual/person [2]
Unincorporated business owned by one person [2]
Partial definition e.g. Run/operated by one person [1]
3(b) Calculate X and Y. 2 $ not required.
Award 1 mark for each correct calculation.
X = 8400
Y = 7000
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Question Answer Marks Notes
3(c) State four factors that can influence the amount of inventory a 4 Only award the first four responses given.
business might hold.
Award 1 mark per factor.
Points might include:
• Demand from customers/amount of sales
• Perishability of the items
• Storage space available
• Cost of storage
• Delivery charges
• Seasons/celebrations/festivals
• Amount of money available (to buy inventory)
• Lead time/reliability of supplier
• Method of production (mass may require high inventory)
• Stock control system – JIT/lean production
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(d) Explain one advantage and one disadvantage to Elton of 6 Note: To use words from the stem as application,
operating in a niche market. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant advantage and
disadvantage (max 1 for each). The following words are likely to be appropriate for
this question:
Award 1 mark for each relevant reference made to this business • Sole trader
(max 2). • 5 years
• Clothing and equipment for sports
Award 1 mark for each relevant explanation (max 2). • shop
• Remained small
Points might include: • Wide range of inventory needed
• Profit margin was 35%
Advantages:
• Use of figures from Table 3.1
• Less competition [k] so easier to attract/retain customers [an] to
his shop [app] Other appropriate examples in context can still be
• Clear focus/easier to target customers [k] interested in certain credited.
sports [app] reducing costs of advertising [an]
• Builds up specialist skills and knowledge [k] Candidates may gain credit for changes to profit
• Can often charge a higher price [k] helps improve profit margin margin only once in either the advantage OR the
[an] disadvantage.
• Customers are prepared to pay for expertise [k]
• Customers tend to be more loyal [k] so may remain in business
for another 5 years [app]
Disadvantages:
• Lack of economies of scale [k] leading to higher unit costs [an] so
not able to lower cost of sales of $7000 [app]
• Risk of over dependence on a single product or market [k]
• Likely to attract competition if successful [k]
• Vulnerable to market changes [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think Elton should be pleased with the financial 6 Relevant calculations for analysis:
performance of his business? Justify your answer using
appropriate ratios. Profit margin:
32% in 2019
Award up to 2 marks for identification of relevant issues. Fallen by 3% in 2019
Award up to 2 marks for relevant development of points. Gross profit margin:
70% in 2018
Award 2 marks for justified decision as to whether Elton should be 72% in 2019
pleased with his financial performance. Risen by 2% [an][an]
Answers might include: OFR applies if candidates have incorrectly
calculated profit in question 3(b).
• Gross profit margin has improved [k] from 70% [an] to 72% [an]
showing better control of its variable costs [an]. For evaluation to be awarded justification will
• Profit margin has decreased [k] showing less control of expenses follow on from relevant analysis of points and must
[an] include ratio analysis.
• Revenue improved [k] by $1000 [an]
• Gross profit increased [k] by $1200 [an]
• Profit decreased [k] by $400 [an]
Other appropriate responses should also be credited.
Justification might include:
• Gross profit margin has improved [k] from 70 % [an] to 72% [an]
However profit margin has decreased. [k] He should be pleased
as sales and gross profit are rising [eval] but he must be
concerned about expenses. [eval]
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Question Answer Marks Notes
4(a) Define ‘business cycle’. 2 Do not award alternative names such as trade
cycle.
Award 2 marks for a full definition. Award 1 mark for a partial
definition.
Fluctuations in economic activity that an economy experiences over
time [2]
Changes in level of economic growth/GDP/economic activity over time
[2]
A period during which a country or economy goes from growth to
recession and back again [2]
Partial definition e.g. Shows changes in GDP [1]
Fluctuations in economic activity [1]
4(b) Identify two reasons why a business might change its objectives. 2 Only award the first two responses given.
Award 1 mark per reason.
Points might include:
• Achieved current objective(s)
• Changing economic conditions
• Changes in legal controls/rules
• Changes in the market e.g. competitors join/leave market/
changes in demand
• New owners
• Growth of business
• Change in capital available to the business.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(c) Outline one advantage and one disadvantage to KTF of taking 4 Note: To use words from the stem as application,
over the other business. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for each advantage/disadvantage.
The following words are likely to be appropriate for
Award 1 mark for each relevant reference to this business. this question:
• Building materials/cement and bricks
Points might include: • $25bn
• Started 60years ago
Advantages: • Main competitors
• Reduces competition/increased market share [k] as this is one of • Combined sales of $40bn/raise of $15bn
its main competitors [app] • Business cycle
• Possible economies of scale [k] reducing the unit costs of bricks • Interest rates
[app] • Legal controls
• Possible cost savings [k] which could be one of its objectives • Protecting the environment
[app] • Stakeholder groups
• Buying an existing brand can be cheaper than internal growth [k]
• Access to new skills or expertise [k]. Other appropriate examples in context can still be
credited.
Disadvantages:
• Clash of culture and leadership styles/objectives [k] for a business
started 60 years ago [app]
• Possible legal action (as gain too much market power) [k] so
could face the risk of new legal controls to protect environment
[app]
• Possible diseconomies of scale or examples e.g. control/
communication problems [k]
• Over reliant on one market [k] especially when enter different
stages of business cycle [app]
• Pressure groups could oppose [k]
• Cost of redundancies [k]
• Expensive to buy the firm [k].
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(d) Explain how two external stakeholder groups might be affected 6 Note: To use words from the stem as application,
by the takeover. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant stakeholder group.
The following words are likely to be appropriate for
Award 1 mark for each relevant reference to this business. this question:
• Building materials/cement and bricks
Award 1 mark for each relevant explanation. • manufacturing
• $25bn
Points might include: • Started 60years ago
• Main competitors
• Banks [k] may have increased demand for loans [an] to pay for • Combined sales of $40bn
taking over its main competitor [app] • Business cycle
• Government [k] as may receive more tax revenue [an] if KTF can • Interest rates
increase its $40bn sales [app] • Legal controls
• [Local] community [k] may be concerned about possible job • Protecting the environment
losses [an]
• Suppliers [k] could lead to fewer / increased orders [an] for Other appropriate examples in context can still be
building materials [app] credited.
• Pressure groups [k]
• Consumers [k] as may lead to less choice [an] Do not award answers which refer to internal
• Competitors [k] as they will be concerned about possible price stakeholders such as: owners (shareholders),
drops due to the economies of scale gained [an] employees.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Do you think businesses will be more affected by new legal 6 For evaluation to be awarded justification will
controls to protect the environment than an increase in interest follow on from relevant analysis of points.
rates? Justify your answer.
Answers which only discuss one option cannot be
Award up to 2 marks for identification of relevant issues. awarded both evaluation marks.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to which factor likely to have
the biggest effect on businesses.
Points might include:
New legal controls to protect environment:
• May have to buy pollution permits/pay fines [k] increasing costs
[an] which could increase prices [an]
• Introduce new techniques/change how they make things [k] so
need to spend more to train employees [an]
• Might have to buy new machinery[k]
• May be forced to change location [k]
• May have to change raw materials [k]
Increase in Interest rates:
• Bank loans more expensive for business/increased cost of
borrowing [k] less likely to invest in capital [an]
• Consumers less likely to borrow to buy expensive items [k]
leading to lower sales [an]
• Demand for higher wages [k] as workers might face lower
disposable income [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Justification might include:
• The business may have to buy pollution permits [k] increasing
their costs [an]. Interest rates may mean consumers may not
borrow [k] and demand could fall [an]. Legal controls will have
more effect because a business cannot avoid them [eval] whereas
interest rates may have no effect if the business does not have to
borrow money. [eval]
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Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2020
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 October/November 2020 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 16 printed pages.
© UCLES 2020 [Turn over
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
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 descriptors
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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Question Answer Marks
1(a) Explain two reasons why having business objectives is important to 8
Gemma.
Award 1 mark for each relevant reason (maximum of two):
Relevant reasons might include:
• A clear target/aim/purpose for owner 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 would be more efficient
• Clear objectives will help focus the employees and management on the
same goal – helps motivate employees - making it more likely to be
achieved
• Allows measurement of success – can judge performance or progress
• Comparison of performance - so business managers at each shop can
compare how the shop has performed against their objective(s) - to see
whether or not it has been successful
Award a maximum of 3 additional marks for each explanation – one of which
must be applied to this context.
Indicative response:
An objective is a target to work towards (1) and Gemma has set the objective
of increasing sales (app). By setting this objective all the employees can try to
find ways to increase sales (1), which should ensure all the employees and
managers work towards a common goal making it more likely to be
achieved. (1)
Application could include: increase market share, increase sales by 10% each
year, jewellery, rings and bracelets, she plans to open a second shop.
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Question Answer Marks
1(b) Consider the advantages and disadvantages of buying the Beautywise 12
franchise. Do you think Gemma was right to buy the franchise? 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 both the advantages and
disadvantages of buying a franchise.
Well-justified conclusion.
Candidates discussing advantages and disadvantages in
detail, in context and with well-justified conclusion,
including why the alternative argument 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 advantage or
disadvantage.
Judgement with some justification/some evaluation of
choice made.
Candidates discussing the advantages and disadvantages
of buying a franchise 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 advantages and
disadvantages with little/no explanation.
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining advantages and disadvantages of
buying a franchise in context should be rewarded with the
top marks in the band.
0 No creditable response. 0
© UCLES 2020 Page 4 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
1(b) Relevant points might include:
Advantages Disadvantages
• It is a known jewellery • High cost of $50 000 per
Buying a brand so the chances of year paid to franchisor
franchise business failure are • Payment each year of
reduced 20% of gross profit –
• The franchisor pays for less profit for Gemma
advertising on national • Less independence in
television and national decision making
newspapers lowering • Cannot sell other
Gemma’s marketing jewellery – restricts
budget supplies in the shop
• All jewellery supplied by
franchisor so don’t need
to find suppliers saving
Gemma time
• Training employees and
Gemma will be provided
by the franchisor
saving costs
• Banks more willing to
lend as it is a lower risk
of failure
Conclusion Justification might include:
• No, as Gemma cannot take her own decisions and she
has done well so far with the original jewellery shop.
She should choose to sell whatever jewellery she wants
and keep all the gross profit for herself, even though the
franchise may be more popular and overall sales may
have been higher, as she may have more gross profit to
keep.
• Yes, as a relatively new business of 5 years buying a
franchise will make it much easier to obtain finance from
the bank to use for the expansion.
© UCLES 2020 Page 5 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
2(a) Explain four requirements for the new manager that Gemma should 8
include in the job specification below.
Job specification for the shop manager
Job title: Shop manager
Location: New shop
Details of job: Manage the shop and the employees
Award 1 mark for each relevant requirement (maximum of four):
Relevant requirements might include:
• Experience - of selling jewellery
• Qualification/product knowledge - in retail management/gems
• Skills - e.g. Leadership skills – make sure new employees are well
motived/communication skills – ensuring excellent customer service/
financial skills – make decision about which items of inventory to buy
• Trained – to operate the shop and supervise new employees
• Physical fitness – need to be on their feet all day in the shop
• Personal characteristics – friendly and welcoming to customers buying
rings/easily approachable by customers when entering the new
shop/able to speak the same language as local people in the area where
the new shop is located
Award a maximum of 1 additional mark for each explanation which must be
applied to this context.
For example:
Experience (1) of working in a jewellery shop so that they will know what to
do. (app)
Application could include: operating the shop, making decisions about which
items of inventory to buy, ensuring excellent customer service, ensuring new
employees are motivated.
© UCLES 2020 Page 6 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
2(b) Consider the advantages and disadvantages of the three towns for the 12
new shop shown in Appendix 3. Recommend which town Gemma
should choose for the location of the new shop. 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 two or more locations.
Well-justified recommendation.
Candidates discussing the three locations in detail, in
context and with well-justified recommendation, including
why the alternative locations 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 location.
Judgement with some justification/some evaluation of
choice made.
Candidates discussing two or more locations 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 locations with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining the three locations in context should
be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2020 Page 7 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
2(b) Relevant points might include:
Town A • Comparison of the figures – e.g. highest rent of the
three towns/shortest lease of the three towns (L1)
• Total costs are $130 000 (not including the
franchise payments) (L1)
• Payment of 20% of gross profit to the franchisor is
$80 000 per year (L1)
• The franchise fee of $50 000 is a smaller
proportion of the estimated gross profit than for
town B and C (L2)
• Gross profit is highest and minus expenses profit =
$140 000 (L2)
• Highest total expenses of $260 000 (L2)
Town B • The wages and salaries are $10 000 lower than
town A (L1)
• Estimated gross profit is $100 000 more than town
C (L1)
• Total costs are $110 000 (not including the
franchise payments) (L1)
• Profit = $80 000 (L2)
• Total expenses = $220 000 (L2)
Town C • Heating and lighting is the cheapest of the three
towns (L1)
• Total costs are $83 000 (not including the franchise
payments) (L1)
• Longer lease contract of 15 years increases risk to
the business if the second shop is not successful
(L2)
• Profit = $27 000 (L2)
• Lowest total expenses of $173 000 (L2)
Recommendation Justification might include:
• If Gemma wants the highest profit then Town A is
the one to choose although she will only have the
lease for 5 years and then may need to move. But
she will make nearly twice as much profit as
Town B and over 5 times as much as Town C.
• Town B might be the better one to choose if
Gemma wants to gain a longer lease and is willing
to reduce the profit made to ensure the location for
twice as long as Town A. She will gain more gross
profit than Town C so that will make a greater
contribution to paying the annual franchise fee of
$50 000.
• If Gemma wants to secure a shop for the longest
time then Town C is the best. However, the gross
profit is the lowest at $200 000 but the expenses
are also a lot lower than the other two options.
© UCLES 2020 Page 8 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
3(a) Explain why liquidity and profitability are important to a business. 8
Award 1 mark for each relevant reason or explanation of the reason for
liquidity and profitability:
Relevant reasons might include:
Liquidity:
• Allows a business to see if it is able to pay back the short-term debts of
the business
• Measured by current ratio/acid test ratio
• If it cannot pay the debts, then it will not be able to buy more inventory or
raw materials
• If the business becomes illiquid it may be forced to sell business assets to
pay debts and will cease trading
Profitability:
• It measures how well profit is being made from sales or capital invested in
the business
• Could be used to reinvest into the business/use retained profits for
expansion
• Measured by gross profit margin/profit margin/ROCE
• It can be a measure of efficiency
• Can compare business performance over time/compare against other
businesses
• It helps investors or bank to decide whether to invest in the business or
lend it money
• Retain shareholders/pay dividends/return on investment for the owners
Award a maximum of 3 additional marks for each explanation. This is a
generic question, therefore there are no application marks available.
For example:
Profitability is a measure of performance (1) and can be used to show the
bank so that it may give the business a loan for expansion. (1) It shows how
efficiently the business is converting investment into profit (1) as shown by the
percentage of profit to revenue or profit to investment in the business. (1)
© UCLES 2020 Page 9 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
3(b) Consider the advantages and disadvantages of the following three sales 12
promotion methods Gemma could use for the new shop. Recommend
which method Gemma should choose to maximise revenue. Justify your
answer.
• Buy one, get 50% off second purchase
• 10% off everything in the shop for one week after opening
• Pay a celebrity to open the shop
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of the two or more methods of sales
promotion.
Well-justified recommendation.
Candidates discussing all three methods in detail, in
context and with well-justified recommendation including
why the alternative methods 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 method.
Judgement with some justification/some evaluation of
choice made.
Candidates discussing two or more methods 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 methods with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining all three methods in context should
be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2020 Page 10 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
3(b) Relevant points might include:
Buy one get 50% • Encourages customers to buy more jewellery -
off second more sales to gain the second item at 50%
purchase reduction
• But this will reduce the gross profit on the second
item of jewellery – lower profit overall
• Customers may perceive this as lower quality
jewellery
10% off • Encourages sales on all items of jewellery as
everything in the reduction on all items
shop for one • Less effect on gross profit than the 50% off (which
week after will effectively be 25% reduction on each item)
opening • However, slightly less gross profit on each item but
this will also mean less gross profit paid to the
franchisor
Pay a celebrity to • Many people may visit the shop to meet the
open the shop celebrity – increasing sales while people are in the
shop
• Gains full gross profit on each item as opposed to
the two alternative options
• If customers like the jewellery then may visit the
shop again later and sales may continue to
increase
• Increased cost of paying the celebrity to visit the
shop which can be very expensive
• Improved the image of the shop – as the shop may
be associated with the celebrity and the luxury
nature of GJs jewellery
© UCLES 2020 Page 11 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
3(b)
Recommendation Justification might include:
• Revenue is likely to increase in all three options.
However, buy one get 50% off second purchase of
jewellery will attract customers to the make more
than one purchase leading to the highest increase
in revenue. The second option may only gain a
small increase in revenue because a 10%
reduction in price is a small discount and may not
encourage much more than a 10% increase in
sales. Although the celebrity may attract
customers to the shop it is a one day promotion
and will only increase sales and revenue for one
day.
• A price reduction of 10% may be the most effective
in maximising revenue by encouraging increased
sales of all items of jewellery. The loss in revenue
from the price reduction of 10% could then be
more than compensated for assuming a higher
than 10% increase in the number of jewellery
sales.
• Paying a celebrity may increase revenue the most
because many people will be made aware of the
shop and be attracted to its opening. Many of
these people may then make purchases of
jewellery when at the new shop which would not
otherwise have been made, therefore increasing
revenue by the highest amount.
© UCLES 2020 Page 12 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
4(a) Explain the effect of the following changes on GJ. 8
• Depreciation in the exchange rate of country Z
• Increase in income tax in country Z
Award 1 mark for each relevant effect (maximum of two):
Relevant effects might include:
Depreciation in the exchange rate of country Z:
• This means the value of the currency falls - higher cost of imported
goods/higher cost of supplies of imported jewellery – possibly decreased
profit
• GJ may need to increase prices which may discourage sales
• If GJ export jewellery using their app – export prices are lower after
depreciation so easier to sell abroad – more overseas customers
Increase in income tax in country Z:
• This decreases consumer disposable income and decreases demand for
luxuries which may decrease revenue for GJ
• Employees may ask for a wage increase due to lower disposable income
Award a maximum of 3 additional marks for each explanation – one of which
must be applied to this context.
For example:
Depreciation in the exchange rate will result in import prices rising. (1) This
will increase the cost of jewellery to GJ (app) which will lead to either higher
prices and lower sales (1) or lower gross profit being made if she keeps prices
the same. (1)
Application could include: Gemma has developed a website, customers can
download an app to order jewellery.
Note: Gemma sells expensive items of jewellery, rings and bracelets may be
considered to be luxury goods.
© UCLES 2020 Page 13 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
4(b) Consider how the following three changes might affect GJ. Which 12
change is likely to have the most effect on GJ’s profit? Justify your
answer.
• All jewellery packaging must state in which country the product has
been made
• Country Z has entered a boom phase of the business cycle
• A higher percentage of people in country Z use mobile (cell) phones
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of two or more changes.
Well-justified conclusion.
Candidates discussing all three changes in detail, in
context and with well-justified conclusion, including why
the alternative changes 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 change.
Judgement with some justification/some evaluation of
choice made.
Candidates discussing two or more changes 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 changes with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining all three changes in context should
be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2020 Page 14 of 16
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
4(b) Relevant reasons might include:
All jewellery • May improve reputation as GJ jewellery supplied by
packaging the Beautywise franchise is ethically sourced
must state in when it is imported
which country • Customers may not bother about which countries
the product jewellery has come from and only be concerned with
has been style and price
made
Country Z has • Increased consumer incomes may lead to higher
entered a sales of jewellery as it is a luxury good
boom phase of • GJ may take the opportunity to raise prices
the business • May buy jewellery from GJ as it is higher quality
cycle jewellery and now consumers can afford to buy from
GJ therefore increasing sales
• However, there may be other products consumers
want to purchase first – jewellery may be bought at
certain times such as weddings or birthdays and this
may not be affected by higher incomes
A higher • More people will find it easier to check GJ website to
percentage of see what jewellery it has for sale – easier to compare
people in with competitors – may increase or decrease sales
country Z use depending on how GJ compares with competitors
mobile (cell) • GJ may start to advertise using social media
phones • May be able to expand sales to other countries
• Overseas sales may result in added delivery costs
• May have little effect on GJ if consumers still prefer to
go into the shop to see and try on jewellery before
buying
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0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2020
Question Answer Marks
4(b)
Conclusion Justification might include:
• The changes to packaging may have the most effect
if consumers are concerned about ethical issues and
even if they have a higher income from the boom,
they will not purchase jewellery from shops that do
not sell ethically sourced inventory so GJ should
have increased profit.
• Economic boom is likely to have the biggest effect on
profit as consumers will have higher incomes and be
more likely to spend some of this on expensive
jewellery rather than cheaper jewellery and therefore
GJ will have higher revenue and higher profit even
after payments to the franchisor. If only some
consumers are concerned about ethical issues this
change will have less effect on sales and profit.
• More mobile (cell) phones will allow GJ to increase
the target customers for sales from beyond where the
shop is located as they have their own mobile
phone app. The potential increase in the number of
customers and therefore sales may be greater than
the increase in disposable income of local residents
near to the shops. Therefore, this may provide the
greater increase in revenue and possibly profit as
costs of selling on the internet are also lower.
© UCLES 2020 Page 16 of 16
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*9997703832*
Paper 1 Short Answer and Data Response October/November 2020
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Blank pages are indicated.
11_0986_11_2020_1.1
© UCLES 2020 [Turn over
2
1 SRB is a bank which provides loans to business customers. SRB plans to make 100 managers’
jobs redundant from its 80 branches. This would remove one level of hierarchy. This is part of its
plan to save $1m in costs over the next 2 years. The Managing Director said: ‘SRB is working with
the trade union about this plan. SRB will make more use of delegation.The bank has to respond
to increased competition from online banks. SRB could either advertise more or develop new
products and services.’
(a) Define ‘trade union’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘level of hierarchy’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two advantages of SRB using delegation.
Advantage 1:.....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2:.....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 11_0986_11_2020_1.1
3
(d) Explain two factors SRB should consider when deciding which managers to make redundant.
Factor 1:............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2:............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think that more advertising is a better way for a business to respond to increased
competition than introducing new products and services? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
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© UCLES 2020 11_0986_11_2020_1.1 [Turn over
4
2 YMG is a private limited company. It is the largest manufacturer of soft drinks in country V. YMG
produces 1 billion litres a year using flow production. The Managing Director wants YMG to expand.
He said: ‘I plan to increase production to 3 billion litres over the next 5 years. This will allow us to
start selling our products in new markets in other countries. I know import quotas and lack of local
knowledge can cause problems but there are ways we can overcome them.’ The Managing Director
also plans to invest $60m in new technology to improve efficiency.
(a) Define ‘flow production’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two methods (other than technology) a business can use to improve efficiency.
Method 1:...........................................................................................................................
...........................................................................................................................................
Method 2:...........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two sources of finance YMG could use for the new technology.
Source of finance 1:...........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Source of finance 2:...........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 11_0986_11_2020_1.1
5
(d) Explain how each of the following problems might affect YMG when entering new markets in
other countries.
Problem caused by lack of local knowledge: ....................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem caused by import quotas: ...................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think a joint venture is the best way for a business to enter a new market in another
country? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
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© UCLES 2020 11_0986_11_2020_1.1 [Turn over
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3 Elton is a sole trader. He sells specialist clothing and equipment for sports, including baseball and
hockey. It is a niche market. Elton started his business 5 years ago and it has remained small. A
wide range of inventory is important. Elton has been looking at the financial performance of his
business. The profit margin for 2018 was 35%. An extract of the accounts is shown in Table 3.1.
Table 3.1
Revenue and cost information for Elton’s business for 2018 and 2019 ($)
2018 2019
Revenue ($) 24 000 25 000
Cost of sales ($) 7 200 Y
Gross profit ($) 16 800 18 000
Expenses ($) 8 400 10 000
Profit ($) X 8 000
(a) Define ‘sole trader’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate X and Y.
X : .......................................................................................................................................
Y: ....................................................................................................................................... [2]
(c) State four factors that can influence the amount of inventory a business might hold.
Factor 1:............................................................................................................................
...........................................................................................................................................
Factor 2:............................................................................................................................
...........................................................................................................................................
Factor 3:............................................................................................................................
...........................................................................................................................................
Factor 4:............................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 11_0986_11_2020_1.1
7
(d) Explain one advantage and one disadvantage to Elton of operating in a niche market.
Advantage:........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage:....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
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........................................................................................................................................... [6]
(e) Do you think Elton should be pleased with the financial performance of his business? Justify
your answer using appropriate ratios.
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© UCLES 2020 11_0986_11_2020_1.1 [Turn over
8
4 KTF makes building materials, including cement and bricks. Last year KTF had sales of $25bn.
KTF’s objectives have often changed since it was started 60 years ago. The Managing Director
wants KTF to expand. KTF is going to take over one of its main competitors. The newly expanded
business will have combined sales of $40bn. The Managing Director said: ‘Many stakeholder groups
will be affected by this decision.’ She knows there are many external factors that affect business
activity including the business cycle, interest rates and legal controls to protect the environment.
(a) Define ‘business cycle’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two reasons why a business might change its objectives.
Reason 1:..........................................................................................................................
...........................................................................................................................................
Reason 2:..........................................................................................................................
........................................................................................................................................... [2]
(c) Outline one advantage and one disadvantage to KTF of taking over the other business.
Advantage:........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage:....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2020 11_0986_11_2020_1.1
9
(d) Explain how two external stakeholder groups might be affected by the take over.
Stakeholder group 1:.........................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Stakeholder group 2:.........................................................................................................
Explanation:.......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think businesses will be more affected by new legal controls to protect the environment
than an increase in interest rates? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2020 11_0986_11_2020_1.1
10
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© UCLES 2020 11_0986_11_2020_1.1
11
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© UCLES 2020 11_0986_11_2020_1.1
12
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be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
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© UCLES 2020 11_0986_11_2020_1.1
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*5395313548*
Paper 2 Case Study October/November 2020
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Blank pages are indicated.
11_0986_21_2020_1.2
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1 (a) Explain two reasons why having business objectives is important to Gemma.
Reason 1: .........................................................................................................................
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(b) Consider the advantages and disadvantages of buying the Beautywise franchise. Do you think
Gemma was right to buy the franchise? Justify your answer.
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2 (a) Explain four requirements for the new manager that Gemma should include in the job
specification below.
Job specification for the shop manager
Job title: Shop manager
Location: New shop
Details of job: Manage the shop and the employees
Requirement 1: .................................................................................................................
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(b) Consider the advantages and disadvantages of the three towns for the new shop shown in
Appendix 3. Recommend which town Gemma should choose for the location of the new shop.
Justify your answer.
Town A: .............................................................................................................................
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Recommendation: ............................................................................................................
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3 (a) Explain why liquidity and profitability are important to a business.
Liquidity: ...........................................................................................................................
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(b) Consider the advantages and disadvantages of the following three sales promotion methods
Gemma could use for the new shop. Recommend which method Gemma should choose to
maximise revenue. Justify your answer.
• Buy one, get 50% off second purchase
• 10% off everything in the shop for one week after opening
• Pay a celebrity to open the shop
Buy one, get 50% off second purchase:............................................................................
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4 (a) Explain the effect of the following changes on GJ.
• Depreciation in the exchange rate of country Z
• Increase in income tax in country Z
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© UCLES 2020 11_0986_21_2020_1.2
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(b) Consider how the following three changes might affect GJ. Which change is likely to have the
most effect on GJ’s profit? Justify your answer.
• All jewellery packaging must state in which country the product has been made
• Country Z has entered a boom phase of the business cycle
• A higher percentage of people in country Z use mobile (cell) phones
All jewellery packaging must state in which country the product has been made:............
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Country Z has entered a boom phase of the business cycle: ..........................................
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A higher percentage of people in country Z use mobile (cell) phones:.............................
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© UCLES 2020 11_0986_21_2020_1.2
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020 11_0986_21_2020_1.2
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2021
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/11
Short Answer/Data Response
Key messages
This is the second year for this new version of the syllabus. Small differences in the weighting of the
assessment objectives since 2020 have resulted in some changes in the mark scheme.
Part (c) of each question continues to have four marks. However, one of the part (c) questions each session
is a generic question, Question 4(c) in this paper. The remaining part (c) questions continue to be applied
questions which assess knowledge and application.
Part (e) of each question no longer includes marks for application. Many candidates continue to try to apply
their answers to the case study which uses valuable time.
Questions which require application refer to the business in the scenario by name. Candidates should be
reminded to use information from the stem to help answer parts (c) and (d) when appropriate as this
provides the basis for application.
General comments
Questions requiring definitions and knowledge, such as parts (a) and (b) of each question were not well
answered this session. Many candidates were unsure of the terms or needed to be more precise when
defining them. This was a particular issue in Questions 1(b), 3(a) and 4(a).
Weak understanding of business terminology was also an issue in a number of other questions notably,
Questions 1(d), 1(e) and 2(c). Understanding the usefulness of business documents requires further study
for many candidates. This was an issue within Question 1(c).
For most part (c) and all part (d) questions, candidates are required to link each point made to the context
outlined within the stem of the question. Candidates should be reminded to use a different point of
application and analysis for each point of knowledge. Each application point can be credited only once within
any question.
Effective evaluation is an area which requires development. Candidates should be reminded that evaluation
should include a justified decision that follows on from the points raised in the answer, not a repetition of
points already explained. The mark scheme for each part (e) question includes an example of how
evaluation may be demonstrated in the answer.
Comments on specific questions
Question 1
(a) The majority of candidates were able to identify two distinct features of this type of business
organisation. A common error was to confuse a sole trader business with an entrepreneur. Some
candidates therefore incorrectly stated characteristics that an entrepreneur may possess such as
risk taking.
© 2021
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2021
Principal Examiner Report for Teachers
(b) Candidates were sometimes unsure of the meaning of this term. Some candidates provided the
formula. Although a formula is not a precise definition, as required in the question, candidates were
awarded for showing awareness of the term. A common mistake was to define starting capital
rather than working capital.
(c) This question required application to the business stated in the stem. Candidates needed to clearly
understand the topic of break-even as many struggled to explain how the information would be
used by a business. A common error was to state that break-even would show the profit made,
rather than the potential profit at any level of output.
(d) The concept of added value was not well understood by many candidates. Most candidates
struggled to explain how changing packaging would add value to a drink, instead they explained
how this would attract more customers. These answers could not be credited. The best responses
explained that changing packaging would improve perceived quality allowing a higher price to be
charged therefore increasing the profit margin on each drink. The impact of cheaper materials was
better understood although candidates struggled to fully develop their answers to gain the analysis
marks available.
(e) The strongest answers recognised that free samples are most appropriate for food items where
customers may be persuaded to purchase by the taste. Very few candidates were able to provide
an effective evaluation for this question. Most offered simple decisions without justification, or
repeated points previously stated in the answer. Some candidates confused methods of sales
promotion and methods of advertising. They often stated that free samples were not appropriate
and then discussed at length the methods of advertising that might be suitable instead. These
candidates showed no knowledge of the concept of sales promotion and therefore their answers
were not credited.
Question 2
(a) Well answered by many candidates. Some candidates needed to show awareness that these
companies have production or service operations in many countries.
(b) Generally, a very well answered question.
(c) This was one of the more challenging questions for candidates. The strongest candidates
explained how JIT could reduce the space needed to store stock of car parts, but it requires a
reliable supplier to ensure production continues. Many candidates stated incorrectly that no
warehouse space would be required or confused inventory control with JIT production. This
question also required application to the business in the question stem.
(d) Although candidates showed awareness of the concept of economic growth, the focus of their
answers was frequently incorrect. Only the strongest responses were able to explain how the
decision to build a new factory would be affected by this situation. Even the most successful
candidates struggled to develop their points sufficiently to gain analysis marks. A common error
was to describe how economic growth would benefit the local population with no reference to
NSN’s decision to build a new factory.
(e) This was a very challenging question for candidates. Although candidates were aware of the issues
surrounding the introduction of technology many needed to address their answers directly to the
question set, in this case the benefit to (all) employees. Some candidates discussed the impact on
the business rather than the employees. The strongest candidates discussed the benefits of safer
working conditions and the risks of redundancy. Very few were then able to make effective
evaluative comments. A significant number of candidates gained one mark only for knowledge that
workers may lose their jobs.
Question 3
(a) This was the most challenging question on the paper for most candidates. Very few were able to
offer a clear and precise definition of the term. A significant number of candidates did not attempt
the question.
© 2021
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2021
Principal Examiner Report for Teachers
(b) Candidates were confident in their understanding of this term. Many provided clear and precise
definitions. A small but significant number of candidates confused stakeholders with shareholders.
(c) Good knowledge of this topic was evident. A variety of different correct answers were provided. A
common error was to give imprecise answers such as ‘for growth’. To gain credit for this point the
candidate would need to state that profit could be used as a source of finance for growth. Some
candidates missed out on the application marks available by not referring to the business in the
question.
(d) The strongest answers identified delegation and team working as ways to involve employees in
decision-making. Many of these answers were effectively applied to the business in the stem of the
question, a paint factory. However, some candidates repeated the same point of application which
could only be credited once. Even the most successful candidates often struggled to explain how
the identified ways would work. Many candidates misunderstood the question and incorrectly
explained a list of different decisions that employees could be allowed to make such as the colour
of paint.
(e) Candidates who explained that wholesalers buy in large quantities and advertise the products on
behalf of manufacturers scored highly on this question. Even the most successful candidates
struggled to fully develop their answers to make an effective decision and gain evaluation marks. A
mistake made in the weakest responses was to confuse wholesalers and agents. These
candidates often explained in some detail how the wholesaler would help a business to sell in a
foreign country. These answers were not credited.
Question 4
(a) This term was not well understood. The weakest responses frequently repeated the phrase stating
that cost of sales is the cost of making sales. Several candidates provided the method by which
cost of sales would be calculated. Although this is not a precise definition of the term it was
credited in this instance as showing understanding of the meaning of the term. Candidates should
be encouraged in future sessions to learn precise definitions rather than methods of calculation.
(b) Many candidates provided correct calculations for both figures. Weaker responses were unsure of
the calculations required and a wide variety of incorrect answers were provided. The correct
answers were revenue of $900 000 and expenses of $320 000.
(c) Many candidates showed good knowledge of the stages in the recruitment process and gained all
marks available. Some candidates stated incorrectly that training was part of the recruitment
process. Candidates often lost marks through imprecise use of language such as stating ‘applying’
rather than ‘application forms sent/received’.
(d) There were many good answers to this question which made effective use of the information
provided in the question stem. The strongest answers explained how clear communication would
ensure employees completed their tasks correctly and would be motivated. Candidates who
identified speed of communication as a point often did not link this to decision-making and
therefore did not gain the knowledge mark. A significant number of candidates discussed the
importance of feedback but did not link this to customer preferences in this cinema chain. These
answers could not be credited.
(e) Many candidates demonstrated appropriate knowledge but were unable to fully develop their
answers to show analysis. The most common knowledge shown was that shares would be a
permanent source of capital and loans would need to be repaid with interest. The strongest
responses recognised the effect on the business of increased debt or limits to decision-making.
The weakest responses focussed on the issue of limited liability which would not be an important
factor in this decision.
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies November 2021
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/21
Case Study
Key messages
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one of the
part (a) questions that is generic. Applying answers to the case will ensure responses are appropriate for
each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study, candidates were expected to refer to a business that
manufactures soap powder.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without
repetition of the previous analysis, be applied to the case and make reference to why the other
alternative option(s) were rejected.
General comments
Candidates were prepared for this examination and understood what was expected of them. The context of
SSM, a soap powder manufacturer established twenty-five years ago, provided an accessible scenario for
candidates. Those who applied their answers to the context of SSM were the most successful.
Candidates must be reminded to take careful note of how many marks are awarded for each question, to
make sure they are clear about the extent of developed explanation that is required for each answer. Many
candidates showed good knowledge and understanding of many of the topics from the syllabus that were
assessed, but in some instances, it was clear that a few topics were not as well understood. The weakest
understanding was apparent in the topic areas of economies of scale, ways in which a business can grow
and the economic environment in which businesses operate.
There were a few examples where candidates had continued an answer to a question in the extra space
provided on the blank pages at the end of the question paper. Candidates should make it clear that there is a
continuation of the response and where the answer can be found.
Overall, there were some good scripts seen and a number of weaker ones. Application marks were often
gained but candidates should make sure that different examples of application are included in the (a)
questions. The conclusion/recommendation should also be applied to the case in the (b) questions.
Candidates should aim to consider the consequences / implications / long-term / short-term / balance issues
of their decisions to secure Level 2 or Level 3 marks.
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies November 2021
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) Candidates demonstrated good knowledge of the benefits and drawbacks of specialisation. The
most common answers focused on the benefits of highly skilled workers who were able to produce
high levels of output with fewer mistakes. Drawbacks included the boredom from the monotony of
performing the same task repeatedly. Weaker responses confused a discussion about
specialisation with points about flow production. Stronger responses achieved full marks because
they made a valid point and then developed it with reasoning. This was the only question on the
paper that was generic so there was no need for application to the case study.
(b) Candidates were required to consider the problems rather than the benefits of entering new
markets in other countries. Stronger responses noted that cultural differences presented a problem
of different traditions regarding the use of soap powder and then developed their explanation of
how this would affect the marketing strategy for SSM. Lack of knowledge would make it difficult for
the business to compare its product to that of the competition and may make it hard to know which
retail outlets would be appropriate to use. Some weaker responses were more confident in
discussing the problem of import restrictions due to tariffs and quotas. Stronger candidates
included a justified conclusion about the most serious problem faced by SSM, and also justified
why the other problems were less significant. A minority of candidates wrongly assumed that SSM
was going to manufacture rather than market soap powder in other countries.
Question 2
(a) Many candidates were able to outline methods of both internal and external growth. Some
responses explained about the process of a takeover or merger which would allow SSM to remove
some of their competition and provide access to new ideas and customers. Strong responses often
suggested developing new products aimed at a different sector of the market, thereby resulting in
diversification in the business. Weaker responses considered the options of new sources of finance
rather than growth of the manufacturing business. Two of the available marks were awarded for
application to the case study so it was relevant to refer, for example, to the decision to expand the
factory and to sell soap powder in other countries.
(b) Many candidates were able to access Level 1 marks by explaining that the main advantage of
primary research was to acquire first-hand, relevant, and comprehensive data about the specific
market. The key advantage of secondary research is to obtain data about the whole market quickly
and without too much expense. Weaker candidates tended to stray away from the question and
discuss disadvantages. Stronger candidates linked the benefit of the research method to an
appropriate sales strategy to achieve Level 2. For example, data from secondary research would
allow SSM to learn about their competitors’ range of soap products and consider their own
advertising and pricing strategy to maximise sales. Answers were often applied by including
reference to the customers’ habits of washing clothes and the soap powder market. Stronger
responses included a recommendation that justified one method of research, giving a reason for
this choice without simply repeating earlier points, and then justified why the alternative method
was rejected. The recommendation also needed to be in the context of this business which
manufactured soap powder. Weaker recommendations simply repeated earlier points without any
further development of the answer to justify why a particular method was chosen.
Question 3
(a) This was a well-answered question. Motivation was a topic that was clearly understood by many
candidates and a wide range of suitable answers were offered such as increasing wages, paying a
bonus, using job rotation or job enrichment. Four marks were awarded for identifying the
motivational factors, but candidates were then required to apply each point to the context of SSM to
earn the remaining four marks. For example, the increase in wages would be given to all sixty
production workers and job rotation would help to solve the problem that they often complain their
jobs are boring. Some responses lacked this development.
(b) This proved to be a difficult question for candidates. Some stronger responses stated that large
scale production would bring the benefit of buying in bulk with a discount. This would have earned
Level 1 credit but further development of the point to explain that average or unit cost would
therefore be lower was needed to achieve Level 2. For financial and managerial economies of
© 2021
Cambridge International General Certificate of Secondary Education (9-1)
0986 Business Studies November 2021
Principal Examiner Report for Teachers
scale, it was important to link the point made to how it would result in reducing average cost. This
would access the higher levels. Some candidates used the case material well, referring to
ingredients for soap powder, the need to obtain $15 m for expansion and the management of
factory workers on many different production lines. Stronger answers included a conclusion that
explained the greater benefit of one economy of scale and then justified, in context, why the other
two economies of scale would have less benefit.
Question 4
(a) Many candidates demonstrated sound knowledge of how to overcome cash flow problems. There
was some very useful information in Appendix 2 to help candidates apply their knowledge to this
business context. Better responses mentioned reducing the number of debtor days from the current
level of 60 to the previous levels of 40 or even 20. This would increase cash inflow. Similarly, using
the case study, strong answers suggested increasing creditor days from the current level of 20 to
the previous level of 30 or 40. This would reduce cash outflow. Weaker responses wrongly entered
into a discussion about profit rather than cash flow.
(b) This question was answered by many candidates in a simple way, showing limited understanding.
Increases in the overall level of employment in Country Y would make it more difficult for SSM to fill
job vacancies if fewer people were seeking work. Employers may have to pay higher wages to
attract more skilled workers. An increase in inflation would result in higher prices for the ingredients
to make soap powder which would push up the selling price of the product, thus possibly reducing
demand. Stronger responses identified more than one consequence of each economic change and
were able to make a link to the level of profit earned by the business. In the conclusion stronger
responses explained which economic change would have the most impact and justified why the
other would have less impact, making relevant use of the case study material to support their
decision.
© 2021
Grade thresholds – November 2021
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the November 2021 examination.
minimum raw mark required for grade:
maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 46 39 32 28 24 19 16 13 9
Component 21 80 51 44 38 31 24 18 14 10 7
The maximum total mark for this syllabus, after weighting has been applied, is 160.
The overall thresholds for the different grades were set as follows.
Combination of
Option 9 8 7 6 5 4 3 2 1
Components
X 11, 21 97 83 70 59 48 37 30 23 16
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email [email protected]
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2021
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*0988989105-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages.
11_0986_21_2021_1.3
© UCLES 2021 [Turn over
2
Soapy Sudds Manufacturer (SSM)
SSM is a public limited company that was set up 25 years ago. SSM manufacture soap powder in
country Y. The soap powder is used for washing clothes. SSM sells all its soap powder to large
retailers in country Y. SSM’s sales have been increasing for many years in country Y but sales in
the last year have remained the same. The directors of SSM are considering ways to increase
sales.
SSM has a total of 100 employees with 60 in the Operations Department. It uses flow production
in the factory and has 10 production lines with 5 workers and 1 supervisor for each line. The
Operations Manager is aware that production workers are unhappy and often complain about their
jobs being boring. These workers have always been paid by an hourly rate. The Human Resources
Manager has recommended changes to ensure fewer workers leave each year to work for other
businesses.
The directors of SSM have decided to expand the factory. They will need $15m to do this. The
directors have also considered taking over a competitor. SSM is likely to benefit from economies
of scale as it grows.
The Marketing Director thinks SSM should start selling soap powder in markets in other countries.
SSM will need to carry out either primary market research or secondary market research to forecast
the potential total sales in these new markets. There are many existing manufacturers in these
countries. SSM need to consider the problems when entering new markets in other countries such
as tariffs or quotas.
© UCLES 2021 11_0986_21_2021_1.3
3
Appendix 1
Manufacturing process to make soap powder
All the different types of soap powder are manufactured on production lines using flow production.
SSM makes use of specialisation.
Each production line has the following stages:
stage 1
raw materials
are mixed together
stage 2
soap powder released
onto conveyor belt
stage 3
Soap
soap powder put Powder
into packaging
stage 4
quality checks
carried out
stage 5
finished boxes transferred
to warehouse for storage
Each of these stages uses machinery controlled by a production worker.
© UCLES 2021 11_0986_21_2021_1.3 [Turn over
4
Appendix 2
Email from the SSM Finance Director to the Managing Director
SSM has a cash-flow problem which may get worse. Please see charts below.
Graph to show the number of days Graph to show the number of days
debtors take to pay SSM SSM takes to pay suppliers
60 60
50 50
40 40
Number Number
30 30
of days of days
20 20
10 10
0 0
2019 2020 2021 2019 2020 2021
Year Year
Appendix 3
Newspaper article from Main News 1 October 2021
Retailers have reported increased sales for most types of products such as sales of washing
machines which have increased by 15%. Economic growth in country Y is predicted to increase.
Many businesses have been recruiting additional employees and there are now shortages of some
skilled workers. The government in country Y has recorded an increase in inflation to 8% so far
this year, which is a worry.
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 11_0986_21_2021_1.3
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer and Data Response October/November 2021
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 October/November 2021 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.
This document consists of 22 printed pages.
© UCLES 2021 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme October/November 2021
PUBLISHED
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 descriptors 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.
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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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PUBLISHED
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).
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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.
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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Question Answer Marks Notes
1(a) Identify two features of a sole trader. 2 Do not credit in private sector as this applies to
many forms of business organisation.
Award 1 mark per feature.
Points might include:
• Keeps all the profit
• Unlimited liability
• Unincorporated / no separate legal identity
• Takes all decisions / own boss
• Has total ownership of business / owned by one person
• Few legal requirements
Other appropriate responses should also be credited.
1(b) Define ‘working capital’. 2 Do not credit examples.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Amount of capital available to a business to pay its day-to-day
expenses/costs [2]
OR The capital needed to finance the day to day running expenses (and
pay the short-term debts of the business) [2]
OR Current assets – current liabilities [2]
Partial definition e.g. funds used to buy inventory [1]
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Question Answer Marks Notes
1(c) Outline two ways that break-even information can help Jerome’s 4 Note: To use words from the stem as
business. application, the reference must be appropriate
(i.e. make sense) in relation to the point being
Award 1 mark for each relevant way. made.
Award 1 mark for each relevant reference to this business. The following words are likely to be appropriate
for this question:
Points might include: • (low sugar) drinks
• He knows the level of output needed to make a profit / cover costs • 200 units above break-even
[k] for his (low sugar) drink [app] • 10 000 / 9800 units sold
• Helps planning/forecasting/decision-making [k] such as how best to • Added value
increase added value [app] • Family and friends
• Help apply for finance [k] as so far only borrowed from friends and
family [app] Other appropriate examples in context can still
• Can see what will happen if costs/prices change [k] be credited.
• Helps identify the expected level of profit/loss at different levels of
output [k] Do not award points such as shows
• Help identify the margin of safety [k] based on the 10 000 units sold costs/sales/revenue/profit on own as this is too
[app] vague.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(d) Explain how each of the following can help Jerome increase added 6 Note: To use words from the stem as
value: application, the reference must be appropriate
• Change the packaging (i.e. make sense) in relation to the point being
• Use cheaper materials made.
The following words are likely to be appropriate
Award 1 mark for identification of each relevant point (max 2). for this question:
• (low sugar) drinks
Award 1 mark for each relevant reference made to this business (max 2). • 200 units above break-even
• 10 000 units sold
Award 1 mark for each relevant explanation (max 2). • 9800 (break-even)
Points might include: Other appropriate examples in context can still
be credited.
Change the packaging:
• This will allow Jerome to be able to increase the price [k] of his drink
[app] increasing the gap between price and costs [an]
• Customers can perceive the product to be worth more [k] so may be
prepared to pay more for the same product [an]
Use cheaper materials:
• This will help lower input costs [k] when making 10 000 units [app]
increasing the gap between cost and price [an]
• Lower costs [k] can lead to higher profit per unit sold [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think giving out free samples is the best method of sales 6 This is a general question so there are no marks
promotion for a business to use when promoting a new food for application.
product? Justify your answer.
Candidates can discuss other options, but
Award up to 2 marks for identification of relevant points. evaluation must focus on whether free samples
is the best method of sales promotion to use.
Award up to 2 marks for relevant development of points.
Award 2 marks for a justified decision as to whether free samples are the
best method of sales promotion for a business to use when promoting a
new (food) product.
Points might include:
Free samples:
• Encourages potential customers to try something [k] which can
persuade them to buy [an]
• Trying is likely to be more effective than just telling someone about it
[k] as the taste is an important part of the buying process [an]
• Tempts existing customers to buy more [k] which can increase
revenue [an]
• Cost of providing samples [k] can decrease profit margin [an]
• Way to use up inventory [k]
• No guarantee people will buy [k]
Other options could include:
• Buy one get one free [k] would generate some income [an]
• Point of sale displays [k] raise awareness of the product [an]
Other appropriate responses should also be credited.
Justification might include:
• Encourages potential customers to try something new [k] which can
persuade them to buy [an]. However, the cost of providing samples
[k] can decrease the profit margin. [an] Free samples are the best
method despite the cost [eval] as taste is important when buying
food [eval].
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Question Answer Marks Notes
2(a) Define ‘multinational company’. 2 Do not award ‘sells in other countries’ as this could
equally apply to an exporter.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
A business with factories, production, or service operations in more than
one country [2]
OR A business with production or service operation in another country
outside its normal area of operation [2]
Partial definition e.g. has businesses everywhere [1] OR works/operates
in more than one country [1]
2(b) Identify two reasons why a government might support business 2 Only award the first two responses given.
activity.
Award 1 mark per reason.
Points might include:
• Create jobs
• Increase competition / develop a market
• Increase output / economic growth/GDP
• Benefit society (small) businesses can grow into large/ important
ones in the future
• Generate new ideas
• Can produce (a future source of) tax revenue
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(c) Outline one advantage and one disadvantage to NSN of using just- 4 Note: To use words from the stem as
in-time inventory control. application, the reference must be appropriate
(i.e. make sense) in relation to the point being
Award 1 mark for each relevant advantage/disadvantage. made.
Award 1 mark for each relevant reference to this business. The following words are likely to be appropriate
for this question:
Points might include: • Car
• Factory
Advantages: • Multinational company
• Less warehouse space [k] needed to store parts for cars [app] • Technology changed production
• Less inventory held [k] in its factories [app]
• Lower storage costs [k] for the multinational company [App] Other appropriate examples in context can still
• Improve working capital [k] be credited.
• Improve cash flow [k]
• Lower risk of obsolete/damaged stock [k]
Disadvantages:
• Very reliant on suppliers to deliver stock when needed / if parts not
available / late it will have a major impact on production [k] as
technology has changed how production is carried out [app]
• May not be able to meet sudden/unexpected order [k]
• Little room for mistakes (as minimal stock available for rework) [k]
• Less (purchasing) economies of scale [k]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(d) Explain two ways in which an increase in economic growth might 6 Note: To use words from the stem as
affect NSN’s decision to build a new factory in country Z. application, the reference must be appropriate
(i.e. make sense) in relation to the point being
Award 1 mark for identification of each relevant way (max 2). made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant explanation (max 2). • Car
• $80m (grant)
Points might include:
• 7000 jobs
• Just-in-time inventory control
• Could lead to increased demand [k] for cars [app] increasing revenue
• Multinational company
[an]
• Shortage of skilled workers [k] may make it more difficult to recruit
Other appropriate examples in context can still
workers [an] for the 7000 jobs[app]
be credited.
• Employees may ask for higher wages [k] increasing costs [an]
• Increased rent costs / less choice of location [k] increasing fixed
costs [an] for the factory[app]
• Increased competition [k] so may gain few customers / low market
share [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Do you think the ways technology has changed production 6 This is a general question so there are no marks
methods benefits all employees? Justify your answer. for application.
Award up to 2 marks for identification of relevant points. Note: Answer must focus on the benefit or not to
the workers so do not accept points such as ‘more
Award up to 2 marks for relevant development of points. efficient’ or ‘better quality/ less mistakes’ unless
clearly link issue to employees.
Award 2 marks for a justified decision as to whether the way technology
has changed production methods has benefited all employees. Do not award work is easier/less work as this is
too vague.
Points might include:
• Need for retraining / learn new skills [k] leading to opportunities for
promotion [an]
• Safer conditions [k] so less risk of injury [an]
• The job is more repetitive [k] so lower job satisfaction [an]
• Fewer workers needed / workers may lose their jobs / redundancy
[k] so lower standard of living [an]
• More job insecurity / fear of change [k] so could reduce motivation
[an]
• More skilled workers may be needed [k] leading to higher pay [an]
Other appropriate responses should also be credited.
Justification might include:
• Less job security [k] could reduce workers motivation [an]. However,
more skilled workers may be needed [k] leading to higher pay. [an]
No, it will not benefit all employees as it depends on the individual
worker. Those who lose their jobs will not see the benefit from
technology [eval] whereas those who keep their job can benefit from
learning new skills. [eval]
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Question Answer Marks Notes
3(a) Define ‘externalities’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Third party effects arising from production or consumption of goods and
services for which no appropriate compensation is paid [2]
OR Advantages or disadvantages that fall on third parties that are not
directly involved in the production process [2]
OR The effect of business activities on unrelated parties [2]
Partial definition e.g. effect on third party or society [1]
3(b) Define ‘stakeholder groups’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Any person or group with a (direct) interest in the performance/activities of
a business [2]
Partial definition e.g. An individual or group which has an interest in a
business [1]
OR Someone affected by what a business does [1]
OR Anybody inside or outside the business who cares about its operations
[1]
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Question Answer Marks Notes
3(c) Outline two reasons why profit might be important to SBG. 4 Note: To use words from the stem as
application, the reference must be appropriate
Award 1 mark for each relevant reason. (i.e. make sense) in relation to the point being
made.
Award 1 mark for each relevant reference to this business.
The following words are likely to be appropriate
Points might include: for this question:
• Source of finance [k] as its objective is to grow [app] • Paint
• To ensure survival of the business / avoid closure [K] protecting jobs • 6 factories
of its 700 employees [app] • 700 employees
• Measure/indicator of success of the business [k] in each of the 16 • 16 countries
countries [app] • Growth (is the objective)
• Measures the performance of managers [k] in the paint business • Employees are encouraged to be involved
[app] in decision-making.
• Reward for risk-taking [k]
• Decide whether to continue making or selling a product [k] Other appropriate examples in context can still
• Attract investors [k] be credited.
Other appropriate responses should also be credited. Do not credit payment of day-to-day expenses.
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Question Answer Marks Notes
3(d) Explain two ways SBG can involve its employees in decision- 6 Note: To use words from the stem as
making. application, the reference must be appropriate
(i.e. make sense) in relation to the point being
Award 1 mark for identification of each relevant way (max 2). made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant explanation (max 2). • Paint
• 6 factories
Points might include: • 16 countries
• Delegation [k] as workers in the 6 factories [app] will make the • 700 employees
decisions themselves [an] • Developing new products
• Democratic leadership [k] encourages employees to offer ideas [an] • Channel of distribution
about developing new products [app]
• Encourage team working / kaizen [k] for its 700 employees [app] Other appropriate examples in context can still
• Meet with employees/surveys [k] be credited.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think using wholesalers is the best way for a large business 6 This is a general question so there are no marks
to distribute its products? Justify your answer. for application.
Award up to 2 marks for identification of relevant points. To gain both evaluation marks, response must
clearly relate to a large business.
Award up to 2 marks for relevant development of points.
Candidates can discuss other options, but
Award 2 marks for a justified decision as to whether wholesalers are the evaluation must focus on whether wholesalers
best channel of distribution for a large business to use. are the best way for a large business to
distribute its products.
Points might include:
• Transport costs to the retailer is paid for by the wholesaler [k] so
reduces costs to manufacturer [an]
• Can help sell goods to a larger market [k] leading to higher revenue
[an]
• Wholesalers buy in large quantities [k] reducing distribution costs
[an]
• Wholesalers will advertise and promote products [k]
• Another middleman will take some of the profit [k]
• Producer loses some control over the marketing [k]
Other options could include:
• Selling direct to customers [k] ensures more control over the
marketing mix [an]
• Using a retailer [k]
Justification might include:
• Wholesalers will pay slightly lower prices [k] which will reduce the
businesses profit margin. [an] By selling direct to customers [k] this
will give the firm more control over marketing. [an] Selling directly to
customers maybe the best way to protect its brand image. [eval] For
a large business image is likely to have a big impact on in their
sales. [eval]
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Question Answer Marks Notes
4(a) Define ‘cost of sales’. 2 Do not award examples or answers which
include references to expenses.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Cost of producing or buying in the goods sold by the business during a
period of time [2]
OR Cost of purchasing the goods used to make the products sold [2]
OR Variable cost of making the goods sold [2]
OR Cost per unit x number of output sold [2]
OR Opening inventory + purchases – closing inventory [2]
Partial definition e.g. money spent on materials [1]
4(b) Calculate X and Y. 2
Award 1 mark for each correct calculation.
X 900 000 or 900
Y 320 000 or 320
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Question Answer Marks Notes
4(c) Identify four stages of the recruitment process. 4 Only award the first four responses given.
Award 1 mark per stage. Note: Answer must be from the business
viewpoint not the applicants e.g. CV or letter of
Four from: application.
• Job analysis / identify vacancy
• Job description
• Person/job specification
• Advertising (the vacancy)
• Application forms sent out/received
• Short listing/screening
• Interview/testing
• Selection / job offer / hire
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(d) Explain two reasons why effective communication might be 6 Note: To use words from the stem as
important to BGR. application, the reference must be appropriate
(i.e. make sense) in relation to the point being
Award 1 mark for identification of each relevant reason (max 2). made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant explanation (max 2). • Cinemas (or cinema related words such as
movies, suppliers of popcorn)
Points might include: • New location
• To ensure employees / suppliers carry out the instructions correctly / • $320 000 expenses
understand what to do [k] to make sure the right thing is done / there is • Recruit 10 more employees
no wastage [an]
• Speed up decision-making [k] at the new location [app] so able to Other appropriate examples in context can still
quickly react to changing customer tastes [an] be credited.
• To ensure customers are given correct information [k] which can help
improve customer loyalty [an]
• Find customer preferences [k] so can use the information to help
improve its services / make it more competitive [an]
• Motivates employees [k] increasing efficiency [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Do you think issuing new shares is a better way for a limited 6 This is a general question so there are no marks
company to finance expansion than using a bank loan? for application.
Justify your answer.
Candidates can discuss other options, but
Award up to 2 marks for identification of relevant points. evaluation must focus on whether new shares is
better than a bank loan to finance expansion.
Award up to 2 marks for relevant development of points.
Award 2 marks for a justified decision as to whether issuing new shares
is a better way for a limited company to finance expansion than using a
bank loan.
Points might include:
Issue new shares:
• Permanent source of capital [k] so no need to repay [an]
• Access to greater amounts of capital [k] as no restriction on number
of shares [an]
• No interest to pay [k] so fixed costs do not increase [an] so can avoid
increasing debt [an]
• Possible loss of control / risk of takeover [k] making it difficult to
manage or take decisions [an]
• Cost/time to arrange [k] so not able to focus on other issues [an]
• Shareholders might expect dividends [k]
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Question Answer Marks Notes
4(e) Bank loan:
• Increase debt [k] which can increase gearing ratio [an]
• Need to repay [k]
• Must pay interest [k] which increases expenses [an]
• Have long time to repay [k] allows time to gain extra revenue to meet
repayments [an]
• Can keep profits for future/emergency [k]
• Can borrow large amount / all the money [k]
Other appropriate responses should also be credited.
Justification might include:
Issuing new shares give access to large amounts of capital [k] as there
is no restriction on the number of shares. [an] Bank loans require interest
payments [k] which will increase costs. [an] It can depend on the current
level of debt as a bank loan will increase financial risk[eval] so it may be
safer to issue shares as a limited company will not be required to repay
the funds. [eval]
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Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2021
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 October/November 2021 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.
This document consists of 17 printed pages.
© UCLES 2021 [Turn over
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2021
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 descriptors
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.
© UCLES 2021 Page 3 of 17
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2021
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.
© UCLES 2021 Page 4 of 17
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PUBLISHED 2021
Question Answer Marks
1(a) Explain two benefits and two drawbacks of specialisation within a 8
manufacturing process.
Award 1 mark for each benefit/drawback (maximum of 4).
Award a maximum of 1 additional mark for each explanation of why it is a
benefit/drawback of specialisation within a manufacturing process.
Relevant benefits might include:
• Higher quantity produced / higher output – increased sales
• Production workers are trained in one task – quicker to train / cheaper to
train workers
• Quicker to produce output / increased efficiency – as less time taken by
workers moving between tasks in the factory
• Performing only one task makes worker become a skilled expert /
employee specialises in what they are good at – more efficient in that
task / more job satisfaction
• Easier to use machinery to perform tasks – speeds up production
• Fewer mistakes made – less wastage / fewer customer complaints /
reduced costs of production
Relevant drawbacks might include:
• Production workers may become bored doing the same task repeatedly –
may become less efficient and slow down production
• Workers less motivated / less job satisfaction – more likely to leave the
business
• Workers cannot cover for absent colleagues – manufacturing may halt or
slow down
• Worker may find it difficult to find alternative employment – as only
trained/skilled in one task
• Lose other skills – as only use skills for one task
For example: The production workers are trained in only one task (1)
therefore it takes less time to train new recruits to the factory. (1)
© UCLES 2021 Page 5 of 17
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Question Answer Marks
1(b) Consider the following three problems for SSM when entering markets 12
in other countries. Which problem is likely to have the most effect on
SSM? Justify your answer.
• Cultural differences
• Lack of knowledge
• Import restrictions
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of at least two problems.
Well-justified conclusion.
Candidates discussing all three problems in detail, in
context and with a well-justified conclusion including why
the alternative problems 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 problem.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing two or more problems 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 problems with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three problems in context should
be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2021 Page 6 of 17
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2021
Question Answer Marks
1(b) Relevant points might include:
Cultural • There may be different preferences for types of soap
differences powder in foreign markets – SSM may need to adapt
their soap powders to the ones required for this market –
increase in development costs
• May need to adapt packaging/marketing to cope with
differences in culture/language -this will increase total
costs
• May not be able to compete with existing suppliers of
soap powder who recognise cultural differences and how
this impacts on choice – customers brand loyal to locally
produced products
Lack of • SSM may not be aware of shopping habits of customers –
knowledge may need to use different distribution channels to large
retailers which it is familiar with – may be difficult to
become established with retailers in foreign markets
• SSM may not be aware of consumer trends – such as
preference for environmentally friendly products
• SSM may lack knowledge of competitors – not aware of
competitors brands of products to wash clothes and
pricing – may find it difficult to keep prices low enough to
enter new market if competitors are well established
• Lack of knowledge of government legal controls about
products
Import • It there are tariffs on imported soap powder then this will
restrictions cause the price of SSM soap powder to increase –
becomes less competitive than domestic brands of soap
powder – lower sales
• If there are quotas on imported soap powder, then this will
restrict the amount of soap powder SSM can export –
limits sales in this market – likely to lead to an increase in
prices if limited supply of foreign soap powder
Conclusion • Cultural differences may be the greatest problem, as local
customs may not include using soap powder similar to
SSM soap powder for washing clothes. Lack of
knowledge can be overcome with market research and
import restriction can be overcome by having production
facilities in the country.
• Lack of knowledge may have the greatest effect as it is
difficult and expensive to overcome and SSM will need to
research and adapt distribution channels to the foreign
market if consumers often do not use large retailers.
• Import restrictions such as tariffs or quotas cannot be got
round as they are imposed by the government in the other
country as goods enter their market. They are likely to
make SSM’s products uncompetitive in the foreign market
and therefore have few sales of its soap powder.
© UCLES 2021 Page 7 of 17
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PUBLISHED 2021
Question Answer Marks
2(a) Explain two ways SSM can grow. 8
Award 1 mark for a way (maximum of 2 marks).
Award a maximum of 3 additional marks for each explanation of the way SSM
can grow – one of which must be applied to this context.
Relevant ways of internal growth might include:
• SSM can increase the size of its own factory / build other factories /
acquire assets – it could use its own funds such as retained profit – to
expand production / output
• Finding new markets for its products / sell to a wider market / sell
overseas
• Diversification
• Develop new products
Relevant ways of external growth might include:
• Take over another business – quickly acquires the assets of the other
business to increase size
• Merger
• Horizontal integration
• Vertical integration
• Conglomerate integration
For example: Internal growth (1) a business could decide to expand its own
factory (1) new machinery could be purchased to increase production (1).
SSM plans to spend $15 million to expand in this (app).
Application might include: SSM is a public limited company; set up 25 years
ago; manufacturer of soap powder; 60 production employees; total of 100
employees; directors have already decided to expand the factory; will need
$15 million; may take over a competitor; start selling soap powder in other
countries; many existing manufacturers in other countries; benefit from
economies of scale.
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Question Answer Marks
2(b) Consider the advantages of using primary and secondary market 12
research to gather information about the potential sales in the new
market. Which is the best method for SSM to use? 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 both methods.
Well-justified recommendation.
Candidates discussing both methods in detail, in context
and with a well-justified recommendation including why the
alternative method 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 method.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing one or more methods 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 methods with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both methods in context should be
rewarded with the top marks in the band.
0 No creditable response. 0
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PUBLISHED 2021
Question Answer Marks
2(b) Relevant points might include:
Advantages
Primary market • Up to date
research • Relevant to the business – find out opinions / more
detailed information from potential customers
• Focus is on the business carrying out the research
– can gather qualitative data on preferences for
washing clothes
• Not available to other businesses
• Effective way to gather specific information as a
questionnaire can focus on the information about
the soap market required by SSM – making it more
reliable
Secondary • Usually much cheaper than primary research to
market research gather information
• It is often better than primary research to assess
the total size of the market for products to wash
clothes by using government population statistics
• Quicker/easier to obtain than primary research
• Can be the total soap market if using government
census data
• May be able to observe trends over time
Recommendation • If the total size of the soap powder market is
required, then secondary research methods will be
the most effective. Government statistics will
provide information on the total number of people
in specific age groups and where they are located
in the country. Primary research is unlikely to be
carried out over the whole country and data will be
more localised so less useful.
• Primary research will be better if specific
information on the needs and wants of customers
habits for washing clothes is required as
questions can be focused on the specific products
produced by SSM or their competitors soap
products.
© UCLES 2021 Page 10 of 17
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PUBLISHED 2021
Question Answer Marks
3(a) Explain four ways SSM could increase the motivation of its production 8
workers.
Award 1 mark for each way to increase motivation of production workers
(maximum of 4 marks).
Award one additional mark for each explanation of the way which must be
applied to this context.
• Introduce piece rate – as currently paid by the hour and now will be paid
by the number of products produced
• Increase wage rates – for all 60 operations workers
• Bonuses – if increase the output of soap powder
• Profit share – if SSM increase profit and pay a higher dividend
• Job rotation – move from mixing raw materials to packaging soap powder
to make their job more interesting
• Job enrichment – as the job is said to be boring then additional tasks can
be added
• Opportunities for promotion – as production workers can gain promotion
to supervisor of the production line
• Training – production workers could have additional training in the use of
machinery on the production line
• Teamworking / using quality circles / workers councils / involve them in
decision-making
• Job enlargement
• Fringe benefits
• Recognition of good work / Employee of the month
• Improving working conditions
For example: Introduce piece rate (1) which will encourage workers to
produce more soap powder as they will be paid more if they produce more
products (app).
Application might include: soap powder; flow production; 60 production
employees; 5 workers and 1 supervisor per line; paid an hourly wage rate;
complain the job is boring; production workers are unhappy; shortages of
some skilled workers; reference to Appendix 1; production line; SSM makes
use of specialisation; machinery is controlled by a production worker.
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Question Answer Marks
3(b) Consider how SSM could benefit from the following three economies of 12
scale. Which economy of scale is likely to have the greatest effect on
SSM? Justify your answer.
• Purchasing
• Financial
• Managerial
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of two or more economies of scale.
Well-justified conclusion.
Candidates discussing all three economies of scale in
detail, in context and with a well-justified conclusion
including why the alternative economies of scale 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 economy of scale.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing two or more economies of scale 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 economies of scale with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining three economies of scale in context
should be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2021 Page 12 of 17
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PUBLISHED 2021
Question Answer Marks
3(b) Relevant points might include:
Purchasing • Raw materials can be purchased in bulk – discounts
received for raw materials needed at stage 1 in
the production process – lower unit costs
Financial • Less risk as it is a larger business and a public
limited company – lower interest rates charged on
loans and overdrafts – lower interest costs
Managerial • Can attract specialist/skilled managers – as SSM
can offer more opportunities for promotion and
higher pay – more effective in managing the soap
powder business – increases productivity/efficiency
in the business
Conclusion • As the soap powder manufacturer produces on a
large scale then being able to reduce the variable
cost of raw materials will have the most effect on
lowering unit costs in the long term. Financial will
have less effect as it would still be expensive to
repay the loan. Managerial will also have less effect
because as the business grows it may experience
diseconomies of scale which are mainly due to
difficulties in managing a larger business.
• Financial economies of scale will benefit SSM as it is
expanding and financing $15 million for
expansion will reduce the costs of interest
payments – reducing expenses / fixed costs.
• Increased efficiency from employing specialist
managers such as a Human Resources Manager,
which may lead to a significant decrease in unit
costs as increased motivation leads to fewer
employees leaving each year.
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Question Answer Marks
4(a) Explain two ways SSM’s cash-flow problems could be overcome. 8
Award 1 mark for each way (maximum 2 marks).
Award three additional marks for explaining each way cash flow problems can
be overcome – one of which must be in context.
Relevant points might include:
• Increase access to short-term source of funds – short-term bank loan /
overdraft – will inject cash into the business / provide funds when there is
a liquidity problem – suppliers need to be paid quickly in 20 days in 2021
• Delay payment to suppliers – as it used to be 40 days and is now 20 days
– cash outflow decreases – less working capital required so eases cash
flow problem
• To ask customers to pay promptly – instead of waiting 60 days – cash
flows into the business more quickly – may have time to receive revenue
from sales before payment for raw materials is necessary
• Delay or cancel purchases of capital equipment – delay paying out the
$15 million for expansion – reduces cash outflow in the short-term
• Example of how to increase cash inflows such as increase price of
product
• Example of how to reduce cash outflows such as find cheaper supplier of
raw materials
For example: Delay payment to suppliers (1) as this will reduce the cash
outflow (1) and will reduce the amount of working capital required by SSM (1).
The time taken to pay suppliers has been reducing 40 days to 20 days which
seems to have been an increasing problem for SSM (app).
Application might include: debtors pay in 60 days – used to pay in 20 or 40
days; suppliers paid in 20 days – used to be paid in 30 or 40 days: debtors
take more days to pay for soap powder; suppliers have been paid more
quickly over the last two years.
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Question Answer Marks
4(b) Consider the effects on SSM of the following changes in country Y. 12
Which effect is likely to have the greatest impact on SSM’s profit?
Justify your answer.
• Increase in employment
• Increase in inflation
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of at least one change.
Well-justified conclusion.
Candidates discussing both changes in detail, in context
and with a well-justified conclusion including why the
alternative change 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 change.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing at least one change 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 changes with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both changes in context should be
rewarded with the top marks in the band.
0 No creditable response. 0
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PUBLISHED 2021
Question Answer Marks
4(b) Relevant points might include:
Increase in • Higher incomes as more people employed – increase in
employment sales of SSM soap powder
• Higher incomes appear to have resulted in a 15%
increase in the sales of washing machines – resulting
in a higher demand for soap powder
• However, wage rates may increase due to more
competition in the labour market – SSM may have to
increase its wage rate
• May be more difficult to recruit new employees – might
disrupt production
Increase in • Increase in pressure to raise wage rates at SSM as cost
inflation of living increases due to 8% inflation this year for
employees
• SSM may have increased raw material costs – raise
prices to maintain gross profit margin of soap powder
• Inflation will cause prices to rise leading to lower sales
for SSM / Customers may not be able to afford SSM
products as prices have increased
• Foreign competitors’ products may be cheaper – if
inflation rates abroad are lower than the 8% inflation
rate in country Y – may put pressure on SSM to lower its
prices – reduce revenue
• However, if employees are well-motivated and now do
not find their job boring then productivity may have
increased – wage cost per unit may not change
• Inflation may cause wages generally to increase and so
an increase in the price of SSM products may have little
or no effect on their sales
• Soap powder for washing clothes can be seen as a
necessity and not a luxury product – so sales will be
maintained even when there is inflation as consumers
still need to buy these products
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Question Answer Marks
4(b)
Conclusion • It depends on the extent to which the increase in
employment leads to increased sales of SSM soap
powder. If there is a large increase in the number of
people employed, then disposable incomes will increase
significantly and may lead to consumers spending a
higher amount on luxury items such as washing
machines and therefore soap powder – higher profit for
SSM. An increase in inflation is likely to have less effect
on profit as an increase in costs may be matched by an
increase in prices.
• Whether SSM has an increase in its profit may depend
on whether the products in country Y are competitive
with products from other countries due to the different
inflation rates. If they are, then SSM revenue from the
sales of its products for washing clothes may
increase possibly leading to higher profit. This will
depend on whether SSM can remain competitive.
© UCLES 2021 Page 17 of 17
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*4448616233*
Paper 1 Short Answer and Data Response October/November 2021
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
11_0986_11_2021_1.1
© UCLES 2021 [Turn over
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1 After identifying a gap in the soft drinks market, Jerome developed a low sugar drink. He borrowed
$5 000 from family and friends to start-up a business and to provide working capital. Jerome operates
as a sole trader. To promote his product, Jerome handed out free samples in the town centre. In
the first year, Jerome’s business sold 10 000 units. This is 200 units more than his break-even
output. Jerome is considering ways to increase added value.
(a) Identify two features of a sole trader.
Feature 1: .........................................................................................................................
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Feature 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘working capital’.
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(c) Outline two ways that break-even information can help Jerome’s business.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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© UCLES 2021 11_0986_11_2021_1.1
3
(d) Explain how each of the following can help Jerome increase added value:
Change the packaging: .....................................................................................................
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Use cheaper materials: .....................................................................................................
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(e) Do you think giving out free samples is the best method of sales promotion for a business to
use when promoting a new food product? Justify your answer.
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2 NSN is a multinational company. It makes cars. Over the years, technology has changed production
methods. NSN uses just-in-time inventory control in all its factories. NSN plans to open a new
factory in country Z creating 7 000 jobs. Country Z’s Government has offered an $80m grant to
NSN. A spokesperson for NSN said: ‘Governments should support business activity. There were
also other factors that influenced our decision to build the new factory there including the possible
effects of economic growth.’
(a) Define ‘multinational company’.
...........................................................................................................................................
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........................................................................................................................................... [2]
(b) Identify two reasons why a government might support business activity.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) Outline one advantage and one disadvantage to NSN of using just-in-time inventory control.
Advantage: .......................................................................................................................
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Disadvantage: ...................................................................................................................
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© UCLES 2021 11_0986_11_2021_1.1
5
(d) Explain two ways in which an increase in economic growth might affect NSN’s decision to
build a new factory in country Z.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
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Way 2: ...............................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think the ways technology has changed production methods benefits all employees?
Justify your answer.
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© UCLES 2021 11_0986_11_2021_1.1 [Turn over
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3 SBG makes a range of products including specialist paints. It has 6 factories and 700 employees.
All SBG’s employees are encouraged to be involved in decision-making. SBG’s products are
exported to 16 countries using wholesalers as its main channel of distribution. The Managing
Director said: ‘Our objectives are to grow and make a profit.’ He also recognises that all business
activity creates externalities for SBG’s stakeholder groups.
(a) Define ‘externalities’.
...........................................................................................................................................
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........................................................................................................................................... [2]
(b) Define ‘stakeholder groups’.
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(c) Outline two reasons why profit might be important to SBG.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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© UCLES 2021 11_0986_11_2021_1.1
7
(d) Explain two ways SBG can involve its employees in decision-making.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
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Way 2: ...............................................................................................................................
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Explanation: ......................................................................................................................
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........................................................................................................................................... [6]
(e) Do you think using wholesalers is the best way for a large business to distribute its products?
Justify your answer.
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4 BGR is a private limited company. It operates 6 cinemas in different towns. Effective internal
communication is important for BGR. The Finance Director has been analysing BGR’s accounts
and an extract is shown in Table 4.1. BGR plans to open another cinema and will need to recruit
10 new employees. The new cinema will cost $8m. The Finance Director has to decide whether
BGR should issue new shares or use a bank loan to finance the expansion.
Table 4.1
Extract from BGR’s Income statement for year ending 2020 ($000’s)
Revenue X
Cost of sales 180
Gross profit 720
Expenses Y
Profit 400
(a) Define ‘cost of sales’.
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(b) Calculate X and Y.
X: ......................................................................................................................................
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(c) Identify four stages of the recruitment process.
Stage 1: ............................................................................................................................
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(d) Explain two reasons why effective communication might be important to BGR.
Reason 1: .........................................................................................................................
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Explanation: ......................................................................................................................
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Reason 2: .........................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think issuing new shares is a better way for a limited company to finance expansion
than using a bank loan? Justify your answer.
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 11_0986_11_2021_1.1
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*0988989105*
Paper 2 Case Study October/November 2021
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
11_0986_21_2021_1.3
© UCLES 2021 [Turn over
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1 (a) Explain two benefits and two drawbacks of specialisation within a manufacturing process.
Benefit 1: ..........................................................................................................................
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Benefit 2: ..........................................................................................................................
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Drawback 1: ......................................................................................................................
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Drawback 2: ......................................................................................................................
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© UCLES 2021 11_0986_21_2021_1.3
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(b) Consider the following three problems for SSM when entering markets in other countries.
Which problem is likely to have the most effect on SSM? Justify your answer.
• Cultural differences
• Lack of knowledge
• Import restrictions
Cultural differences: ..........................................................................................................
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Lack of knowledge: ...........................................................................................................
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Import restrictions: ............................................................................................................
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Conclusion: .......................................................................................................................
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2 (a) Explain two ways SSM can grow.
Way 1: ...............................................................................................................................
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Explanation: ......................................................................................................................
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Way 2: ...............................................................................................................................
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Explanation: ......................................................................................................................
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(b) Consider the advantages of using primary and secondary market research to gather information
about the potential sales in the new market. Which is the best method for SSM to use? Justify
your answer.
Advantages of primary market research: .........................................................................
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Advantages of secondary market research: .....................................................................
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Recommendation: ............................................................................................................
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3 (a) Explain four ways SSM could increase the motivation of its production workers.
Way 1 : ..............................................................................................................................
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Way 2: ...............................................................................................................................
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Way 3 : ..............................................................................................................................
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Way 4: ...............................................................................................................................
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© UCLES 2021 11_0986_21_2021_1.3
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(b) Consider how SSM could benefit from the following three economies of scale. Which economy
of scale is likely to have the greatest effect on SSM? Justify your answer.
• Purchasing
• Financial
• Managerial
Purchasing: .......................................................................................................................
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Financial: ..........................................................................................................................
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Managerial: .......................................................................................................................
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Conclusion: .......................................................................................................................
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4 (a) Explain two ways SSM’s cash-flow problems could be overcome.
Way 1: ...............................................................................................................................
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Explanation: ......................................................................................................................
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© UCLES 2021 11_0986_21_2021_1.3
9
(b) Consider the effects on SSM of the following changes in country Y. Which effect is likely to
have the greatest impact on SSM’s profit? Justify your answer.
• Increase in employment
• Increase in inflation
Increase in employment: ..................................................................................................
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Increase in inflation: ..........................................................................................................
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 11_0986_21_2021_1.3
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2022
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/11
Short Answer/Data Response
Key messages
• Questions which require application, such as part (c) and (d) of each question, refer to the
business in the scenario by name. Candidates should be reminded to use information from
the stem to help answer such questions as this provides the basis for application.
• Part (e) of each question is no longer marked for application. These questions now have 2
knowledge, 2 analysis and 2 evaluation marks.
• Effective evaluation is an area which requires development. Candidates should be
reminded that evaluation must include a justified decision that follows on from the points
raised in the answer. A repetition of points already explained in the answer will not gain
evaluation marks. The mark scheme for each part (e) question includes one example of
how evaluation may be demonstrated in the answer.
General comments
Questions requiring definitions and knowledge, such as parts (a) and (b) of each question were generally
better attempted this session. Some candidates needed to be more precise when defining the requested
terms. This was a particular issue in Question 4(a).
Weak understanding of business terminology was also a factor in the low marks awarded for
Questions 1(d), 3(e) and 4(e).
There was some evidence that candidates were not reading the entire question. This was an issue within
Question 3(d) where candidates did not explain the effect of the change.
Comments on specific questions
Question 1
(a) The majority of candidates were able to provide at least a partial definition for this term, most
frequently training whilst working. Candidates lost marks by specifying that this was training for new
workers and therefore providing an explanation that could be related to induction. Such answers
gained no marks.
(b) The strongest candidates illustrated how they had achieved their correct answer by providing their
workings. Many candidates were unclear on this calculation frequently dividing output by variable
cost per unit.
(c) This part (c) question required no application to the business stated in the stem. The strongest
candidates recognised the importance of the factors noted in the mark scheme when making this
production decision. Weaker responses often simply stated the four factors of production, capital
enterprise land and labour with no attempt to relate these to the decision being made.
(d) The concept of quality control was not well understood by many candidates. Many incorrectly
stated that this method would ensure that no errors would appear in the product, showing lack of
awareness that only some products would be checked. Stronger candidates identified that the
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2022
Principal Examiner Report for Teachers
method attempted to reduce errors but could not identify the stage at which the error occurred.
Candidates struggled to provide two different points of application for this question.
(e) The strongest answers recognised that adding new features may make a product more appealing
to customers increasing sales revenue. Only the strongest candidates were able to correctly
explain any problems with this strategy, most often this was that customers may dislike the
changes. A mistake made by many candidates was to explain the benefits of designing a totally
new product which did not answer the question set. No candidate provided an effective evaluation
for this question.
Question 2
(a) Well answered by many candidates. Candidates lost marks by stating that this was the product
chosen rather than given up.
(b) Many candidates struggled to answer this question. Answers frequently did not focus on labour but
stated other methods to measure size, such as profit or output. The strongest candidates
recognised the problems of part-time staff and capital-intensive production.
(c) This part (c) question was one of the most challenging for candidates. The strongest candidates
explained how personal assets would be protected in the case of business failure for this electricity
supplier. A common error was to state that the shareholders would not pay any debts. Such
answers showed a lack of understanding that money invested into the business would be used to
pay debts.
(d) Although candidates showed awareness of the concept of pressure groups, the focus of their
answers was frequently incorrect. Only the strongest responses were able to fully explain two
different actions that pressure groups could take. Weaker responses often stated that pressure
groups would force the business to change its way of working without identifying how they would
do this.
(e) Many candidates had a good understanding of methods of internal communication. Stronger
candidates explained why a meeting would be preferred as it allows workers to ask questions to
ensure that they fully understand. A mark of 2 was common as many candidates simply stated
methods of communication with no development to show application to the question set.
Question 3
(a) This term was generally understood with many candidates offering clear definitions. An error made
by some candidates was to state that these assets would not be owned by the business.
(b) Candidates were confident in their understanding of this topic, many gained both marks available.
(c) A variety of correct, appropriately applied points were provided for this question. A common error
was to state that wages would have to rise, or staff would be made redundant. These are not direct
consequences of a rise in taxation so could not be credited. Some candidates lost the application
marks available by not referring to the business in the question.
(d) Many candidates simply identified that both ratios would fall quoting appropriate figures to support
their answers. Such answers gained the knowledge and application marks available. Very few
candidates were able to answer the question set and explain the effect on CPK of these changes.
The mark scheme provides examples of the most appropriate impacts that were credited.
(e) Candidates found this to be one of the most challenging questions on the examination paper.
Although many had a general understanding of the terms, they were unable to explain how these
motivation methods worked. The strongest candidates identified the benefit of workers feeling
valued and money as a major motivator, gaining 2 marks. A mistake made by some candidates
was to confuse job enrichment with job rotation.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2022
Principal Examiner Report for Teachers
Question 4
(a) This term was not well understood. Very few candidates provided clear and precise definitions.
Some candidates stated that this meant business failure or identified features of a recession such
as high unemployment.
(b) Many candidates provided two correct answers. Weaker responses often stated by price or
product, showing some confusion with the marketing mix.
(c) The strongest candidates identified the need to pay day to day expenses and for use in
emergencies providing appropriate examples of each situation. Many candidates provided two
examples of expenses which could be paid by a hairdresser. Such answers gained a maximum of
2 marks as they illustrated one reason. Some candidates incorrectly stated that working capital
would be used to purchase the franchise.
(d) There were some good answers to this question which made effective use of the information
provided in the question stem. The strongest answers explained the benefits of purchasing a well-
established brand name and the support offered by the franchisor. A significant number of
candidates did not apply their answers to the context of a hairdressing salon and lost the
application marks available. The weakest responses suggested that the franchisor would operate
the business with Beena acting as a manager. Such answers gained zero marks.
(e) A mark of 2 was common for this question as candidates demonstrated appropriate knowledge but
were unable to fully develop this to show analysis. Most commonly the knowledge shown was that
primary research would be up to date, but expensive, while secondary may be outdated. The
strongest candidates recognised that a start-up business would have limited finance and therefore
may be unable to afford effective primary research. Candidates struggled to provide effective
evaluation of the two methods. A small number of candidates confused primary and secondary
research.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2022
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/21
Case Study
Key messages
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one (a)
question that will usually be generic. Applying answers to the case will ensure responses are appropriate for
each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study candidates were expected to refer to a small business that
organises safari tours. It is advisable for candidates to ask themselves about the size of the business, is
it a service or manufacturer and what is the type of business organisation? This may add to the quality
of their answers.
• Candidates should try to give a full explanation of positive and negative consequences of a business
decision when this is asked for. Responses require developed reasoning rather than simple description;
listed points generally only gain Level 1 whereas an explanation of a point could move the answer to
Level 2. Few well developed points will score higher marks than a long list of simple statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of SA, a small business organising safari tours, provided an accessible scenario for
candidates. Those who applied their answers to the context of SA boosted their marks much further. The
majority of candidates seemed to have time to complete the paper and attempted all questions.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Also the question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but in some cases it was
clear that certain topics were not as well understood. The weakest understanding was of ecommerce and the
impact of a rise in inflation.
Overall, the standard was good with very few weak scripts. Candidates often provided answers in context
which enabled access to application marks. However, candidates should make sure that different examples
of application are included in each section of (a) questions (not 2a on this particular paper) and the
conclusion/recommendation should also be applied to the case in (b) questions. A lack of analysis and
evaluation resulted in answers remaining in the lower-level mark band. Candidates should aim to consider
the consequences/implications/long term/short term/balance issues of the decisions to secure Level 2 or
Level 3 marks in the conclusion/recommendation.
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2022
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) The majority of candidates could name and explain four business objectives and make an
appropriate link to the context of SA. The business had started just two years ago so one example
of a strong response was to identify the objective of survival so that Tokumbo could focus on
establishing his new safari business with a secure future. Many responses mentioned making
profit, providing good customer service and increasing market share as objectives and then offered
explanations in the context of SA to earn additional marks. Weaker responses discussed strategies
rather than objectives, sometimes copying points made in the case study.
(b) This question required candidates to consider the opportunities and threats of e-commerce for SA.
Many candidates discussed the benefit of customers being able to make a direct booking with SA
which would remove the need to use holiday companies as an intermediary. This would increase
profit margins for SA. Stronger responses supported their answer by referring to the flexibility of a
website being able to change prices and holiday details, easily linking with other aspects of tourist
services such as booking hotels and travel. Consideration of the threats of ecommerce often cited
the need for expertise to set up and maintain a dynamic website to attract customers. Mention was
frequently made about hacking or poor internet connection. Ecommerce does not bring face to face
contact between SA and its customers so the website would need to be more attractive and
informative than the many competitors also offering safaris. Only a few candidates went on to offer
a meaningful judgement as to whether or not the opportunities outweighed the threats. SA is only a
small, relatively new business so the threat of competition in ecommerce would be very hard to
overcome without a comprehensive website gaining many hits on search engines to give SA the
best chance of increased sales and profit.
Question 2
(a) Knowledge of why quality is important to a business was generally strong. Many candidates
identified brand image, customer loyalty and not having to replace faulty products as important
factors. There were no application marks in this question, so it was possible to earn maximum
marks by making four clear points with additional development or reasoning for each. Some
weaker responses offered repetition of points or focused on the importance to customers rather
than the business and consequently did not earn the highest level of reward.
(b) The majority of candidates showed sound knowledge of sources of business finance. There
appeared to be less confidence in discussing leasing as an option to finance new vehicles
compared to bank loans and retained profit. Stronger candidates explained that leasing allowed
payments to be spread out each month and included vehicle maintenance. However, at the end of
the lease there would not be an asset for SA to sell since they did not have ownership of the
vehicle. This might make it more expensive to replace the vehicles later on. The option of a bank
loan as a source of finance was related to the context by candidates who pointed out that although
interest rates had fallen to 2 per cent, a relatively new business, such as SA, might not be able to
secure a loan of sufficient size at this lower rate of interest. To earn Level 3 credit in the conclusion,
responses needed to make a justified judgement about which option would be the best choice.
Stronger answers avoided repeating points made earlier in the response and related to why one
choice was more suitable and the other two options less suitable for SA.
Question 3
(a) This was a well-answered question. Many candidates were able to outline independent decision
making, keeping all profit or being easy to set up as an advantage of being a sole trader. The
disadvantage of this type of business was identified as having unlimited liability, difficulty in raising
finance or having a very heavy workload. To gain the highest number of marks on this question
additional explanation was required which also referred to the context of Tokumbo’s business.
Some responses discussed two advantages or two disadvantages, but this did not gain access to
maximum marks because the question clearly asks for one advantage and one disadvantage.
(b) Strong numeracy skills were displayed by candidates answering this question. Many candidates
were able to make good use of the data in Appendix 3 to calculate levels of profit and average
costs for each of the three options for expansion. Correct calculations of this nature earned Level 2
credit with additional application marks for referring to the appropriate data in the case study. Such
© 2022
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2022
Principal Examiner Report for Teachers
calculations provided evidence to support a justified decision by the candidate. The best answers
earned Level 3 credit by using the calculated data to explain which option would be a better option
for growth and why the other options would not be such a good choice. Weaker responses simply
copied data about forecast number of tourists and total costs which did not earn any credit.
Question 4
(a) This question required candidates to explain the effects of an increase in inflation on Tokumbo’s
business. Strong responses mentioned that SA would experience increased costs of fuel and
accommodation which would force SA to increase prices. The increase in the cost of living, caused
by inflation, might reduce demand for safari tours and lower sales revenue and profit. Good
application explained the likelihood that potential customers would not choose a safari holiday
when rising prices meant they would decide to spend their income on basic wants and needs
instead. Some responses offered brief outcomes of inflation without explaining the sequence of
economic principles and, more importantly, not linking their answer to SA itself.
(b) The topic of training employees was widely known. Most responses discussed the advantages and
disadvantages of on-the-job and off-the-job training. Candidates should be mindful that brief
definitions and mirror image statements do not earn credit when developed explanations of
advantages and disadvantages are required. On-the-job training would be a cheaper method of
training and would be specifically planned for SA’s own safaris. However, it might lead to bad
habits being passed on and if this resulted in a bad reputation amongst customers SA might
experience a fall in sales and profit. Off-the-job training would teach a wider range of skills and may
lead to expert qualifications, but the risk would be that tourist guides might take their expertise to a
rival safari business. Stronger recommendations weighed up the benefits against the drawbacks of
each possible method of training as part of the justification for the decision made. These
recommendations took into account the one that would have the most positive impact on the
reputation of the safari tours whilst not being too costly for a small business, like SA.
© 2022
Grade thresholds – November 2022
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the November 2022 examination.
minimum raw mark required for grade:
maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 52 44 37 31 25 20 16 12 8
Component 21 80 54 49 43 37 31 25 19 13 8
The overall thresholds for the different grades were set as follows.
Maximum
Combination of
Option mark after 9 8 7 6 5 4 3 2 1
Components
weighting
X 160 11, 21 106 93 80 68 56 45 35 25 16
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email [email protected]
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2022
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*2549910429-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages.
11_0986_21_2022_1.2
© UCLES 2022 [Turn over
2
Safari Adventures (SA)
Tokumbo is a sole trader. He started SA 2 years ago in country X. Tokumbo had previously worked for
a company selling holidays. SA organises safari tours which take tourists to view wild animals on a game
reserve. Most of SA’s customers are tourists from other countries. Tokumbo did not have any objectives
when he started SA but knows they are important for his business.
SA uses its own vehicles for the 7 day safari tours and provides accommodation in small local hotels.
Tokumbo employs 4 safari guides, 1 for each of the 4 vehicles. The safari guides drive the tourists
around the game reserve. There is 1 additional employee who helps Tokumbo in the office with
administration. Tokumbo thinks SA needs a website so tourists can book directly with them rather than
booking through holiday companies that charge SA a fee.
Tokumbo is considering the following three options for the future growth of SA safari tours:
• Option 1 - increasing the number of safari guides and vehicles to increase the number of customers
from the existing target market
• Option 2 – targeting young people who want to camp and sleep in a tent on their safari
• Option 3 - targeting high-income tourists who prefer to stay in luxury hotels
Information about these three options is outlined in Appendix 3.
Tokumbo plans to provide more training for his employees whichever option he chooses. He wants his
existing employees to have a wider knowledge of the wild animals on the game reserve and to be able
to provide high-quality customer service. Tokumbo has to decide which method of training to use.
© UCLES 2022 11_0986_21_2022_1.2
3
Appendix 1
Newspaper article in Main News, September 2022
Tourism takes off
Country X is becoming a popular holiday destination for tourists from other countries.
There is an increased demand from high-income tourists who want to stay in luxury hotels whilst on
safari tours. These tourists are willing to pay high prices. There is also a new trend for younger people
who want cheaper holidays. They prefer to camp and sleep in tents on game reserves rather than stay
in hotels.
Are the many safari businesses in country X ready to target these new markets?
The use of e-commerce to find and book safari tours by tourists from other countries is offering both
opportunities and threats to businesses in country X.
The inflation rate in country X has increased to 4% which may affect some of our local safari businesses.
© UCLES 2022 11_0986_21_2022_1.2 [Turn over
4
Appendix 2
Email from Tokumbo’s accountant
To: Tokumbo
From: Accountant
Subject: Source of finance for the new vehicles
New vehicles will be needed whichever option you choose for the future growth of your business.
I have considered several sources of finance you could use for the new vehicles. Interest rates on bank
loans have fallen to 2% whilst interest rates on savings are 3%. I think you should choose from one of
the following sources:
• Leasing
• Bank loan
• Retained profit
We can meet to discuss these sources if that would help you to decide.
Appendix 3
SA’s three options for a 7 day safari tour
Option 1 Option 2 Option 3
More existing safari tours Camping safari tours Luxury safari tours
Forecast number of
16 32 10
tourists per week
Total costs per week for
SA to provide these $12 000 $8000 $20 000
safari tours
Average cost per tourist $750 ? ?
Price per tourist $1000 $400 $2400
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 11_0986_21_2022_1.2
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer and Data Response October/November 2022
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 October/November 2022 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.
This document consists of 22 printed pages.
© UCLES 2022 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme October/November 2022
PUBLISHED
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 descriptors 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.
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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).
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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.
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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0450/7115/0986 Business Studies–Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X 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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
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 Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Define ‘on-the-job training’. 2 Do not award answers which clearly
relate to induction.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Accept: Watching a more experienced
Training at the place of work, watching or following an experienced worker doing the job [2]
employee [2]
OR
Training at the place of work–usually the person does the actual job while
an experienced employee observes and guides him or her, making
corrections as required [2]
Partial definition e.g. training while you are working [1]
1(b) Calculate total variable cost per month. Show your working. 2 Award only 1 mark if $960 000 is written
as part of the answer but is not given as
Correct answer: $960 000 [2] the final answer.
Method e.g. Variable cost per unit times output [1] $ sign not required.
OR
$80 12 000 [1]
If correct answer given with no working shown award 2 marks.
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Question Answer Marks Notes
1(c) Identify four factors a business should consider when deciding which 4 Only award the first four responses
method of production to use. given.
Award 1 mark for each relevant factor. Award ‘size of business’ [BOD]
Points might include:
• Amount of capital available / costs (of machinery/production)
• Demand / size of the market / how much they are likely to sell / output
needed
• Nature / type / variety of goods produced
• Amount of suitable space / storage
• Access to (suitable/skilled) labour / amount of labour needed
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(d) Explain one advantage and one disadvantage to SSG of using quality 6 Note: To use words from the stem as
control. application, the reference must be
appropriate (i.e. make sense) in relation
Award 1 mark for identification of each relevant advantage/disadvantage to the point being made.
(max 2).
The following words are likely to be
Award 1 mark for each relevant reference made to this business (max 2). appropriate for this question:
• (Mobile/cell) phones
Award 1 mark for each relevant explanation (max 2). • 130 employees
• On-the-job training
Points might include: • $80
• 12 000
Advantage: • $300 000
• Tries / may eliminate errors before customers receive the product [k] • Maturity / extension strategy
improving the reputation [an] of its phones [app] • Batch production
• All workers do not need to be trained for quality control [k] reducing
costs [an] of its 130 employees [app] Other appropriate examples in context
• Production is not slowed [k] can still be credited.
Disadvantage:
• Inspectors / someone needs to be employed to check the product [k]
increasing labour costs [an]
• Faulty products must be scrapped [k] therefore variable cost is higher
[an] than $80 per unit [app]
• Does not identify where / why the fault has occurred [k] so vulnerable to
repeating the errors
• There is less reason for employees to help ensure quality [k] leading to
more faults in products [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think adding new features to a product is the best extension 6 This is a general question so there are
strategy for a manufacturing business to use? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. Some points could be awarded for
different options or as [k] / [an], but do
Award up to 2 marks for relevant development of points. not award the same point twice.
Award 2 marks for justified decision as to whether adding new features is For evaluation to be awarded justification
the best extension strategy for a large manufacturer to use. will usually follow on from relevant
analysis of points.
Points might include:
• Product appears more appealing [k] attracting new / more customers or USP [k] attracting customers away from
sales [an] increasing revenue [an] competitors [an]
• High cost of development / market research [k] which the business may
not be able to afford [an]
• Customers may dislike changes [k] reducing sales [an]
• Adds value to product [k] therefore can charge a higher price [an]
Other strategies might include:
• Finding new markets [k] widening customer base [an]
• Adapt / change the packaging [k] improving the appeal [an] but existing
customers may not recognise the product [an]
• Increase advertising / marketing / promotion [k] remind customers that
the product still exists [an]
• Sell through additional outlets [k]
Other appropriate responses should also be credited.
Justification might include:
Adding new features involves high development costs [k] which the
business may not be able to afford [an]. Finding new markets [k] could
increase sales revenue [an]. There is a risk that customers may not like the
new features [eval] so it’s safer and cheaper to try to find new markets.
[eval]
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Question Answer Marks Notes
2(a) Define ‘opportunity cost’. 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
The next best alternative foregone / given up [2]
OR
The benefit that could have been gained from an alternative use of the same
resource [2]
OR
A benefit, profit, or value that a firm gives up in order to achieve something
else [2]
Partial definition e.g. what you must give up / forgo [1]
2(b) Identify two limitations of using the number of employees to measure 2 Only award the first two responses given.
the size of a business.
Award 1 mark per limitation.
Points could include:
• Does not account for capital intensive business / depends on method of
production used
• Could have many part-time employees
• May give a different indicator of size to other measures used.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(c) Outline how having limited liability might benefit DNG’s shareholders. 4 Note 1: Candidates can outline one
benefit in detail or outline two separate
Award up to 2 marks for relevant points (max 2). benefits.
Award up to 2 marks for each relevant reference to this business (max 2). Note 2: Answers must refer to the
owners / shareholders and not the
• Shareholders risk is limited to the amount invested [k] in this electricity business itself.
business [app]
• Protects personal assets [k] in case the business decision to contribute To use words from the stem as
to sustainable development does not work [app] application, the reference must be
• Encourages (potential/existing) shareholders to invest [k] appropriate (i.e. make sense) in relation
to the point being made.
Other appropriate responses should also be credited.
The following words are likely to be
Shareholders risk is limited (to the amount invested) [k] in the electricity appropriate for this question:
company [app] protecting their personal assets [k] in case the decision to • Electricity
stop using coal does not work [app] • (Stop using) coal
• 16 million (customers)
• 6500 (employees)
• Pressure groups
• Opportunity cost
Other appropriate examples in context
can still be credited.
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Question Answer Marks Notes
2(d) Explain two ways a pressure group might influence DNG’s decisions. 6 Note: Can award responses which refer
to strikes as TU may use to influence pay
Award 1 mark for identification of each relevant way (max 2). or working conditions.
Award 1 mark for each relevant reference made to this business (max 2). To use words from the stem as
application, the reference must be
Award 1 mark for each relevant explanation (max 2). appropriate (i.e. make sense) in relation
to the point being made.
Points might include:
• Create (negative) publicity / publish information / write to newspaper [k] The following words are likely to be
about the impact of using coal [app] damaging its reputation [an] appropriate for this question:
• Organise customer boycotts [k] of its 16 million customers [app] leading • Electricity
to fewer sales / less revenue [an] • Coal
• Demonstrations / protests [k] about electricity production [app] which • 16 million (customers)
could reduce investment in the business [an] • 6500 (employees)
• Petition / send letters to government [k] against this limited company • Opportunity cost
[app] • Limited company / shareholders
• Lobbying [k]
• Take legal action [k] Other appropriate examples in context
can still be credited.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
2(e) Explain two methods of internal communication a large business could 6 This is a general question so there are
use to share important information with its employees. Justify which no marks for application.
method should be used.
Some points could be awarded for
Award up to 2 marks for identification of relevant points. different options, but do not award the
same point twice.
Award up to 2 marks for relevant development of points.
For evaluation to be awarded justification
Award 2 marks for justified decision as to which of the two methods will usually follow on from relevant
discussed is the best method of communication for a large business to use analysis of points.
to convey important information to its employees.
Note: Do not award types of
Points might include: communication such as written, verbal,
• Meeting / briefing / video conference [k] workers receive the message at electronic.
the same time [an] but workers will not be working so output may fall
[an]
• Email [k] message can be sent to multiple people at the same time [an]
but people may not be able to access the internet [an]
• Phones [k] allows for immediate feedback [an]
• Text / SMS [k] contains only very limited information [an]
• Posters / noticeboards [k]
• Announcements [k]
• Internal newspapers [k]
• Social media such as Whatsapp [k]
• Letter [k]
Other appropriate responses should also be credited.
Justification might include:
Email [k] would allow the business to send the same message to multiple
people [an]. A meeting [k] will allow employees to ask questions to confirm
their understanding of the important information [an]. Email is better as it
may not be possible to get all employees in a large business together at the
same time [eval]. Whereas with an email all employees receive information
which they can refer back to later. [eval]
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Question Answer Marks Notes
3(a) Define ‘non-current assets’. 2 Do not award Assets owned for one year
as this is TV.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
Do not award examples.
Resources owned by a business which will be used for a period longer than
one year [2]
OR
Items owned by a business for more than one year [2]
Partial definition e.g. items owned by the business [1]
Items in the business for more than one year [1]
3(b) State two elements of the marketing mix. 2 Only award the first two responses given.
Award 1 mark per element.
Two from: Price, product, place, and promotion
3(c) Outline two ways CPK might be affected by an increase in taxation. 4 Note: To use words from the stem as
application, the reference must be
Award 1 mark for each relevant way. appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for each relevant reference to this business.
The following words are likely to be
Points might include: appropriate for this question:
• Less profit [k] to help improve the sports clubs [app] • Sports club or examples such as
• Decreased demand [k] at the 5 locations [app] activities / gym / yoga class
• May have to increase prices [k] affecting its marketing mix [app] • 5 (locations)
• Can increase expenses / cost of buying materials [k] • 60 (employees)
• Marketing mix
Other appropriate responses should also be credited. • 10% / 12%
Other appropriate examples in context
can still be credited.
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Question Answer Marks Notes
3(d) Explain one possible effect on CPK of the change in each of the 6 Award decrease/fallen as [k] OR [app]
following ratios as shown in Table 3.1: but not both.
Award 1 mark for identification of each relevant effect (max 2). Do not award reasons for change as
knowledge or analysis as this does not
Award 1 mark for each relevant reference made to this business (max 2). answer the question.
Award 1 mark for each relevant explanation (max 2) Note: To use words from the stem as
application, the reference must be
Points might include: appropriate (i.e. make sense) in relation
to the point being made.
Current ratio:
Decreased / fallen / worsened / deteriorated [k] or [app] The following words are likely to be
appropriate for all responses on this
Analysis could be awarded for: question:
• May need to reduce creditors / trade payables [k] to avoid cashflow • 2% / 12% or 10%
problems [an] in the sports clubs [app] • 0.3 / 1.6 / 1.3
• May need to improve cash by selling more products or sell unwanted • Sports club or examples such as
non-current assets gym / yoga class
• May have problems paying its short-term liabilities / less liquidity / less • 5 (clubs)
cash available
• May make it harder to obtain finance Other appropriate examples in context
• Suppliers may be less willing to provide goods (on credit) can still be credited.
Profit margin:
Decreased / fallen / worsened / deteriorated [k] or [app]
Analysis could be awarded for:
• May need to increase prices [k] to improve profit margin [an] in the 5
clubs [app]
• Need to look for ways to increase added value
• May look for ways to lower variable costs / expenses
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think job enrichment is a better way for a business to motivate 6
its employees than profit sharing? Justify your answer.
Award up to 2 marks for identification of relevant points.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to whether job enrichment is a better
way for a business to motivate its employees than profit sharing.
Points might include:
Job enrichment:
• Business able to make most / full use of employee’s skills [k] which
can help increase labour flexibility [an]
• Training may be needed [k] which can increase expenses [an]
• Workers gain more job satisfaction/ feel recognised/valued [k]
• Not all workers are able / want to do more complex work [k] leading to
mistakes/ waste [an]
• Not easy to add extra tasks to some jobs [k]
• Time consuming to redesign tasks [k]
• May create conflict between employees (as may not be possible to
offer opportunities to all) [k]
Profit sharing:
• Money is a major motivator for many employees [k]
• Can help build team spirit / sense of belonging / common goal [k]
• Not everyone is motivated by money [k]
• If business makes low/ no profit, then there is little/ nothing to share [k]
which could decrease motivation [an]
Other appropriate responses should also be credited
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Question Answer Marks Notes
3(e) Justification might include:
Job enrichment can help the business make the most use of employee’s
skills [k] increasing productivity [an]. A business making no profit, has
nothing to share [k] which could decrease rather than increase motivation
[an]. I think job enrichment is better as making the job more interesting is
more likely to motivate employees every day. [eval]. Profit-sharing is at the
end of the year, and therefore is likely to have less impact on daily effort.
[eval]
Question Answer Marks Notes
4(a) Define ‘recession’. 2 Do not award features of a period of
recession.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
When there is a period of falling gross domestic product / GDP [2]
OR a sustained (over a period of time) reduction in GDP / national income /
output [2]
Partial definition e.g.–fall in output / fall in GDP [1]
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Question Answer Marks Notes
4(b) Identify two ways of segmenting a market. 2 Only award the first two responses given.
Award 1 mark per way. Award :
Points might include: • Demographic–if age / gender / socio-
• Age economic group / social status/ethnic
• Gender group not awarded
• Socio-economic group / social status / class • Psychographic if lifestyle,
• Geographical / region / location personality, and attitudes not
• Lifestyle awarded
• Ethnic group
• Family characteristics
• Education
• Occupation
• Use of product
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(c) Outline two reasons why having enough working capital might be 4 Note: To use words from the stem as
important for Beena’s business. application, the reference must be
appropriate (i.e. make sense) in relation
Award 1 mark for each relevant reason. to the point being made.
Award 1 mark for each relevant reference to this business. The following words are likely to be
appropriate for this question:
Points might include: • Hairdressing or related words such
• To pay for (day-to-day) expenses / short-term debts [k] of her as haircut or shampoo
hairdressing business [app] • Start-up / new business
• Evidence to support loan applications [k] if she decides to take the • Recession
franchise [app] • Franchise
• Use in an emergency / pay for unexpected expenses [k] in case she • $800
needs more than $800 [app] • Market research
• To ensure the business has a good credit reputation [k] especially as • (Market) segment
her business is a start-up [app]
• Ensures the business can take advantage of discount on bulk Other appropriate examples in context
purchases [k] can still be credited.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(d) Explain two possible advantages to Beena of buying a franchise. 6 Note: To use words from the stem as
application, the reference must be
Award 1 mark for identification of each relevant advantage (max 2). appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Award 1 mark for each relevant explanation (max 2). appropriate for this question:
• Hairdressing or related words such
Points might include: as haircut or shampoo
• Established brand / well-known brand [k] therefore no need to spend on • Start-up / new business
advertising [an] • Recession
• Reduces risk of failure [k] especially after a recession [app] • $800
• Training / advice offered by franchisor [k] which saves costs [an] which • Market research
is important for a start-up business [app] • (Market) segment
• Attracts customers [k] helping to ensure / increase revenue [an] for her • Working capital
hairdressing business [app]
• Easier to obtain finance / bank more willing to lend [k] which may be Other appropriate examples in context
necessary with savings of $800 [app] can still be credited.
• Franchisor pays for advertising [k]
• Stock control and accounting systems often provided by franchisor [k] Note: [k] Points may sometimes be
which can help make business more efficient [an] and improve her awarded [an]
working capital [app]
• All supplies are obtained from a central source / the franchisor [k] which
can help ensure quality [an]
• Fewer decisions to be made (than an independent business) [k]
Other appropriate responses should also be credited.
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PUBLISHED
Question Answer Marks Notes
4(e) Do you think it is always better for a start-up business to use primary 6 This is a general question so there are
market research, rather than secondary market research, when making no marks for application.
decisions? Justify your answer.
Some points could be awarded for
Award up to 2 marks for identification of relevant points. different options, but do not award the
same point twice.
Award up to 2 marks for relevant development of points.
For evaluation to be awarded justification
Award 2 marks for justified decision as to whether it is always better for a will usually follow on from relevant
start-up business to use primary market research rather than secondary analysis of points.
market research when making decisions.
Note: Do not accept mirror arguments
Points might include: such as primary research is up to date
and secondary research maybe
Primary market research:
outdated.
• Relevant / up to date data gathered [k] so should help you find out what
you want to know [an]
• High cost / time to collect information [k] which a new business might
not be able to afford [an]
• Only available to own business [k]
• May find it difficult to find people that represent target market /
population [k]
Secondary market research:
• May not be relevant / outdated [k] which can lead to wrong decisions
[an]
• Readily available [k]
• Cheap [k]
• Can collect wide range of information [k]
Justification might include:
Primary research collects business specific data [k] helping to find out what
you want to know [an]. Secondary research is cheaper than primary to
collect [k] which could help reduce costs [an]. As this is a start-up business
finance may be limited therefore secondary research may be better for
them. [eval]. However the information must be from a reliable source. [eval]
© UCLES 2022 Page 22 of 22
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2022
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 October/November 2022 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.
This document consists of 22 printed pages.
© UCLES 2022 [Turn over
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2022
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 descriptors
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 rewarded.
given
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 four business objectives Tokumbo could set for SA. 8
Award 1 mark for each relevant objective (max 4).
Award a maximum of 1 additional mark for each explanation of the business
objective in context.
Relevant business objectives might include:
• Profit – so Tokumbo will have the funds to pay for the development of his
website
• Increase sales / number of customers – so revenue from safari tours
increases
• Return on investment for the owner – so Tokumbo can gain a return on
his investment in SA as he is a sole trader
• Growth / expansion of the business – so that the business can take
advantage of the growth in the number of young people camping
• Market share – increased publicity and awareness for tourists visiting the
country
• Survival – as SA is a new business and has only been operating for 2
years
• Provide services to the community
• Providing good customer service
• Reducing environmental impact
For example: Tokumbo will want to make a profit (1) as he has invested his
own money into the sole trader business (app).
Application might include: safari holidays; increase in tourists from other
countries; high income tourists; luxury safari holidays; 5 employees; only been
operating for 2 years; sole trader; game reserve; camping / tent; wild animals;
4 safari guides; 4 safari vehicles; accommodation in local / luxury hotels; fuel.
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Question Answer Marks
1(b) Consider the opportunities and threats of e-commerce for SA. Which is 12
likely to have the greatest effect on SA? Justify your answer.
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of 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 alternative was
rejected should be rewarded with the top marks in
the band.
2 Sound application of knowledge and understanding 5–8
of 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 and
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 1–4
understanding of relevant business concepts.
Limited ability to discuss opportunities and 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
1(b) Relevant points might include:
Opportunities • Websites can be used to promote SA and its
holidays worldwide – reaches potential
customers from other countries – cheaper
than many other forms of promotion
• Bookings can be taken directly by SA over the
internet – this means that intermediaries such
as holiday companies are not required – SA
profit margins are therefore not shared as it
doesn’t pay them a fee
• Tourists may be encouraged to purchase
more additional services when booking SA
holidays – easier to link through to other
services
• It is easier for SA to book hotel rooms for
guests – quicker and cheaper than other
communication methods such as phone calls
• Easier to change prices if necessary than
having to republish holiday brochures –
reprints are expensive, and this makes it
cheaper
Threats • High levels of competition from many other
safari businesses in country X and other
countries that may also have websites –
makes it harder to be the business tourists
choose to book from
• Website design may not be clear if Tokumbo
does not know how to do this – are likely to be
incurred for paying an expert to set up the site
– and maintenance costs of up-dating the
safari holiday site
• There is still no face-to-face contact with
customers
• Customers may not be familiar with new
businesses – less likely to buy if business not
known
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Question Answer Marks
1(b)
Conclusion Justification might include:
• E-commerce will provide more opportunities
than threats as the target customers of SA are
tourists from other countries and having a
website is an easy way to promote SA safari
holidays to these customers rather than using
intermediaries that may sell holidays from
several other holiday businesses. There are
many competitors but as long as SA can keep
attracting customers using the internet then
revenue will increase, and the threats are less
of a concern
• E-commerce will provide more threats than
opportunities as many competitors will also
have websites and sell their safari holidays
through online bookings. There is no
guarantee that people searching for a holiday
will find SA’s website and they could easily
find competitors’ websites instead and hence
not be aware of SA at all. Therefore, there is
reduced revenue
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Question Answer Marks
2(a) Explain four reasons why quality is important to a business. 8
Award 1 mark for each reason (max 4).
Award a maximum of 1 additional mark for each explanation of the reason.
There are no application marks for this question.
Answers might include:
To establish a brand image – so that customers are encouraged to buy the
product and new customers are attracted
• To build brand loyalty / customer loyalty – so that customers will make
repeat purchases and maintain sales
• To maintain a good reputation / not to gain a bad reputation – friends and
family tell others about the good or service which may lead to a good /
bad reputation
• To increase sales / attract more customers – due to customer needs
being satisfied by the products supplied
• So that faulty products do not have to be replaced – which would reduce
waste / ensures customer safety / avoids legal action
• Able to charge a high price – may lead to higher profits / as may increase
added value
For example: To maintain a good reputation (1) because if quality is not good
then friends and family will tell others about the product which may lead to a
bad reputation and sales will be lower (1).
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Question Answer Marks
2(b) Consider the following three sources of finance Tokumbo could use for 12
the new vehicles. Which source should he choose? Justify your answer.
• Leasing
• Bank loan
• Retained profit
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of two or more sources.
Well-justified recommendation.
Candidates discussing all three sources in detail, in
context and with a well-justified recommendation
including why the alternative sources were rejected
should be rewarded with the top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one source.
Judgement with some justification / some
evaluation of choice made.
Candidates discussing two of more sources 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 sources with little / no
explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining all three sources 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
Leasing • Allows SA to use the • Will be more expensive
vehicles without a than buying the vehicle
large sum of capital outright as total cost is
required to purchase likely to be higher
it • SA does not own the
• Payments are made vehicle, so it is not an
each month so this asset
spreads out the • May have to return the
payments instead of vehicle at the end of
one large sum at the the lease and will have
start which can help to start again to
management of cash replace it or safari
flow tours may have to be
• Maintenance of the cancelled
vehicle will be paid
for by the lease
company – lower
cost
• May be able to
purchase the vehicle
at the end of the
lease
• Easier to replace the
vehicles more
regularly as new
models are brought
out
Bank loan • Usually quite quick • It has to be repaid with
to arrange compared interest – increases
to some other costs
sources • As SA is a small
• Can be repaid over business then the
various periods of interest rate on the
time – so if over a loan may be quite high
longer period then relative to the interest
the repayments will rate for a large
be lower each month business – it may be
especially as harder to be
interest rates are competitive with other
now only 2% holiday businesses
• Paid back in • As a sole trader
instalments – usually Tokumbo will have his
monthly personal assets at risk
if he does not repay
the loan
• Security is often
required
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2(b)
Advantages Disadvantages
Retained profit • Does not have to be • SA only started 2
repaid years ago so there
• No interest paid on it may not be any
– making it a retained profit available
cheaper source of to use
finance than possibly • It may use all the
2% on bank loans reserves of SA then
• No security needed there will be no
which would be reserves left for any
required with a bank emergencies in the
loan – Tokumbo future
does not have to risk • Reduces the payment
any personal assets to Tokumbo, as there
due to being a sole will be less profit
trader available to be
distributed
• Loss of 3% interest as
money not left in a
savings account
Recommendation Justification might include:
• Leasing will be the best because no capital is
required, and SA has only been trading for 2
years so is unlikely to have the funds required to
be able to use retained profit. As Tokumbo is
unlikely to have the capital to purchase a vehicle,
leasing will allow him to use the vehicle and just
make monthly payments which he can afford with
revenue from tourists when they pay for
holidays. A bank may not grant a loan as SA is a
new business and may not have the financial
statements that show it is able to repay the loan
• A bank loan will be the best choice because
Tokumbo needs to spread out the repayments for
a new vehicle. The business has been trading
successfully for 2 years and may have a good
relationship with the bank. As a sole trader
Tokumbo will use his personal assets as collateral
for the loan so the bank will be willing to grant the
loan
• Retained profit should be used because it has the
lowest cost of the three sources which is important
as SA will be incurring increased expenditure as it
expands and provides more holidays. Tokumbo
will not want additional costs from interest
payments if it can be avoided so retained profit will
be more beneficial to SA than the other two
sources
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Question Answer Marks
3(a) Explain one advantage and one disadvantage to Tokumbo of being a 8
sole trader.
1 mark for each advantage/disadvantage identified (max 2).
Award a maximum of 3 additional marks for explanation of each
advantage/disadvantage for Tokumbo of being a sole trader – one of which
must be applied to this context.
Relevant advantages might include:
• Owner is in complete control / makes all the decisions – likes being his
own boss with no one to tell him what to do – prefers making all the
business decisions instead of having to consult others – such as deciding
whether to start offering other safari tours
• Does not have to share profits – as there is only one owner – keeps all
the returns from his own hard work – his 5 employees
• It was easy to set-up – as there were few legal requirements – reduced
the costs of setting up, such as accountancy costs
• Freedom to choose own working hours or holidays – if worked for another
business he would have to work the hours stated in his employment
contract – which he would have done when he worked for a holiday
company – no flexibility to change these hours if needed
• Complete privacy – does not have to share any financial details with
anyone else – apart from the tax office, as he will still have to pay tax
Relevant disadvantages might include:
• Unlimited liability / no limited liability – which means all his personal
possessions are at risk – not just the capital he invested in the business
• There is no-one to share responsibilities with or discuss business
decisions – everything is the sole responsibility of the owner – this can be
stressful, and he may be more likely to make mistakes
• No continuity – if the owner dies then because the owner is the business
it will end – unlike a company where the shares allow it to carry on as it
has a separate legal identity
• Lack of capital / difficult to raise finance – as only the funds of the sole
trader or borrowing is available to the business – may make it more
difficult to expand in the future
• May need to work long hours / difficult to take holidays / increased
workload
For example: A disadvantage is that Tokumbo has unlimited liability (1) and he
put his own money into the business to start it 2 years ago (app). If SA fails,
he could lose all his personal possessions (1) and not just the capital he
invested in SA as would happen if it was a limited company (1).
Application could include: safari holidays; increase in tourists from other
countries; high income tourists; luxury safari holidays; 5 employees; only been
operating for 2 years; game reserve; camping / tent; wild animals; 4 safari
guides; 4 safari vehicles; accommodation in local / luxury hotels; fuel.
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Question Answer Marks
3(b) Using Appendix 3 and other information, consider the three options for 12
the future growth of SA. Which option should Tokumbo choose? Justify
your answer using appropriate calculations.
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of the two or more options.
Well-justified recommendation.
Candidates discussing all three options in detail, in
context and with a well-justified recommendation
including why the alternative options were rejected
should be rewarded with the top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one option.
Judgement with some justification / some
evaluation of choice made.
Candidates discussing two or more options in detail
and applying them 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 options with little / no
explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining all three options 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:
Option 1 • Already familiar with these type of holidays –
have existing customers that may return
regularly
• Existing relationship with hotels so no need
to find new suppliers
• Total costs of $12 000 per week are lower
than Option 3
• Average cost per tourist is $1250 lower than
Option 3 – but $500 higher than Option 2
• Profit per tourist is $250
• Total profit per week is $4000
• Revenue per week is $16 000 which is higher
than Option 2
Option 2 • New target market and this has a growing
trend for young people to demand this type
of holiday
• Lower total costs to provide this holiday $8000
per week – this is the lowest of the 3 Options
– less likely to cause a cash flow problem as
the business expands as lowest outflow of
cash to pay for costs
• The lowest average cost of the three options
at $250 per tourist
• Total profit per week is the highest at $4800
• The revenue per week is the lowest of the 3
Options at $12 800
• However SA may need to buy tents and
camping equipment – high initial cost of
setting up for this option whereas the other
options use hotel rooms
• Not familiar with the requirements of
customers in this market and may have
increased costs from carrying out market
research into the preferences of young
people
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Question Answer Marks
3(b)
Option 3 • New target market and tourists are willing to
pay a high price for a luxury safari holiday
• Highest revenue of the 3 options at $24 000
per week
• Highest price of $2400 per tourist can be
charged – leads to higher profit per tourist per
week
• Average cost per tourist is the highest of the 3
Options at $2000 per week
• Profit per tourist is $400
• Total profit per week is $4000
• However, costs are a lot higher than the other
two options – $20 000 per week, $8000 more
than Option 1 and $12 000 more than Option 2
• This is a new market for SA, and it may be
difficult to find suitable luxury hotels to meet
the needs of these consumers – need to
establish relationship with new hotels
• May need to buy more expensive vehicles
which will further increase costs to serve the
needs of these high-income consumers
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Question Answer Marks
3(b)
Recommendation Justification might include:
• Option 1 is the best one to choose as it is a
market Tokumbo is already familiar with and
he just needs to increase the number of
vehicles and guides. The total cost is
$12 000 per week and makes the same profit
per week of $4000 as option 3 without the risk
of trying to attract a new target market. Option
2 is a very different market and SA has no
experience of providing these types of
holidays therefore the holidays may not meet
the needs of these customers and SA may not
attract the forecast 32 customers a week.
Option 3 should not be chosen as it has high
total costs and SA is a new business of 2
years with limited capital
• Option 2 is the best one to choose as it has
the lowest total costs and the highest total
profit per week of the 3 options. The lowest
average cost may make it easier for SA to be
competitive with other tourist businesses in
country X and set lower prices. Also this is a
growing market so this option may make it
easier for continued growth of SA in the future
• Option 3 is the best one to choose because it
has the highest price of the 3 options at $2000
per tourist. High-income consumers are less
price sensitive making it easier for SA to
charge a high price for this holiday and has
the highest profit per tourist of $400. This also
has the highest revenue at $24 000 per week,
nearly twice as much as option 2
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Question Answer Marks
4(a) Explain two possible effects on SA of the increase in the rate of inflation 8
in country X.
Award 1 mark for each effect (max 2).
Award a maximum of 3 additional marks for each explanation of an effect on
SA of an increase in the rate of inflation in country X – one of which must be
applied to this context.
Relevant answers might include:
• Likely rise in prices for safari tours – decreased demand / harder to attract
tourists to country X – decreased revenue for SA if demand is price
elastic – possible decrease in profits if costs rise more than revenue
• Increase in costs for SA – may need to spend time sourcing lower cost
inputs / updating the brochures – keep recalculating prices / need to keep
printing brochures with new prices
• More pressure to increase wages for SA employees – prices of basic
goods may be increasing significantly in country X – as employees cannot
maintain their standard of living without a wage increase – increases
costs
• Increased cost of investment / equipment – may mean expansion is
delayed
For example: Prices of basic goods may be increasing significantly in country
X (1) as the inflation rate is now 4% (app). This will mean there is more
pressure on SA to increase the wages of employees (1) because employees
cannot maintain their standard of living without a wage increase (1).
Application could include: safari holidays; increase in tourists from other
countries; high income tourists; luxury safari holidays; 5 employees; only been
operating for 2 years; sole trader; game reserve; camping / tent; wild animals;
4 safari guides; 4 safari vehicles; accommodation in local / luxury hotels; fuel.
© UCLES 2022 Page 19 of 22
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2022
Question Answer Marks
4(b) Consider the advantages and disadvantages of two methods of training 12
Tokumbo could use for his existing employees. Which method should
he use? Justify your answer.
Level Description Marks
3 Sound application of knowledge and understanding 9–12
of relevant business concepts using appropriate
terminology.
Detailed discussion of both methods.
Well-justified recommendation.
Candidates discussing both methods in detail, in
context and with a well-justified recommendation
including why the alternative method was rejected
should be rewarded with the top marks in the band.
2 Sound application of knowledge and understanding 5–8
of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one method.
Judgement with some justification / some
evaluation of choice made.
Candidates discussing both methods 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 methods with little / no
explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining both methods in context
should be rewarded with the top marks in the band.
0 No creditable response. 0
© UCLES 2022 Page 20 of 22
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2022
Question Answer Marks
4(b) Relevant points might include:
Advantages Disadvantages
On-the-job • Individual training • Some output will be
training given on the safari lost by the trainer as
tours – leads to they would usually be
training specific to SA working instead of
• There will be some training
output from the • The trainer may pass
trainee as training is on bad habits to the
provided while a trainee – and these
safari tour is being may lead to bad
given reputation with
• Usually costs less tourists / lower
than off-the-job productivity
training – as it will be
provided by existing
employees
Off-the-job • Provided by experts – • Costs are usually
training more knowledge of higher – as tourist
the different animals guides will usually be
seen in the game sent away to college
reserve – better or other training
techniques taught institution
• The courses may be • Employees are paid a
taught in the evening wage, but no safari
– so no tours are lost tours are being taken
in the normal working for the business whilst
day training
• Employee may be • Qualification gained
taught a range of new by employees may
skills that current make it easier for
employees may not them to leave – may
know about – be attracted by
improves productivity another tourist
business that will not
then need to pay for
training
© UCLES 2022 Page 21 of 22
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2022
Question Answer Marks
4(b)
Recommendation Justification might include:
• On-the-job training is the best method to use
because the employees will develop skills specific
to the safari tours Tokumbo wants them to
provide. If they undertake off-the-job training then it
will not only cost more but it may not provide the
training specific to SA, making it more expensive
but less effective
• Off-the-job training is the best method to use
because it will be delivered by experts who will
have the most up-to-date knowledge of the wild
animals in the game reserve leading to better
trained employees and they may be better than the
employees of competitors. This may give SA a
competitive edge and lead to higher sales that will
more than cover the additional costs of the training
© UCLES 2022 Page 22 of 22
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*9973542935*
Paper 1 Short Answer and Data Response October/November 2022
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
11_0986_11_2022_1.3
© UCLES 2022 [Turn over
2
1 SSG manufactures mobile (cell) phones using batch production. Quality control is important. SSG
has 130 employees who all receive on-the-job training. The Marketing Manager is analysing cost
and output data for product X. An extract is shown in Table 1.1. As product X is in the maturity
stage of the product life cycle SSG is considering possible extension strategies.
Table 1.1
Extract from SSG’s cost and output data for product X
Rent and other expenses per month $300 000
Variable cost per unit $80
Output per month 12 000
(a) Define ‘on-the-job training’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate total variable cost per month. Show your working.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Identify four factors a business should consider when deciding which method of production
to use.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Factor 3: ...........................................................................................................................
...........................................................................................................................................
Factor 4: ...........................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 11_0986_11_2022_1.3
3
(d) Explain one advantage and one disadvantage to SSG of using quality control.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think adding new features to a product is the best extension strategy for a manufacturing
business to use? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 11_0986_11_2022_1.3 [Turn over
4
2 DNG provides electricity to 16 million customers. It is a limited company which means DNG’s
shareholders benefit from limited liability. DNG is planning to stop using coal to produce its electricity.
Pressure groups had an influence on this decision. The Managing Director knows there will be an
opportunity cost to making this change. She is considering the best way to communicate this
important information to DNG’s 6500 employees.
(a) Define ‘opportunity cost’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two limitations of using the number of employees to measure the size of a business.
Limitation 1: ......................................................................................................................
...........................................................................................................................................
Limitation 2: ......................................................................................................................
........................................................................................................................................... [2]
(c) Outline how having limited liability might benefit DNG’s shareholders.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 11_0986_11_2022_1.3
5
(d) Explain two ways a pressure group might influence DNG’s decisions.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two methods of internal communication a large business could use to share important
information with its employees. Justify which method should be used.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 11_0986_11_2022_1.3 [Turn over
6
3 CPK operates 5 sports clubs. Each club offers a range of activities including gym and yoga classes.
CPK uses job enrichment to keep its 60 employees well-motivated. Having the right marketing mix
is important to CPK’s success. The Finance Director is analysing CPK’s financial statements. An
extract is shown in Table 3.1. He wants to know how an increase in taxation might affect CPK’s
business.
Table 3.1
Extract from CPK’s financial statements
2020 2021
Current ratio 1.6 1.3
Profit margin 12% 10%
Non-current assets $2m $2m
(a) Define ‘non-current assets’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) State two elements of the marketing mix.
Element 1: ........................................................................................................................
...........................................................................................................................................
Element 2: ........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two ways CPK might be affected by an increase in taxation.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 11_0986_11_2022_1.3
7
(d) Explain one possible effect on CPK of the change in each of the following ratios as shown in
Table 3.1:
Change in current ratio: ....................................................................................................
...........................................................................................................................................
Explanation of effect on CPK: ...........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Change in profit margin: ...................................................................................................
...........................................................................................................................................
Explanation of effect on CPK: ...........................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think job enrichment is a better way for a business to motivate its employees than profit
sharing? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 11_0986_11_2022_1.3 [Turn over
8
4 Following the end of a recession in country X, Beena wants to start up a hairdressing business.
One option is to purchase a franchise from an established hairdressing business. Beena has $800
in savings and knows having enough working capital will be important for her business. She plans
to use market research to help her decision-making. Beena knows there are many ways to segment
a market.
(a) Define ‘recession’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two ways of segmenting a market.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(c) Outline two reasons why having enough working capital might be important for Beena’s
business.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 11_0986_11_2022_1.3
9
(d) Explain two possible advantages to Beena of buying a franchise.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think it is always better for a start-up business to use primary market research, rather
than secondary market research, when making decisions? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2022 11_0986_11_2022_1.3
10
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© UCLES 2022 11_0986_11_2022_1.3
11
BLANK PAGE
© UCLES 2022 11_0986_11_2022_1.3
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 11_0986_11_2022_1.3
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*2549910429*
Paper 2 Case Study October/November 2022
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
11_0986_21_2022_1.2
© UCLES 2022 [Turn over
2
1 (a) Explain four business objectives Tokumbo could set for SA.
Objective 1: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Objective 2: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Objective 3: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Objective 4: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 11_0986_21_2022_1.2
3
(b) Consider the opportunities and threats of e-commerce for SA. Which is likely to have the
greatest effect on SA? Justify your answer.
Opportunities: ...................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Threats: ............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2022 11_0986_21_2022_1.2 [Turn over
4
2 (a) Explain four reasons why quality is important to a business.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 3: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 11_0986_21_2022_1.2
5
(b) Consider the following three sources of finance Tokumbo could use for the new vehicles.
Which source should he choose? Justify your answer.
• Leasing
• Bank loan
• Retained profit
Leasing: ............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Bank loan: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Retained profit: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2022 11_0986_21_2022_1.2 [Turn over
6
3 (a) Explain one advantage and one disadvantage to Tokumbo of being a sole trader.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 11_0986_21_2022_1.2
7
(b) Using Appendix 3 and other information, consider the three options for the future growth of
SA. Which option should Tokumbo choose? Justify your answer using appropriate calculations.
Option 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Option 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Option 3: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2022 11_0986_21_2022_1.2 [Turn over
8
4 (a) Explain two possible effects on SA of the increase in the rate of inflation in country X.
Effect 1: .............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Effect 2: .............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 11_0986_21_2022_1.2
9
(b) Consider the advantages and disadvantages of two methods of training Tokumbo could use
for his existing employees. Which method should he use? Justify your answer.
Method 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2022 11_0986_21_2022_1.2
10
BLANK PAGE
© UCLES 2022 11_0986_21_2022_1.2
11
BLANK PAGE
© UCLES 2022 11_0986_21_2022_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 11_0986_21_2022_1.2
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2023
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/11
Short Answer/Data Response 11
Key messages
• Questions which require application, such as parts (c) and (d) of each question, refer to the
business in the scenario by name. Candidates should be reminded to use information from the stem
to help answer such questions as this provides the basis for application.
• Analysis and effective evaluation are areas which require further development. Candidates should
be reminded that analysis should show the effect of the knowledge. Evaluation must include a
justified decision that follows on from the points raised in the answer. A repetition of points already
explained in the answer will not gain analysis or evaluation marks. The mark scheme for each part
(e) question includes one example of how evaluation may be demonstrated in the answer.
General comments
Candidates found this paper to be accessible and most were able to achieve marks on the majority of
questions. However, Questions 2(a), 3(e) and 4(c) did cause candidates some issues. A noticeable number
of candidates did not attempt Questions 2(a), 2(d) and 3(b).
Some candidates needed to be more precise when defining the requested terms. This was a particular issue
in Question 1(a). Weak understanding of business terminology was also a factor in the low marks awarded
for Questions 2(a), and 3(e).
There was some evidence this session that more candidates were reading the questions thoroughly before
starting to write. Although, within Question 1(d) and 2(b) some candidates did not carefully read the
instructions given.
Application continues to be an issue for a number of candidates. Many repeated the same point of
application in each section of an answer. Others simply stated ‘product’ rather than naming the product or
service that the business offered.
Evaluation continues to be a weak area for many candidates. A common error being to restate the points of
knowledge as a conclusion. Candidates should be reminded that points can only be credited once within an
answer, there is no benefit to be gained by repetition.
Comments on specific questions
Question 1
(a) This term was not well understood by the majority of candidates. A mark of one was common as
many responses offered a feature of unincorporated businesses such as unlimited liability. Weaker
responses confused this with a sole trader enterprise and gained zero marks.
(b) This question was well answered by many candidates with a range of suitable objectives being
suggested. A small number of candidates confused objectives with barriers. Such candidates
thought that objectives prohibited success.
(c) This part (c) question required no application to the business stated in the stem. A wide variety of
different characteristics were correctly stated. Many responses achieved full marks. Responses
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2023
Principal Examiner Report for Teachers
which did not gain full marks often stated that entrepreneurs must be charismatic or skilled. Such
answers were too vague to be credited.
(d) The potential reasons for failure were not well understood by the majority of candidates. Strong
responses often provided only one suitable reason. The most common correct answers being lack
of experience or failure to attract customers. Many candidates did not carefully read the instruction
within the question and discussed a lack of finance. Candidates struggled to provide two different
points of application for this question, often repeating gardening or related words.
(e) The strongest answers for this question recognised that owner`s savings may not be sufficient for a
successful start-up but has the advantage of no interest being paid. A mistake made by many
candidates was to state it saves time with no elaboration. Such answers were too vague to be
credited. Very few candidates attempted an effective evaluation for this question.
Question 2
(a) This concept was not well understood by many candidates. Better responses identified the points
listed in the mark scheme. Weaker responses described the information presented in the chart and
did not answer the question set.
(b) The strongest candidates illustrated how they had achieved their correct answer by providing their
workings. Some candidates did not carefully read the information in the question and calculated
profit at a different level of output. Such responses were able to gain one mark if a method of
calculation was outlined. A significant number of candidates were unclear on this calculation.
(c) For this question, better responses recognised the benefit of gaining new customers and retaining
loyalty for this cooking pot manufacturer. As with other questions, candidates often repeated the
same point of application in each benefit. The weakest responses stated that having a good brand
image means having a good reputation and gained zero marks.
(d) A noticeable number of candidates did not attempt this question The weakest candidates were
confused by this topic. Often these answers discussed lowering price, which would increase the
output required to achieve break even. As with part(c) even better responses were unable to
provide two separate points of application in this part of the question.
(e) Many candidates had a good general understanding of social media. Stronger responses explained
the benefits of reaching a large group of people and compared this to an alternative method of
advertising. Weaker responses gained two marks by stating points with no development. Very few
candidates attempted evaluative comments, those that did often simply repeated the points of
knowledge.
Question 3
(a) This topic was generally well understood with many candidates gaining both marks. An error made
by some candidates was to identify internal users such as managers or workers.
(b) A significant number of candidates did not attempt this part of the question. Some candidates
incorrectly stated liquidity ratios rather than the profitability ones required.
(c) Correct answers produced for this question focused on the potential for lower prices and higher
quality for this computer manufacturer. The same point of application, computers, was often
repeated in each reason. Weaker responses thought that the business was selling rather than
buying raw materials abroad.
(d) Many candidates understood the benefits of being ethical in attracting customers to the business.
Such answers often gained the knowledge and application marks available. Limitations were less
well understood. Very few candidates were able to develop their answers fully to show analysis.
The mark scheme provides examples of the most appropriate impacts that were credited. A
significant number of candidates confused being ethical with following laws.
(e) Candidates found this to be the most challenging question on the examination paper. Although
many had a general understanding of the terms, responses were unable to explain why these are
important in a business. The strongest answers explained that profit could potentially be reinvested
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2023
Principal Examiner Report for Teachers
to increase growth while cash is vital for paying day to day costs. A mistake made by the weakest
answers was to state that profit was used to pay wages and raw materials.
Question 4
(a) Very few candidates provided clear and precise definitions of this term. A mark of one was
common as responses identified that this involved some sharing of tasks or authority. The weakest
responses stated that this meant delegating tasks which was considered too vague for credit.
(b) Many candidates provided two correct answers, most frequently such candidates identified controls
over dismissal and discrimination. Weaker responses lost marks by providing unclear general
answers related to paying wages rather than minimum wages.
(c) This part (c) question was one of the most challenging for candidates. The strongest responses
identified two of the four key functions of management which were then clearly applied to the
context. Many candidates provided descriptive answers which failed to clearly name these
functions. Such answers could not be credited.
(d) Strong answers to this question focused on profitability, sales, or costs. Such answers frequently
did not make effective use of the information provided in the question stem, gaining only one of the
application marks available. A mark of three was common as the answers were not fully developed
to show analysis.
(e) For this question candidates demonstrated appropriate knowledge but were unable to fully develop
this to show analysis and evaluation. Most commonly the knowledge shown was that the business
could reduce prices or improve the quality of the products. Weaker responses discussed the
production rather than selling of new items, for this retail business. Candidates struggled to provide
effective evaluation in this question.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2023
Principal Examiner Report for Teachers
BUSINESS STUDIES
Paper 0986/21
Case Study 21
Key messages
Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one (a)
question that will usually be generic. Applying answers to the case will ensure responses are appropriate for
each given situation.
• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study candidates were expected to refer to a large, public limited
company that produces a range of protective hats for construction and mining workers. It is advisable
for candidates to ask themselves about the size of the business, is it a service or manufacturer and
what is the type of business organisation? This may add to the quality of their answers.
• Candidates should try to give a full explanation of positive and negative consequences of a business
decision when this is asked for. Responses require developed reasoning rather than simple description;
listed points generally only gain Level 1 whereas an explanation of a point could move the answer to
Level 2. Few well developed points will score higher marks than a long list of simple statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.
General comments
Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of PH, a large business manufacturing high-quality protective hats, provided an accessible
scenario for candidates. Those who applied their answers to the context of PH boosted their marks much
further. Most of the candidates seemed to have time to complete the paper and attempted all questions.
Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Also, the question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but it was clear that certain
topics were not as well understood. The weakest understanding was of the analysis of company accounts
and the concepts of quality control and quality assurance.
Overall, the standard was good with very few weaker scripts. Candidates often provided answers in context
which enabled access to application marks. However, candidates should make sure that different examples
of application are included in each section of (a) questions (not 2(a) on this paper) and the
conclusion/recommendation should also be applied to the case in (b) questions. A lack of analysis and
evaluation resulted in answers remaining in the lower level mark band. Candidates should aim to consider
the consequences/implications/long term/short term/balance issues of the decisions to secure Level 2 or
Level 3 marks in the conclusion/recommendation.
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2023
Principal Examiner Report for Teachers
Comments on specific questions
Question 1
(a) Most candidates could identify two advantages and two disadvantages of PH being a public limited
company. Many responses mentioned the advantages of raising a large amount of capital by
selling shares to the public and providing continuity of the business as shareholders die and pass
on their shares to others. However, there was a tendency to overlook the need to apply these
points to the context of PH. For example, raising large amounts of capital would specifically help
PH with their plan to expand and open factories in other countries. Similarly, the disadvantages of
PH having to publish their accounts and being at risk of a takeover should have been explained in
the context of PH being a manufacturer of protective hats and currently being the market leader.
Some responses demonstrated good knowledge but scored only half of the available marks without
relevant application.
(b) This question required candidates to consider quality control and quality assurance as ways to
ensure quality production at PH. Some candidates seemed confused about the difference in these
approaches and mixed up the explanations. In the discussion about quality control, strong
responses outlined the benefit of checking the protective hats at the end of the production line so
that any faults could be eliminated, and customer satisfaction would be achieved. This would
maintain the reputation that PH has for producing high-quality hats. However, it would mean
recruiting quality control inspectors which would raise costs of training and wages for PH. This kind
of developed explanation earned Level 2 reward. Simple statements which mentioned that the hats
would be checked carefully at the last stage of production to ensure there were no errors earned
only Level 1 reward. Consideration of the quality assurance option focused on the benefit of
reducing waste because checking at each stage of production would mean that errors could be
sorted out quickly and productivity would be high. In the recommendation at the end of the
response candidates need to balance the two options and justify which would be the most
appropriate way to ensure the highest quality of production to earn level 3 reward. Candidates may
have reasoned that quality assurance would be preferable because the 100 production workers
would feel more trusted and motivated by having responsibility for the highest quality standard in
their own particular work. Quality control would take that responsibility away from the production
workers and would only emphasise the low level of job satisfaction that has been identified at PH
recently.
Question 2
(a) This question required candidates to consider the limitations and benefits of a business developing
new products. It was a generic question and the available marks were rewarded for making a
relevant point with additional explanation. This was the only response which did not need to
reference PH. Some good answers pointed out the limitation of undertaking extensive market
research which would be time consuming and expensive. Others identified the risk that a business
may damage its reputation if a new product is not properly tested and trialled before it is put into
production. The benefit of developing a product which would attract a different market segment and
boost sales to new customers was explained by many candidates. Some responses did not focus
on product development and consequently did not earn credit. Production and sales take place
after the product has been developed not during the process.
(b) Many candidates demonstrated sound subject knowledge in their response to this question. Three
methods of market research were discussed, and a recommendation made about which method
would ensure accurate data would be collected. The option of using a focus group of existing
customers would allow in-depth questioning of customers who already had first-hand experience of
using the protective hats. Useful and specific feedback could be recorded in a discussion group
that would encourage interaction and honest opinions. However, this would not be a way of
gathering information about competitors and may not result in many new ideas. The online survey
would be a quicker and cheaper way of gathering data which could be collated and analysed
effectively. However, response levels from this type of research are quite poor and no extra
explanation of the questions would be possible without an interviewer present. Merely asking five
questions would produce too small a range of data. Most responses mentioned that secondary
research would be out of date and more general, thus having limited use and accuracy. To earn
Level 3 credit in the conclusion, responses needed to make a justified judgement about which
option would be the ideal choice. The best answers avoided repeating points made earlier in the
© 2023
Cambridge International General Certificate of Secondary Education (9–1)
0986 Business Studies November 2023
Principal Examiner Report for Teachers
response and related to why one method of research would result in more accurate data and the
other two less accurate data for PH.
Question 3
(a) This was a well-answered question. Many candidates were able to outline two reasons why training
is important to PH. The benefit of employees learning new skills to improve their efficiency was
often discussed by candidates. This would lead to more protective hats being made than before.
Other strong responses explained that understanding how to correctly use the machinery was an
important point of safety which would also reduce accidents on the flow production line. To gain the
highest number of marks on this question it was necessary to make a clear point, offer additional
explanation and reasoning, and ensuring that this was in the context of factory production at PH.
Some responses briefly mentioned several reasons for training instead of developing the
explanation of just two points, whilst others repeated themselves.
(b) Some candidates found this question quite challenging. Not all responses showed good knowledge
of how different stakeholder groups might use financial information. The wording of the question
directed candidates to use the data in Appendix 3 to support their answer. Comparison of data from
2021 and 2022 allowed a judgement to be made of how it might impact on PH employees,
shareholders and competitors. The possibility of employees seeking a wage rise, as a result of OH
maintaining a healthy level of $20 m profit, could have been discussed. Employees might feel
empowered to argue for a rate of pay above their current minimum wage with strong financial data
to support them. Shareholders may note that a fall of 4 per cent in PH’s profit margin is an
indication of poor financial management and may question this at the next AGM. The competitors
of PH will be able to use the financial data to compare their own performance in the protective hat
market and may see that the 25 per cent increase in revenue indicates the strengthening position
of PH as market leader is too significant for them to consider a takeover. Responses that made
clear points and developed reasoning, making relevant use of the data, were likely to access Level
2 reward. A supported justification of which stakeholder group would find the data most useful
would have possibly earned Level 3 credit.
Question 4
(a) This question required candidates to explain two benefits of becoming members of a trade union.
Strong responses made clear points, developed the explanation and made good use of the context.
PH are paying their employees just the minimum wage and there have been complaints about
working conditions. If employees join a trade union, they could speak with one voice and negotiate
a pay rise with PH management. There is more likelihood they will be listened to, since there are
100 workers, and more chance they will get higher wages. Some responses quite rightly mentioned
the benefit of trade unions offering advice and support if members feel they have been unfairly
treated by PH. For example, if they had an accident on the production line the union could help the
member get proper medical attention and compensation. Some responses demonstrated
knowledge and understanding of trade unions but did not always focus on the benefits in the
context of PH.
(b) The discussion about three possible benefits for PH of becoming a multinational company resulted
in some varied responses. It was often mentioned that expanding into new markets would allow PH
to substantially increase sales revenue and profit, especially where mining and construction
industries were strong. Currently PH sell their hats around the world but production in other
countries might bring a benefit of reduced transport costs, increasing profit margins and boosting
profit overall. Many candidates pointed out the benefit of choosing a location where labour costs
would be lower, also increasing profit margins. In the last year, the data shows that the profit
margin at PH has fallen by 4 per cent so a decision to produce more cheaply in another country
would be a wise decision. Some governments in other countries might offer grants to PH if they set
up in an area of high unemployment. A grant might lower start-up costs for the new factories and
reduce the amount that PH would need to borrow. Lower interest payments on smaller loans would
reduce expenses. The responses that offered good recommendations did more than offer repeated
earlier points – they weighed up the benefits, large or small, which might result from PH becoming
a multinational company. The best answers justified their decision with reasoned argument about
which would benefit VP the most.
© 2023
Grade thresholds – November 2023
Cambridge IGCSE™ (9–1) Business Studies (0986)
Grade thresholds taken for Syllabus 0986 (Business Studies) in the November 2023 examination.
Minimum raw mark required for grade:
Maximum raw
mark 9 8 7 6 5 4 3 2 1
available
Component 11 80 60 53 46 40 33 26 20 15 9
Component 21 80 52 46 40 33 27 21 16 11 7
The overall thresholds for the different grades were set as follows.
Maximum
Combination of
Option mark after 9 8 7 6 5 4 3 2 1
components
weighting
X 160 11, 21 112 99 86 73 60 47 36 26 16
Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email [email protected]
© Cambridge University Press & Assessment 2023
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2023
INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*5112696359-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
This document has 4 pages. Any blank pages are indicated.
11_0986_21_2023_1.2
© UCLES 2023 [Turn over
2
Protective Hats (PH)
PH is a large public limited company based in country Z. It has been operating successfully for 50 years.
PH produces a range of protective hats for employees working on construction sites, in factories or
mines. It has a reputation for producing high-quality products and sells its hats around the world.
PH is currently the market leader in country Z. To remain competitive PH regularly carries out market
research to find out if new products are needed. PH needs to ensure its market research data is accurate,
so that it can develop the best new protective hats.
PH’s only factory is in country Z. It has 100 production employees. They work on a flow production line
and carry out the same tasks every day. PH pays these employees the minimum wage and there have
been complaints about working conditions. Some of the employees are considering becoming members
of a trade union.
PH’s directors plan to expand the company by opening factories in other countries to produce protective
hats. They think there are many benefits for PH of becoming a multinational company. They are aware
that there is growing demand for protective hats in many developing countries where construction and
manufacturing industries are expected to continue to have strong growth in the next 10 years.
Appendix 1
Advertisement for PH’s products
PH’s protective hats will protect your employees when at work.
We supply many of the leading construction, manufacturing and mining companies across the world.
High quality is guaranteed.
PH’s hats can be ordered online from our website.
© UCLES 2023 11_0986_21_2023_1.2
3
Appendix 2
Email to PH’s Managing Director from PH’s Human Resources Director
To: Managing Director
From: Human Resources Director
Date: 1 October 2023
Re: Training
After reviewing our current training, I think we need to increase the training we provide to new employees.
Existing employees would also benefit from additional training as there have been issues with motivation.
I know there are plans to introduce new equipment into the flow production line. When is this likely to
happen?
Can we please meet to discuss these issues?
Appendix 3
PH’s financial data for 2021 and 2022
2021 2022
Revenue $100m $125m
Profit $20m $20m
Gross profit margin 60% 65%
Profit margin 20% 16%
© UCLES 2023 11_0986_21_2023_1.2
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 11_0986_21_2023_1.2
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/11
Paper 1 Short Answer/Structured Response October/November 2023
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 October/November 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level components, and some Cambridge O Level
components.
This document consists of 24 printed pages.
© UCLES 2023 [Turn over
0986/11 Cambridge IGCSE (9–1) – Mark Scheme October/November 2023
PUBLISHED
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 descriptors 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.
© UCLES 2023 Page 2 of 24
0986/11 Cambridge IGCSE (9–1) – Mark Scheme October/November 2023
PUBLISHED
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.
© UCLES 2023 Page 3 of 24
0986/11 Cambridge IGCSE (9–1) – Mark Scheme October/November 2023
PUBLISHED
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).
© UCLES 2023 Page 4 of 24
0986/11 Cambridge IGCSE (9–1) – Mark Scheme October/November 2023
PUBLISHED
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.
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.
© UCLES 2023 Page 5 of 24
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0450/7115/0986 Business Studies – Paper 1 Annotations
Annotation Description Use
Tick Tick Indicates a point which is relevant and rewardable.
X 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 answering the question asked.
question
K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.
APP Application Indicates appropriate reference to the information in the stem.
AN Analysis Indicates where the answer has demonstrated analysis.
EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).
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 Indicates that content has been recognised but not rewarded.
credit given
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Question Answer Marks Notes
1(a) Define ‘unincorporated business’. 2 Max 1 for features of an unincorporated business
e.g. business ends if an owner leaves.
Award 2 marks for a full definition. Award 1 mark for a partial definition.
A business that does not have a separate legal identity [2]
Partial definition e.g. owner is/are responsible for business
debts/unlimited liability [1]
1(b) Identify two objectives a new business might have. 2 Only award the first two responses given.
Award 1 mark per objective (max 2).
Points might include:
• Survival
• Break-even
• Make a profit
• Become known in the market/create good reputation
• Generate sales/gain customers
• Encourage customer loyalty
• Offer good customer service
• Create added value
• Social responsibility/ethical
• Growth/expansion/increase market share
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(c) Identify four characteristics of a successful entrepreneur. 4 Only award the first four responses given.
Award 1 mark for each relevant characteristic (max 4).
Points might include:
• Risk-taker
• Problem solver
• Decisive
• Creative
• Innovative
• Hard-working
• Perseverance/determined/focused/(self-)motivated
• Resourceful/adaptable
• Optimistic
• Self-confident/esteem
• Independent
• Effective communicator
• Organised
• Multi-skilled
• Results driven/ambitious
• Leadership
• Team player
• Good at networking/prepared to learn from others
Other appropriate examples should be credited.
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Question Answer Marks Notes
1(d) Explain two reasons (other than lack of finance) why Desmond’s 6 To use words from the stem as application, the
new business might be at greater risk of failure than an established reference must be appropriate (i.e. make sense)
business. in relation to the point being made.
Award 1 mark for identification of each relevant reason (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant reference to this business (max 2). • Gardening or examples such as cutting
grass/planting flowers
Award 1 mark for each relevant explanation (max 2). • Service
• Entrepreneur
Points might include: • $750
• Inadequate/no market research [k] about gardening [app] so may not • Office job
offer what customers want [an] • Unincorporated business
• Providing wrong/poor quality [k] service [app] • Business objectives
• Lack of experience/poor decision-making/skills [k] as only worked in
an office [app] so more likely to make mistakes [an] Other appropriate examples can be credited.
• Difficult to compete with competitors/lack of customers/insufficient
sales [k] for this unincorporated business [app] leading to less revenue Some answers could be awarded as either [k] or
[an] [an] but do not award the same point twice.
• Poor planning/no business plan [k] despite setting objectives [app]
so does not have time/opportunity to resolve problems [an]
• No reputation/brand image/poor marketing [k] therefore potential
customers do not trust him [an].
Other appropriate responses should also be credited.
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Question Answer Marks Notes
1(e) Do you think owner’s savings are the most suitable source of 6 This is a general question so there are no marks
finance for a start-up business? Justify your answer. for application.
Award up to 2 marks for identification of relevant points. For evaluation to be awarded justification will
usually follow on from relevant analysis of
Award up to 2 marks for relevant development of points. points.
Award up to 2 marks for a justified decision as to whether owner's Advantages of one source can be presented as
savings are the most suitable source of finance for a start-up business to disadvantages of another but do not award the
use. same point twice as mirror answers are not
accepted.
Points might include:
Do not award 'issue shares' or 'profit' as these are
Owner's savings: not appropriate for a start-up business.
• No need to repay/no debt [k] helping to reduce/keep cash outflows
low/less risk [an]
• No interest payable [k] therefore not increasing cost [an]
• May not have enough/any savings [k] delaying/stop their plans [an]
• Immediately available [k]
Crowdfunding [k]
• No initial fees payable (to the crowdfunding platform) [an]
• Allows public‘s reaction to the new business venture to be tested [an]
• Crowdfunding platform might reject the entrepreneur’s proposal [an]
• Publicising could allow competitors to copy the idea [an] leading to
fewer sales [an]
Bank loan [k]
• Could provide all the finance (at once) [an] but must be repaid [an]
• Interest payable [an] increases expenses [an]
• Quick to arrange [an]
Borrow from friends and family [k]
• May give longer time/better terms to repay [an]
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Question Answer Marks Notes
1(e) Government grant [k]
• No need to repay/no interest [an]
• May be conditions attached [an]
Microfinance [k]
Overdraft [k]
Other appropriate responses should also be credited.
Justification might include:
Owner’s savings may not provide enough funds [k]. Another option is a
bank loan [k] although interest must be paid [an] increasing expenses.
[an]. The best option is a bank loan because plans are not delayed
through lack of finance [eval]. By the time the owner has saved enough,
they might have missed out on the business opportunity [eval].
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Question Answer Marks Notes
2(a) Identify two limitations of break-even analysis. 2 Only award the first two responses given.
Award 1 mark per limitation (max 2).
Points might include:
• Assumes that all costs can be represented by straight lines
• It is not easy to separate costs into fixed and variable
• Assumes that all output is sold/does not allow for inventory (stock)
holding costs
• Assumes only one type of product sold
• Assumes selling price remains unchanged for all products sold
• Concentrates on break-even point/ignores other aspects of
operations such as how to reduce wastage/increase sales
• It is a prediction/forecast/does not include unexpected costs.
Other appropriate responses should also be credited.
2(b) Calculate LCT’s profit if it sells 800 units. Show your working. 2 $ sign is not required.
Award 2 marks for a correct answer.
Award 1 mark for a correct method but incorrect answer.
Correct answer e.g. $2000 [2]
Correct method but incorrect answer e.g. Profit = total revenue – total cost
[1]
OR
8000 – 6000 [1]
Award only 1 mark if 2000 is written as part of the answer but is not given
as the final answer.
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Question Answer Marks Notes
2(c) Outline two possible benefits to LCT of having a good brand image. 4 To use words from the stem as application, the
reference must be appropriate (i.e. make sense)
Award 1 mark for each relevant benefit (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Points might include: • (Cooking) pots
• Encourage/maintain (customer) loyalty [k] for this small business • Manufactures/production
[app] • 16 (employees)
• Can help increase sales/customers/market share [k] of cooking pots • Small business
[app] • Social media (for advertising)
• Aids recognition/awareness/advertising [k] on social media [app] • (Lower) break-even output
• May be able to charge high price (than for unbranded products) [k] • 400 units (break-even output)
which can help lower its break-even output [app] • $10 (price per unit)
• Helps differentiate product from competitors [k] so may be able to sell • 800 units
more than 800 units [app] • Total revenue $10 000
• Helps launch new products in the market (as customers already know • Total costs $7000
and trust the brand) [k]
• May attract investors [k] Other appropriate examples can be credited.
• Helps with employee recruitment [k]
Other appropriate responses should also be credited.
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PUBLISHED
Question Answer Marks Notes
2(d) Explain two ways LCT might lower its break-even level of output. 6 To use words from the stem as application, the
reference must be appropriate (i.e. make sense)
Award 1 mark for identification of each relevant way (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant explanation (max 2). • (Cooking) pots
• Manufactures/production
Points might include: • 16 (employees)
• Increase price [k] higher than $10 [app] which would increase • Small business
revenue [an] • Good brand image
• Lower rent or other example [k] below $2000 [app] so lowering fixed • $2000 (fixed costs)
costs/expenses [an] OR lower fixed costs [k] lead to lower total costs • $10 (price)
(TC) [an] • $5 (variable costs per pot)
• Buy cheaper raw materials or other example [k] for its cooking pots • 400 (break-even output)
[app] reducing variable cost [an] OR lower variable costs [k] lead to • Social media
lower total costs (TC) [an] • $10 000
• $7000
Other appropriate responses should also be credited.
Other appropriate examples can be credited.
Some points can be awarded as [k] or [an] but do
not award the same point twice e.g. lower rent [k]
so lower costs [an]
Only allow one example of fixed costs and one
example of variable costs.
For this question, candidates can use the same
point of analysis e.g. increase contribution per
unit.
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Question Answer Marks Notes
2(e) Do you think social media is the best method of advertising for a 6 This is a general question so there are no marks
small business to use? Justify your answer. for application.
Award up to 2 marks for identification of relevant points. For evaluation to be awarded justification will
usually follow on from relevant analysis of points.
Award up to 2 marks for relevant development of points.
Candidates do not need to discuss other methods
Award up to 2 marks for a justified decision as to whether social media is to gain full marks.
the best method of advertising for a small business to use.
Do not award examples of sales promotion as
Points might include: these are excluded by the question.
Social media: Advantages of one method can be presented as
• Cover wide area/seen by many people [k] leading to an increase in disadvantages of the other method but do not
sales[an] more revenue [an] award the same point twice as mirror answers are
• Low-cost method of advertising [k] so fewer cash outflows [an] not accepted.
• Easy/quick to update [k] so can spend time on other tasks [an]
• Can target specific groups [k] could encourage brand loyalty [an] Allow only one reference to costs e.g. this
• Way to build relationship/communicate with customers/gain direct method is cheap and this one is expensive.
customer feedback [k]
• Risk of hacking/fraud/virus [k]
• Bad reviews can be seen by everyone [k] could lead to a bad
reputation [an]
• No internet access/not everyone uses social media/easy to lose
message among many messages on social media [k]
• Takes time to continually post/monitor messages [k]
Other methods might include:
• Newspapers [k] can contain lot of information [an] but fewer people
read newspapers these days [an]
• Leaflets [k] can be kept for future reference [an] but may not be
read/thrown away (as seen as junk) [an]
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Question Answer Marks Notes
2(e) • Posters/billboards [k] can be seen by anyone when passing [an] but
cannot include detailed information [an]
• Website [k] more information can be added [an]
• Pop-up adverts [k] can be expensive [an]
• Television [k] can be high cost [an]
• Radio [k]
Other appropriate responses should also be credited.
Justification might include:
Social media is low-cost [k] reducing cash outflow [an]. Another method
is leaflets [k] which may only reach a limited number of people [an].
Social media is the best way, for a small business, because it is unlikely
to have a large marketing budget [eval]. Therefore the cost is likely to be
important as it allows the business to have funds available for other
purposes [eval].
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Question Answer Marks Notes
3(a) Identify two external users of accounts. 2 Only award the first two responses given.
Award 1 mark per external user of accounts identified (max 2). Do not award examples of internal users of
accounts e.g. employees.
Points might include:
• Banks/lenders Do not award 'stakeholder' as this does not
• Suppliers answer the question.
• Government
• Competitors Accept creditors alone as an alternative to
• Other businesses e.g. insurance companies lenders/bank/suppliers if no specific example is
• Pressure groups given of a creditor.
• Investors/shareholders
• Customers
Other appropriate responses should also be credited.
3(b) Identify two profitability ratios. 2 Only award the first two responses given.
Award 1 mark per profitability ratio (max 2). Allow correct formula e.g. Gross profit:sales
revenue
Two from:
• Gross profit margin/ratio/percentage
• Profit margin/ratio/percentage
• Return on capital employed/ROCE
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(c) Outline two possible reasons why ACP imports its raw materials. 4 To use words from the stem as application, the
reference must be appropriate (i.e. make sense)
Award 1 mark for each relevant reason (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Points might include: • 65%
• Lower prices/cost of materials [k] which could help the business • Cash flow
manage its cash flow [app] • Production/manufacture
• Access to a wider range of materials [k] to make its computers [app] • (Manufacture) computers
• Limited resources available from own country [k] especially as trying • (Act in an) ethical way
to act in an ethical way [app] • 3000 (workers)
• Better quality (than available in own country) [k] which may be why • Factory
the business already import 65% [app] • Profit is important
• Purchasing from ethical supplier [k][app]
Other appropriate examples can be credited.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(d) Explain one benefit and one limitation to ACP of being ethical. 6 To use words from the stem as application, the
reference must be appropriate (i.e. make sense)
Award 1 mark for identification of each relevant benefit/limitation (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant explanation (max 2). • 65%/import
• Cash flow
Points might include: • Raw materials
• Computers
Benefits: • 3000 employees
• Good image/good reputation/customer loyalty [k] so customers more • Factory
willing to pay high prices [an] for its computers [app] • Production/manufacture
• High/higher demand/sales [k] which can help increase revenue [an] • Profit is important/profitability ratios
• Can help recruit/motivate/retain workers [k] reducing recruitment costs
[an] as the business has 3000 employees [app] Other appropriate examples can be credited.
• Better supplier relations (as pay a fair price) [k] which can help ensure
the necessary supply to maintain production [an] Some points can be awarded as [k] or [an] but do
• Investors more likely to invest [k] not award the same point twice.
• Less opposition from pressure groups [k]
Limitations:
• Limited/fewer sources of materials [k] which may lead to less output
[an] as already imports 65% of its raw materials [app]
• May have to pay more to suppliers [k] leading to higher variable
costs/cost of goods sold [an]
• Workers may have to be paid more [k] at the factory [app] increasing
labour costs [an]
• Higher costs [k] could lead to higher prices [an]
Other appropriate responses should also be credited.
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Question Answer Marks Notes
3(e) Do you think making a profit is more important for a business than 6 This is a general question so there are no marks
managing its cash flow? Justify your answer. for application.
Award up to 2 marks for identification of relevant points. Allow attracts investors/investment as a [k] or
[an] once
Award up to 2 marks for relevant development of points.
Do not allow ‘important for growth’ without the
Award up to 2 marks for a justified decision as to whether making a profit idea that it is a source of finance/or for
is more important for a business than managing its cash flow. reinvestment.
Points might include:
Profit:
• It is a source of finance [k] may increase opportunity for growth [an]
• Reward for risk-taking/allows dividend for owners [k] without it,
owners will have less incentive to invest [an]
• Reward for enterprise [k]
• Indicator/measure of success [k]
• Important for long-term survival [k]
Cash flow:
• Need cash to pay day-to-day costs/ensures liquidity/help avoid cash
flow problems/pay debt [k] otherwise might have insufficient
funds/working capital to continue production [an]
• Sales may be on credit [k] therefore money received later [an]
• Reduced need for overdraft [k] which would add to interest costs [an]
Other appropriate responses should also be credited.
Justification might include:
Profit is a reward for risk-taking [k], without it owners will have less incentive
to invest [an]. Cash flow is needed to pay day-to-day costs [k] to ensure
sufficient inventory to continue production. [an] Managing cash flow is
likely to be more important because a business can continue in the short
term without making a profit, [eval] but without sufficient cash flow a
business may be unable to operate and earn revenue [eval].
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Question Answer Marks Notes
4(a) Define ‘delegation’. 2 For two marks needs the idea of who is
giving/receiving authority/responsibility and for
Award 2 marks for a full definition. Award 1 mark for a partial definition. what.
Giving a subordinate the authority to perform particular tasks [2] Do not award answers which identify reasons for
OR using delegation e.g. motivates, create time for
When a manager gives authority to another employee to complete a managers to do other jobs [0].
task, although the manager retains the ultimate responsibility for the
completion of the task [2]
OR
Passing responsibility to perform tasks to employees (lower down the
organisation) [2]
Partial definition e.g. manager gives task to employee [1]
OR subordinate given task to do [1]
OR giving authority to a subordinate/employee [1]
4(b) Identify two legal controls over employment. 2 Only award the first two responses given.
Award 1 mark per legal control (max 2).
Points might include:
• (Unfair) dismissal
• Discrimination/equal opportunities
• Health and safety
• Legal minimum wage
• Legal minimum age/child labour
• Contract of employment/conditions of employment
• Redundancy
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(c) Outline two functions of MRN’s shop managers. 4 To use words from the stem as application, the
reference must be appropriate (i.e. make sense)
Award 1 mark for identification of each relevant function (max 2). in relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Two from: • Food
• Planning [k] so have the necessary resources for this food retailer • 490/410 shops
[app] • 80
• Organising [k] to ensure everyone is working effectively in each of • 70 000 employees
the 490 stores [app] • (Increased) competition
• Commanding [k] to help guide the 70 000 employees [app] • 20% (management) jobs
• Co-ordinating [k] so better placed to respond to increased competition • Delegation
[app] • Legal controls over employment
• Controlling [k]
Other appropriate examples can be credited.
Do not award answers such as
motivate/communicate as knowledge.
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Question Answer Marks Notes
4(d) Explain two factors MRN should consider when deciding which 6 To use words from the stem as application, the
shops to close. reference must be appropriate (i.e. make sense)
in relation to the point being made.
Award 1 mark for identification of each relevant factor (max 2).
The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
• Food
Award 1 mark for each relevant explanation (max 2). • 490/410 shops
• 70 000 employees
Points might include: • 80
• Level of demand/where its customers are/number of sales [k] of food • Increased competition
[app] as some might have lower revenue [an] • 20% management jobs
• Level of competition/number/type of shops in area [k] which could • Delegation
reduce sales/demand [an] • Legal controls over employment
• Rent/rates [k] for each of the 80 locations [app] as this could make
some sites too expensive to run [an] Other appropriate examples can be credited.
• Distance from suppliers [k] increased transport costs [an]
• Space [k] as in some locations there may not be (enough) room to Some points can be awarded as [k] or [an] but
display everything [an] do not award the same point twice.
• Shops which are too close together [k]
• Economic state of area/area in decline [k] Award the word costs [k] only once if no specific
• Local wage rates/labour availability [k] leading to higher costs [an] costs identified.
• Number of workers employed [k] to reduce redundancy payments [an]
• Profitability of each shop [k] Increased competition can be [k] or [an] but only
award once.
Other appropriate responses should also be credited.
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Question Answer Marks Notes
4(e) Explain two ways a retail business could respond to increased 6 This is a general question so there are no marks
competition. Which would be the best way to use? Justify your for application.
answer.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. usually follow on from relevant analysis of points.
Award up to 2 marks for relevant development of points. Some points could apply to more than one way
but do not award the same point twice as mirror
Award up to 2 marks for a justified decision as to which is the best way a answers are not accepted.
retail business could respond to increased competition.
Points might include:
• Introduce new products [k] therefore gaining a unique selling point
[an] but may have limited shelf space [an]
• Lower prices/change pricing method [k] can sell more
products/increased market share [an] increasing revenue [an]
• Improve quality of service/products [k] but this might increase
(training) costs [an] but this may lower its profit margin [an]
• Maintain/build good customer relationships [k] which could
encourage customer loyalty [an]
• Increase promotion/advertising (only award once) [k]
• Renovating shop [k]
• Relocate [k]
• Merger/takeover [k]
Other appropriate responses should also be credited.
Justification might include:
The business could lower its prices [k] therefore sell more products [an].
Introducing new products [k] may appeal to a wider range of customers
[an]. Introducing new products is a better way because price might not
be important to the customer [eval] therefore lowering the price will
simply reduce profit margin [eval].
© UCLES 2023 Page 24 of 24
Cambridge IGCSE™ (9–1)
BUSINESS STUDIES 0986/21
Paper 2 Case Study October/November 2023
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 October/November 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level components, and some Cambridge O Level
components.
This document consists of 25 printed pages.
© UCLES 2023 [Turn over
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2023
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 descriptors
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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PUBLISHED 2023
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.
© UCLES 2023 Page 5 of 25
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PUBLISHED 2023
Question Answer Marks
1(a) Explain two advantages and two disadvantages of PH being a public 8
limited company.
One mark for each advantage/disadvantage (max of 4).
Award a maximum of 1 additional mark for each explanation of the
advantage/disadvantage of being a public limited company in the context of
PH.
Relevant answers might include:
Advantages:
• Can sell shares to the public – which may be attractive to prospective
shareholders as this business has a long history of producing high quality
products
• Limited liability – giving protection to the assets of shareholders when the
business is expanding in other countries
• Continuity – if shareholders die their shares will be passed on to others
which has allowed the company to exist for over 50 years
• As it has a higher status it may find it easier to borrow from banks
• Rapid expansion may be possible/can raise large amounts of capital
• Incorporated identity/separate legal identity
Disadvantages:
• Legal formalities – for this business that manufactures protective hats
• Accounts have to be published – which may be viewed by competitors that
want to become the market leader instead of PH
• Divorce between ownership and control/potential conflict between
managers and shareholders
• The company may be at risk of a takeover/no control over who buys shares
• Directors' decision making may be influenced by major investors when
seeking to satisfy their own objectives
For example: A public limited company can sell shares to the public (1), and
this makes it easier to raise capital for investment in new factories to produce
its protective hats (app).
Application could include: protective hats; construction sites; construction
workers on building sites; mining workers; plan to expand by opening factories
in other countries; remain the market leader; has a long history of producing
high quality products; been in business for 50 years; becoming a multinational
company.
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Question Answer Marks
1(b) Consider the following two ways PH could ensure quality production. 12
Which way should PH choose? Justify your answer.
• Quality control
• Quality assurance
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate terminology.
Detailed discussion of both ways.
Well-justified recommendation.
Candidates discussing both ways in detail, in context and
with a well-justified recommendation, including why
the alternative way 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 way.
Judgement with some justification / some evaluation of
choice made.
Candidates discussing at least one way 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 ways with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining both 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
1(b) Relevant points might include:
Quality Method Advantages Disadvantages
• Products checked • It raises costs as
at the end of the inspectors need to
production line tries be employed
to eliminate faults • Identifies faulty hats
and errors before at the end of the
the customer process but does
receives the not identify where
protective hats the fault has
• Less training is occurred
required for the 100 • If PH does not
workers as identify the fault,
inspectors check the then it does not
quality of the hats eliminate the faulty
Quality control before they leave process – higher
the factory costs if protective
hats need to be
scrapped/reworked
• Employees may be
demotivated as
quality checks are
not their
responsibility and so
do not feel trusted –
possibly making
more careless
errors when carrying
out their tasks
© UCLES 2023 Page 8 of 25
0986/21 Cambridge IGCSE (9–1) – Mark Scheme October/November
PUBLISHED 2023
Question Answer Marks
1(b)
Quality Method Advantages Disadvantages
• Products checked • Can be expensive to
at every stage of train employees to
the production check the quality of
process to try to their own work
eliminate faults or • The reliability of
errors at each stage employees is
of production before important, and they
passing to the next need to be
stage - reducing committed or quality
faults at the end assurance will not
• There are fewer be effective
customer • Takes longer to
complaints of faulty produce protective
protective hats hats as each worker
• Reduced costs of needs to do their
Quality wastage as fewer own check for faults
assurance
hats are scrapped • Components and
due to being faulty raw materials need
• Can make workers to be of an
feel trusted and approved standard
may improve to comply with
motivation quality assurance -
may restrict the
suppliers that can
be used - possibly
increasing costs
• Employees may
expect to be paid
more to carry out
the quality checks
as they are currently
only on the
minimum wage
© UCLES 2023 Page 9 of 25
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PUBLISHED 2023
Question Answer Marks
1(b)
Quality Method Advantages Disadvantages
Justification may include:
• If the process to produce protective hats is
simple, then quality control may be most
suitable as inspectors may just carry out a
simple check at the end of the production line.
The 100 production workers do not need to
be trained to check their own work, reducing
training costs, which they would have to do if
quality assurance was used. This makes the
production process faster than if quality
assurance is used as production workers
Recommendation
would need to keep checking the hats at each
stage of the production process.
• Quality assurance is best because each stage
of production can be checked so it is less likely
for a faulty product to go to customers than if
quality control is used. It keeps a good brand
image and reputation for PH products which
is very important for protective hats. It will
ensure faults do not need to be repaired,
reducing cost of faulty products being
scrapped.
© UCLES 2023 Page 10 of 25
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PUBLISHED 2023
Question Answer Marks
2(a) Explain two limitations and two benefits to a business of developing new 8
products.
1 mark for each limitation/benefit (max of two limitations/benefits).
Award a maximum of one additional mark for each explanation of the
limitation/benefit of developing new products.
There are no application marks available for this question.
Relevant answers might include:
Limitations:
• Would need to carry out market research to see if there is a market for the
new product – which is expensive/may not be accurate
• Analysing the results to develop a new product that meets customer
needs takes time – could have been used for alternative tasks
• Trailing new products is expensive – as a free sample of the new product
to try out still costs the business to produce
• Demand may be so low that revenue does not cover costs/may not be a
market for the new product – the new product may have to be withdrawn
• Image of the business could be damaged – if the new product does not
meet customer needs
Benefits:
• It could have a USP – which could make the products more popular with
consumers than those of other businesses/business remains competitive
• It could attract a different market segment/new customers/expand into a
new market – leading to higher sales and revenue
• It could encourage existing customers to buy the new product/return more
often – increasing market share
• It spreads risk/diversifies as the choices for customers may now be wider
– reducing the likelihood of revenue falling if one product does not sell
• Developing new products first before competitors – may be able to charge
a higher price and achieve higher sales/revenue
For example: Trialling new products is expensive (1) as a free sample of the
new product to try out still costs the business to produce (1).
© UCLES 2023 Page 11 of 25
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PUBLISHED 2023
Question Answer Marks
2(b) Consider the advantages and disadvantages of the following three 12
methods PH uses to collect market research data. Which method is most
likely to ensure that accurate data is collected? Justify your answer.
• A focus group made up of existing customers
• An online survey with only 5 questions
• Secondary research including government sources
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of two or more methods.
Well-justified conclusion.
Candidates discussing all three methods in detail, in
context and with a well-justified conclusion including
why the alternative methods 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 method.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing two or more methods 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 1–4
of relevant business concepts.
Limited ability to discuss the methods with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining three methods 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:
Market Advantages Disadvantages
research
method
• Asking questions of • Discussion is likely to be
people that work in biased – as the sample
the construction and in the focus group is
mining industries restricted to existing
who are already customers – may not
familiar with the gain information about
products – more existing competitors/the
likely to gain requirements for a new
detailed/honest mining hat – may lose
information about sales if new product
A focus existing products - doesn’t meet customer
group made good and bad points needs
up of to help develop a • Limited number of
existing new protective hat people asked as focus
customers • Interaction between groups are small – may
members of the focus not gather the opinions
group can help the of a large enough
researchers sample to gain accurate
understand the research data
reasons for existing • Can be time-consuming
customer opinions and expensive to
conduct – especially if
carried out for PH by a
specialist market
research agency
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PUBLISHED 2023
Question Answer Marks
2(b)
Market Advantages Disadvantages
research
method
• Results can be • Only including 5
automatically questions may restrict
analysed and the answers – less likely
presented using IT – to be accurate due to
quicker and cheaper other options not being
to collate the results available to answer
than alternative forms • Absence of interviewer
of survey or person to explain the
• Fast and with quicker question – may be
response times than misinterpreted so
postal survey – can results less accurate
be emailed out to • May be completed
An online
existing customers of quickly and therefore
survey with
the hats to complete may not be taken as
only 5
the survey – already seriously as an
questions
have their email interview when being
addresses so quick asked questions – again
to send out links to results may not be
the survey accurate
• Cheaper to carry out • May not be completed
than interviews or by a wide range of
postal questionnaires potential customers
– no personnel or from the construction
postage to pay industry – as don’t
• Larger sample from have access to their
different parts of the contact details/they
world don’t have the internet
• Reliable as collected • May be out of date –
by the government – therefore may not reflect
more likely to be current trends
accurate as less • Restricted to single
likely to be secondary source –
Secondary biased/carried out by may have been
research experts collected for a purpose
including • May be free to that does not inform PH
government access information about their market – e.g.
sources about the general information
construction about mining
companies in the industries
country – reducing • Available to competitors
market research – so may not help
costs competitiveness
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PUBLISHED 2023
Question Answer Marks
2(b)
Market Advantages Disadvantages
research
method
Justification may include:
• A focus group is likely to be the most accurate as it
uses existing customers who are already familiar
with the hats. It will allow detailed information to be
gathered on the opinions of existing customers.
Online surveys may not sample a wide enough
group of people and the answers will be restricted by
only 5 questions being asked so the answers to other
questions will not be gathered. Government statistics
may be out of date and therefore not reflect current
trends in industries such as mining.
Conclusion
• An online survey is likely to be most accurate as it can
ask for responses about hats for construction sites
and mining from a much larger sample than the
focus group. This is more likely to provide opinions
from a wider group of people than just existing
customers as well.
• Secondary research is likely to be the most accurate
as government data on construction and mining
industries will have been gathered by experts and
hence is unlikely to contain inaccuracies or be
biased.
© UCLES 2023 Page 15 of 25
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Question Answer Marks
3(a) Explain two reasons why training is important to PH. 8
1 mark for each reason (max 2).
Award a maximum of 3 additional marks for each explanation of the reason why
training is important to PH – one of which must be applied to this context.
Relevant answers might include:
• To introduce a new process or equipment – so that employees know how
to use the new equipment without damaging it/operate it safely – or not
being sure how to operate it and become less productive
• To improve the efficiency/productivity of employees – as they will be
skilled in operating equipment – and output will increase
• To train unskilled workers to perform a wider range of tasks – so they may
be moved to other areas of the factory – which makes production more
flexible when increased output of a particular product is required
• To decrease the chances of faulty products being produced/fewer mistakes
– to ensure high quality products are manufactured – so the reputation of
PH does not fall
• To decrease the chance of accidents
• To provide opportunities to internally recruit
• To improve the motivation of employees
• To provide induction training to introduce new employees to the business
• Less supervision of workers may be required
For example: To decrease the chances of faulty products being produced (1)
because PH has a reputation for producing high quality products (app) and PH
does not want to get a bad reputation (1) as sales would decrease (1).
Application could include: protective hats; construction sites; construction
workers on building sites; mining workers; plan to expand by opening factories in
other countries; remain the market leader; has a long history of producing high
quality products; 100 production employees; been in business for 50 years;
becoming a multinational company; workers are currently demotivated; flow
production line.
© UCLES 2023 Page 16 of 25
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Question Answer Marks
3(b) Consider how the following three groups might use the financial data 12
shown in Appendix 3. Which group will find this data most useful? Justify
your answer.
• PH’s employees
• PH’s shareholders
• Competitor considering taking over PH
Level Description Marks
3 Sound application of knowledge and understanding of 9–12
relevant business concepts using appropriate
terminology.
Detailed discussion of how two or more stakeholder
groups might use the financial information in
Appendix 3.
Well-justified conclusion.
Candidates discussing in detail how all three
stakeholder groups might use the financial
information in Appendix 3, in context and with a well-
justified conclusion including why the other
stakeholder groups may find the financial information
less useful 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 how at least one stakeholder
group might use the financial information in Appendix
3.
Judgement with some justification / some evaluation
of choice made.
Candidates discussing in detail of how two or more
stakeholder groups might use the financial
information in Appendix 3 and applying them to the
case should be rewarded with the top marks in the
band.
© UCLES 2023 Page 17 of 25
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PUBLISHED 2023
Question Answer Marks
3(b)
Level Description Marks
1 Limited application of knowledge and understanding 1–4
of relevant business concepts.
Limited ability to discuss how the stakeholder groups
might use the financial information in Appendix 3 with
little/no explanation.
Simple judgement with limited justification/limited
evaluation of choice made.
Candidates outlining how the three stakeholder
groups might use the financial information in
Appendix 3 and in context should be rewarded with the
top marks in the band.
0 No creditable response. 0
© UCLES 2023 Page 18 of 25
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Question Answer Marks
3(b) Relevant points might include:
• Whether to ask for a pay rise - may use the profit to
indicate if PH can afford to increase its wages from
just paying the minimum wage - $20m profit in
2022indicates that PH may have sufficient profit to
increase wages the following year
PH’s
• Whether to look for another job - revenue has
employees
increased 25% from $100m to $125m - may
indicate that their jobs are secure as the business
is doing well
• Whether there is sufficient revenue to improve
working conditions
• Whether to sell shares - profit margin has fallen from
20% to 16% which is a fall of 4%. May indicate losing
control of expenses or costs are rising
• The level of profit has remained the same at $20m so
PH's
dividend payments may remain the same
shareholders
• Whether to buy more shares - business has made
more revenue as it has increased by $25m which
may indicate the business is successful and growing
– buy more shares or keep existing shares
• Whether to take over PH as revenue has increased
by $25m from $100m so may be taking market
share away from the competitor – may indicate the
competitor should take over PH – although profit
margin is falling and needs to have greater control
Competitor of expenses – may indicate higher profit and profit
considering margin possible if better managed
taking over • Comparison with own revenue and profit to see if
PH PH is doing better than competitor – may learn how
to improve its own competitiveness - gross profit
margin has increased indicating that the cost of
sales is lower - may be due to cheaper materials
being purchased - may lead to lower quality products
and may not want to take over the business
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Question Answer Marks
3(b)
Justification might include:
• PH's employees will find the financial information in
Appendix 3 most useful as it will show if PH can
afford to increase the wages of the 100 production
employees higher than the minimum wage.
Profit has remained at $20m and so PH should be
able to afford higher wages. Without knowledge of the
revenue increasing and profit it would be harder for
employees to argue for an increase in their pay.
Shareholders may find this information less
important as they would want to know the dividends
that were going to be paid out of the profit rather
than just the profit figure. Competitors would also
want to see the share price if they were considering
taking over PH as well as the profit made so this
Conclusion information is less useful to them.
• PH's shareholders would find the financial
information most useful as they want to know if
profit has increased to indicate whether they are
likely to receive a dividend. The profit margin of
16% would indicate that PH is still relatively
successful, and their shares may remain at the
same value.
• PH's competitors would find the financial
information most useful as they want to know if PH is
worth taking over. If the profit margin has fallen to
16%, then there may be room to increase the profit
margin if the business is better managed after a
takeover. This would allow a comparison with their
own profit margin to see if it is higher than theirs and
hence worth taking over.
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Question Answer Marks
4(a) Explain two benefits of PH’s employees becoming members of a trade 8
union.
1 mark for each benefit (max of 2).
Award a maximum of 3 additional marks for each explanation of the benefits of
PH's employees becoming members of a trade union – one of which must
be applied to this context.
Relevant answers might include:
• More likely to be listened to as strength in numbers – employee’s views
are represented in grievances with managers – so more likely to get their
demands actioned
• Provides advice to members – such as if they feel they have been
dismissed unfairly/unfairly treated by the business – then employees will
know if they have a case against the business/whether to take action
• The communication between employers and employees is better – as
there is a channel through which points from employees can be raised – it
is more likely that problems are sorted without causing disputes between
employers and employees
• Possibly improved pay – as there is strength in numbers to make wage
demands for a pay rise more likely to be successful – employees more
satisfied with work/happier
• Improved working conditions – as trade union can put forward a case to
the employer if conditions are not good
• Provides services to members – reduced rates of insurance making it
more affordable
• Helps to protect legal rights of employees – may improve job security
For example: Provides advice to members (1) if they feel they have been
dismissed unfairly by the business (1) then the 100 employees (app) will know
if they have a case against the business to take action (1).
Application could include: protective hats; construction sites; construction
workers on building sites; mining workers; 100 employees; flow production; same
tasks every day; paid minimum wage; working conditions are bad.
© UCLES 2023 Page 21 of 25
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Question Answer Marks
4(b) Consider three possible benefits for PH of becoming a multinational 12
company. Which benefit is likely to be the most important? 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 two or more benefits of
becoming a multinational company.
Well-justified conclusion.
Candidates discussing in detail all three benefits of
becoming a multinational company, in context and with
a well-justified conclusion, including why the other
benefits of becoming a multinational company will be
less important to PH, 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 benefit of
becoming a multinational company.
Judgement with some justification / some evaluation
of choice made.
Candidates discussing in detail two or more benefits
of becoming a multinational company and applying
them to the case should be rewarded with the top
marks in the band.
1 Limited application of knowledge and understanding 1–4
of relevant business concepts.
Limited ability to discuss the benefits of becoming a
multinational company with little/no explanation.
Simple judgement with limited justification / limited
evaluation of choice made.
Candidates outlining three benefits of becoming a
multinational company 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 benefits might include:
• Low rents will reduce the total costs of producing
goods – may lead to lower prices – increases sales
as more competitive
• Low production costs may allow higher profit
Produce goods margins than 16% in 2022 if prices remain the
in countries same
with low costs • May produce protective hats in countries with
low labour costs – leading to lower unit costs –
may be able to reduce prices – become more
competitive in other markets/increases sales in
other markets
• Reduced transport costs in other countries –
lower total costs
Easier access • Quicker delivery of raw materials to produce
to raw material construction hats – reduces the time from
source development to the market
• Access to raw materials that stops/reduces
competitors access to these supplies
• Reduces transport costs and quicker delivery to
customer - improves customer satisfaction
• Nearer to the market for protective hats may be
more familiar with customer needs in that market
– therefore more likely to meet customer needs –
Produce nearer
increasing revenue
the market
• Markets may be quite spread out across the globe
as there may not be mines in all countries –
however, near to one market may not be near to
other markets – limiting the advantage from lower
transport cost
• Do not pay tariffs – reduces price of goods to
customers
Avoid trade
barriers • Do not have quotas – no restrictions on quantity
of goods supplied to the market – increases
sales
• Able to expand into more markets in the mining
and construction industries more easily in
other countries – increases revenue/encourages
Increase growth of the business
market share • Spreads risk of selling protective headwear – if
demand falling in one market can be
compensated for by increasing demand in other
countries
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Question Answer Marks
4(b)
• Reduces investment required to set up the
factory to produce protective hats – less
borrowing required – lower interest
payments/lower expenses
Receive
• The government may require the business to
government
undertake certain activities such as locating in
grants
an area of high unemployment – may not
always be the best location for the hat factory
as other areas may have more factors to attract
the business - may not lead to lower costs
• Competitors producing safety equipment are
Remain expanding into more markets abroad - may lead
competitive to falling sales of protective hats – needs to
compete in all markets to retain sales
• Selling protective hats on a larger scale may
Benefit from
allow for reduced average costs – for example
economies of
marketing economies when advertising globally
scale
and products ordered through its website
• A globally recognised brand may give a better
May be able to reputation to the already leading supplier of
raise prices protective products – leading to higher prices
being charged and increased revenue
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Question Answer Marks
4(b)
Justification might include:
• Reduced production costs are likely to be the
most important as unit costs can be reduced
which will make the hats cheaper to produce
and can be sold at a lower price. They will be
more competitive, and it will be easier to
increase sales in many countries. It may be that
competitors are also locating in low-cost
countries and so if PH doesn’t do this then it
may not be able to compete. As PH is a
multinational it will produce and sell in many
countries around the world and so locating near
to just one market will not have significant
savings in transport costs. Government grants
are a one-off payment when setting up in a
country and are not likely to have much impact
Conclusion on the business in future years.
• Producing protective hats nearer to the market
is likely to be most important as not only will
transport costs be reduced, helping to increase
profit, but improved knowledge of the market will
help to increase sales and hence revenue will
increase. Increased revenue and lower
transport costs together could lead to a higher
profit.
• Government grants could be substantial which
means a much smaller bank loan is required.
This will lower borrowing costs by reducing
interest payments and therefore costs may be
reduced significantly and profit from the
manufacture of hats to protect employees’
heads whilst working will increase for many
years whilst the smaller loan is being paid off.
© UCLES 2023 Page 25 of 25
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/11
*2618547992*
Paper 1 Short Answer and Data Response October/November 2023
1 hour 30 minutes
You must answer on the question paper.
No additional materials are needed.
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
This document has 12 pages. Any blank pages are indicated.
11_0986_11_2023_1.1
© UCLES 2023 [Turn over
2
1 Desmond wants to be a successful entrepreneur. He has decided to leave his office job to start up
a gardening business cutting grass and planting flowers. It will be an unincorporated business.
Desmond is aware that a new business is at greater risk of failure than an established business.
He has identified his business objectives for the first year. Desmond has calculated he will need
$750 for his start-up capital.
(a) Define ‘unincorporated business’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two objectives a new business might have.
Objective 1: .......................................................................................................................
...........................................................................................................................................
Objective 2: .......................................................................................................................
........................................................................................................................................... [2]
(c) Identify four characteristics of a successful entrepreneur.
Characteristic 1: ................................................................................................................
...........................................................................................................................................
Characteristic 2: ................................................................................................................
...........................................................................................................................................
Characteristic 3: ................................................................................................................
...........................................................................................................................................
Characteristic 4: ................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 11_0986_11_2023_1.1
3
(d) Explain two reasons (other than lack of finance) why Desmond’s new business might be at
greater risk of failure than an established business.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think owner’s savings are the most suitable source of finance for a start-up business?
Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2023 11_0986_11_2023_1.1 [Turn over
4
2 LCT manufactures cooking pots. It has 16 employees. As a small business LCT uses social media
as its method of advertising. The owner, Carole, knows having a good brand image is important.
She is analysing LCT’s break-even chart. This is shown in Fig. 2.1. Carole is considering possible
ways to lower LCT’s break-even level of output.
Break-even chart for LCT
12 000
10 000 total revenue
8000
costs / revenue total costs
6000
($)
4000
2000 fixed costs
0 100 200 300 400 500 600 700 800 900 1000
units
Fig. 2.1
(a) Identify two limitations of break-even analysis.
Limitation 1: ......................................................................................................................
...........................................................................................................................................
Limitation 2: ......................................................................................................................
........................................................................................................................................... [2]
(b) Calculate LCT’s profit if it sells 800 units. Show your working.
Working: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Final answer: .................................................................................................................... [2]
© UCLES 2023 11_0986_11_2023_1.1
5
(c) Outline two possible benefits to LCT of having a good brand image.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
(d) Explain two ways LCT might lower its break-even level of output.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 11_0986_11_2023_1.1 [Turn over
6
(e) Do you think social media is the best method of advertising for a small business to use? Justify
your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2023 11_0986_11_2023_1.1
7
3 ACP manufactures computers. Being ethical is important to ACP. The business employs 3000
workers in its factory. ACP imports 65% of its raw materials. As internal users of accounts, the
directors plan to analyse ACP’s financial performance using profitability ratios. The Finance Director
thinks making a profit is more important for a business than managing its cash flow.
(a) Identify two external users of accounts.
User 1: ..............................................................................................................................
...........................................................................................................................................
User 2: ..............................................................................................................................
........................................................................................................................................... [2]
(b) Identify two profitability ratios.
Ratio 1: .............................................................................................................................
...........................................................................................................................................
Ratio 2: .............................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible reasons why ACP imports its raw materials.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 11_0986_11_2023_1.1 [Turn over
8
(d) Explain one benefit and one limitation to ACP of being ethical.
Benefit: .............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Limitation: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think making a profit is more important for a business than managing its cash flow?
Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 11_0986_11_2023_1.1
9
4 MRN is a food retailer. It has 490 shops and 70 000 employees. MRN has announced plans to
close 80 of its shops. The Human Resources Director said: ‘20% of management jobs will be
removed. We want to encourage delegation. MRN will continue to follow legal controls over
employment.’ MRN’s directors know it is important that businesses respond to increased competition.
(a) Define ‘delegation’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two legal controls over employment.
Legal control 1: .................................................................................................................
...........................................................................................................................................
Legal control 2: .................................................................................................................
........................................................................................................................................... [2]
(c) Outline two functions of MRN’s shop managers.
Function 1: ........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Function 2: ........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2023 11_0986_11_2023_1.1 [Turn over
10
(d) Explain two factors MRN should consider when deciding which shops to close.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two ways a retail business could respond to increased competition. Which would be
the best way to use? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2023 11_0986_11_2023_1.1
11
BLANK PAGE
© UCLES 2023 11_0986_11_2023_1.1
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 11_0986_11_2023_1.1
™
Cambridge IGCSE (9-1)
BUSINESS STUDIES 0986/21
*5112696359*
Paper 2 Case Study October/November 2023
1 hour 30 minutes
You must answer on the question paper.
You will need: Insert (enclosed)
INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.
INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.
This document has 12 pages. Any blank pages are indicated.
11_0986_21_2023_1.2
© UCLES 2023 [Turn over
2
1 (a) Explain two advantages and two disadvantages of PH being a public limited company.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0986_21_2023_1.2
3
(b) Consider the following two ways PH could ensure quality production. Which way should PH
choose? Justify your answer.
• Quality control
• Quality assurance
Quality control: ..................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Quality assurance: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 11_0986_21_2023_1.2 [Turn over
4
2 (a) Explain two limitations and two benefits to a business of developing new products.
Limitation 1: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Limitation 2: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0986_21_2023_1.2
5
(b) Consider the advantages and disadvantages of the following three methods PH uses to collect
market research data. Which method is most likely to ensure that accurate data is collected?
Justify your answer.
• A focus group made up of existing customers
• An online survey with only 5 questions
• Secondary research including government sources
A focus group made up of existing customers: ................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
An online survey with only 5 questions: ...........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Secondary research including government sources: .......................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 11_0986_21_2023_1.2 [Turn over
6
3 (a) Explain two reasons why training is important to PH.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0986_21_2023_1.2
7
(b) Consider how the following three groups might use the financial data shown in Appendix 3.
Which group will find this data most useful? Justify your answer.
• PH’s employees
• PH’s shareholders
• Competitor considering taking over PH
PH’s employees: ...............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
PH’s shareholders: ...........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Competitor considering taking over PH: ...........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 11_0986_21_2023_1.2 [Turn over
8
4 (a) Explain two benefits of PH's employees becoming members of a trade union.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0986_21_2023_1.2
9
(b) Consider three possible benefits for PH of becoming a multinational company. Which benefit
is likely to be the most important? Justify your answer.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 3: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 11_0986_21_2023_1.2
10
BLANK PAGE
© UCLES 2023 11_0986_21_2023_1.2
11
BLANK PAGE
© UCLES 2023 11_0986_21_2023_1.2
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2023 11_0986_21_2023_1.2
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