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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 objectives/shareholders.
4. [2] Reasons why objectives might change e.g. survival to growth, profit making to social responsibility.
5. [2] Application of two relevant points to a business context.
6. [1] Application of one relevant point to a business context.
7. [2] Changed business objectives applied to shareholders - .
8. [4] Developed analysis that identifies connections between causes, impacts and/or consequences of two points.
9. [2] Developed analysis that identifies connections between causes, impacts and/or consequences of one point.
10. [2] Limited analysis that identifies connections between causes, impacts and/or consequences of two points.
11. [1] Limited analysis that identifies connections between causes, impacts and/or consequences of one point.
12. [1] Changes may be agreed by some shareholders but not supported by others – leading to conflict and division
13. [1] Different shareholders have their own personal interests – they will try to protect those interests
14. [1] Some shareholders may see CSR as detrimental to profit making – raise issue at AGM
15. [1] Shareholders may see a movement away from economic objectives towards social or human objectives as undermining the very purpose of the business – to make profit
16. [2] Developed knowledge of relevant key term(s) and/or factor(s) is used to answer the question.
17. [1] Limited knowledge of relevant key term(s) and/or factor(s) is used to answer the question.
18. [2] Knowledge of business failure/growth / niche/manufacturing businesses.
19. [2] Developed application of relevant point(s) to the business context.
20. [1] Limited application of relevant point(s) to the business context.
21. [2] Developed application of business failure/growth to a niche cake manufacturing business - .
22. [1] Limited application of business failure/growth to a niche cake manufacturing business - .
23. [2] Developed analysis that identifies connections between causes, impacts and/or consequences.
24. [1] Limited analysis that identifies connections between causes, impacts and/or consequences.
25. [1] Fast growth can mean a business loses focus on essential functions and take too many risks – e.g. product diversification
26. [1] Fast growth can lead to significantly increased demands on employees and especially managers- stress, fatigue, burn out
27. [1] Inferior service may result in lower levels of customer satisfaction as attempt is made to produce more
28. [1] Output demands may outpace capability
29. [1] A business might accept new clients without resources to meet the demand
30. [1] A business might launch a new product with inadequate research and development – not ready for market
31. [1] A business might expand into unfamiliar/ fragile markets and territories – suffer significant losses
32. [1] A business might fail to account for and control overhead costs – that increase disproportionately in relation to growth
33. [1] Too fast growth can result in cash shortages and/or long-term damage to the brand and customer relations of a business
34. [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.
35. [3-4] Developed evaluation. A developed judgement/conclusion is made. Developed evaluative comments which balance some key arguments.
36. [1-2] Limited evaluation. A judgement/conclusion is made with limited supporting comment/evidence. An attempt is made to balance the arguments.
37. [1] Growth that is too quick is likely to undermine the success of any business, particularly if the managers are not skilled enough to see that fast growth places enormous pressure on some aspects of the business, such as cash flow.
38. [1] Businesses that grow very quickly may assume that profit-making in the short term means success, but if the quality of the products deteriorates due to unskilled workers the long term viability of the business is not guaranteed and the business might fail as quickly as it grows.
39. [1] Without effective marketing and quality control and a recognition of the threat of competitive 'copy-cats' a business may be quickly undermined and fail.'
40. [1] Developed judgement: There are many other reasons why a business might fail (already discussed) but none of those are more important than the ability to manage the growth of the business. Many businesses lack the skills to meet the demands made as a business grows quickly, such as the control of cash flows and the hiring of an appropriate number of skilled employees. Fast growth may mean that a business is still making profits, but losing control of costs and employees, and/or managers that may not have the time or ability to recognise that lack of control, is the most important factor in the failure of a new business.
41. [1] Growth alone is not sufficient to sustain a business – stability and controlled growth are required
42. [1] Are there some recognisable risks associated with fast growth of a niche cake manufacturing business that can lead to business failure?
43. [1] Are there some specific characteristics of a niche cake manufacturing business that are likely to lead to failure?
44. [1] Does failure depend on whether the business is new or established?
45. [1] Niche cake manufacturing businesses are often single product businesses (e.g. cupcakes) – which are often fashionable/trendy but high risk – is this the reason for failure rather than fast growth?
46. [1] Are there other factors/risks (some closely associated with fast growth) such as poor management, level of competition, poor decision-making, poor marketing and cash control, lack of innovation/creativity that can explain business failure of a niche cake manufacturing business?
47. [2] Example of limited evaluation: Fast growth is the main reason why businesses fail. Without an understanding of the effect of fast growth on a business, many problems will not be anticipated, such as lack of skilled employees, and the business will fail.
48. [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.