Section B Answer one question only. EITHER

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2023). The mark or mark type is shown in brackets.

1. [2] Knowledge of two relevant points is used to answer the question.
2. [1] Knowledge of one relevant point is used to answer the question.
3. [2] Knowledge of accurate cost information / improved business performance OR knowledge of ways to improve business performance e.g. price setting, setting budgets, cost cutting strategies, construct CFF, record keeping/attracting investors in a business/cash flow
4. [2] Application of two relevant points to a business context.
5. [1] Application of one relevant point to a business context.
6. [2] Accurate cost information applied to a business context e.g. price setting / setting budgets / cost cutting strategies / construct CFF / record keeping / attracting investors in a business.
7. [4] Developed analysis that identifies connections between causes, impacts and/or consequences of two points.
8. [2] Developed analysis that identifies connections between causes, impacts and/or consequences of one point.
9. [2] Limited analysis that identifies connections between causes, impacts and/or consequences of two points.
10. [1] Limited analysis that identifies connections between causes, impacts and/or consequences of one point.
11. [1] Accurate information about business costs is vital for a number of key decisions – without it a business will likely fail.
12. [1] Cost information relating to pricing, budgets, objectives, profitability and competitors is essential for management monitoring and control
13. [1] Benchmark cost levels can be set – used to compare comparative performance internally and with competitors externally.
14. [1] Cost reduction strategies can be developed – requires accurate information to be effective.
15. [1] Cost information can be used to identify significant areas and factors for attention – allows focussed analysis on organisation sections.
16. [1] Assets on the balance sheet need to be accurately valued on the balance sheet – the cost basis of inventory might signal change required
17. [1] Business performance requires optimal choices – these alternatives depend heavily on cost factors
18. [1] Competitive edge requires regular monitoring of financial performance – accurate cost data is fundamental to many financial metrics that need tracking - e.g. profit margins
19. [1] Cost information is fundamental to business questions such as what are the most and least profitable areas of the business?
20. [1] Accurate cost information leads to effective cost controls – produces an ability to check if the business is functioning in compliance with the budget
21. [1] Accurate cost control information is the mechanism for effective monitoring of performance – and improvement of its operations
22. [2] Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question.
23. [1] Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question.
24. [2] Developed knowledge of CFF /new restaurant / success - .
25. [1] Limited knowledge of CFF / new restaurant / success - .
26. [2] Developed application of relevant point(s) to the business context.
27. [1] Limited application of relevant point(s) to the business context.
28. [2] Developed application of CFF to context of a restaurant business - .
29. [1] Limited application of CFF to context of a restaurant business - .
30. [2] Developed analysis that identifies connections between causes, impacts and/or consequences.
31. [1] Limited analysis that identifies connections between causes, impacts and/or consequences.
32. [1] A business may run out of cash – cannot pay suppliers or wages – it may face insolvency-cash flow forecast may be the vital missing measure of control/discipline
33. [1] CFF enables a business to track expected cash movements over a period of time in the future – and take appropriate action
34. [1] CFF provides an early warning system for future shortfalls in cash balances in the future – allows a business to take informed business decisions, e.g. overdraft provision or short-term loan
35. [1] CFF assists effective cash flow management – provides greater certainty for internal and external stakeholders
36. [1] CFF is a strategic tool – it informs business plans for survival and growth
37. [1] Cash is the lifeblood of new and small businesses, so it is essential that forecasts are made about future cash flows – to make sure a business has enough to survive
38. [1] External stakeholders, such as banks, may want to look at CFF at regular intervals – to make judgements about the viability of a business
39. [5-6] Developed evaluation in context. A developed judgement/conclusion is made in the business context. Developed evaluative comments which balance some key arguments in the business context.
40. [3-4] Developed evaluation. A developed judgement/conclusion is made. Developed evaluative comments which balance some key arguments.
41. [1-2] Limited evaluation. A judgement/conclusion is made with limited supporting comment/evidence. An attempt is made to balance the arguments.
42. [1] Without effective CFF, cash problems will not be identified. It is crucial that businesses have financial stability in the short and the long term.
43. [1] As well as CFF, promotion/marketing is also very important. Business success is unlikely to be achieved if the business is not made attractive to potential customers through effective operation of the 4P's e.g. competitive pricing.
44. [1] Without an effective recruitment and selection process that produces appropriately experienced and skilled employees, a business is unlikely to achieve lasting success. This HRM activity is crucial for business success.
45. [1] Developed judgement: CFF is very important, as analysed above, because a business is at risk without sufficient cash controls, however, CFF is not the most important activity. Cash control will not necessarily guarantee product quality, customer satisfaction and loyalty. CFF is an essential activity but others such as marketing and appropriately skilled employees are all essential in their own way and as important as CFF. Activities other than CFF are crucial to business success, but unless they are combined with CFF, success is unlikely to be achieved and the business might even fail.
46. [1] What does success mean for a new restaurant – survival in the short term / large profits in the long term
47. [1] Are there other activities as important, or more important, that might affect a restaurant's ability to succeed, such as – perception of the quality of the food/menu – location – reputation of chef – ambience created – strength/weakness of the economy - amount of discretionary/disposable income?
48. [1] How significant is cash control and CFF for a new business such as a new restaurant?
49. [2] Example of limited evaluation: CFF is more important than any other business activity to lead to success. It supports all other activities a business carries out such as marketing.
50. [1] Example of limited evaluation: The analysis above indicates that fast growth is an important reason why a business fails – but other reasons such as marketing and promotion are also important.