Zara operates a small bakery business. She is considering expanding her business.

Mark scheme

Marking points from the official mark scheme. The mark or mark type is shown in brackets.

1. **(a) Define the term 'sole trader'. (2 marks)**
2. Award 1 mark for a partial definition and 2 marks for a clear, accurate definition.
3. e.g. A business owned and controlled by one person (1) who takes all the risks and keeps all the profits (1).
4. Accept other valid definitions, such as unlimited liability, ease of set-up, or fewer legal formalities, if presented as part of the definition.
5. **(b)(i) Explain one advantage for Zara of operating as a sole trader. (3 marks)**
6. Award 1 mark for identifying a relevant advantage. Award a further 2 marks for developing the explanation in the context of Zara's business.
7. e.g. Zara has complete control over her business (1). This means she can make quick decisions about her bakery, like changing the menu or opening hours, without needing to consult partners (1), which can lead to faster responses to customer needs and preferences for her baked goods (1).
8. Accept any other valid advantage, e.g., retains all profits, simple to set up, flexible working hours. Application to Zara's bakery is crucial for full marks.
9. **(b)(ii) Discuss the potential benefits for Zara's business if she decided to expand by opening another branch. (6 marks)**
10. Award 1 mark for identifying a benefit, 2-3 marks for explaining benefits with some application, 4-5 marks for a developed discussion showing application, and 6 marks for a balanced discussion with clear application to Zara's business, showing insight into the implications of expansion.
11. Level 1 (1-2 marks): Identification of benefits, generic statements, limited or no application.
12. Level 2 (3-4 marks): Explanation of benefits, some application to Zara's business, but may lack depth in discussion.
13. Level 3 (5-6 marks): Developed discussion of benefits, clear and consistent application to Zara's business (e.g., her specific products or market), showing a good understanding of how expansion can lead to these benefits. May include some recognition of potential drawbacks or trade-offs (though not explicitly required for benefits-only discussion).
14. Indicative content:
15. - **Increased sales/revenue:** A new branch would attract new customers in a different location, leading to higher overall sales for Zara's bakery products.
16. - **Economies of scale:** She might be able to buy ingredients (e.g., flour, sugar, butter) in larger quantities for both branches, reducing the cost per unit and increasing profit margins.
17. - **Brand recognition:** Opening another branch can enhance Zara's brand visibility and reputation, making 'Zara's Bakery' more well-known across a wider area.
18. - **Market share:** Expanding could allow Zara to capture a larger share of the local bakery market, potentially outpacing competitors.
19. - **Spreading risk:** Diversifying into another location might reduce reliance on a single store's performance, making the business more resilient.
20. Application to Zara's bakery (e.g., more customers for her specific baked goods, bulk buying flour, wider recognition for 'Zara's Bakery' in new areas, employing more bakers) is essential for higher marks. A full response will explore at least two distinct benefits with good development and specific application to the context.