Super Heroes (SH) SH is a leisure (theme) park aimed at 10–18 year olds. It is owned by two companies, X and Y, which started SH as a joint venture. Company X owns many leisure centres and swimming pools. Company Y owns many brands based on superheroes. SH employs 200 full-time workers and an extra 50 seasonal workers during the busiest times of the year. The park has 10 large rides which take up 2km² of land. There are also many smaller rides, restaurants, toilets and shops. The price of an entrance ticket is $11 per customer. Table 1.1 shows the costs for SH in 2019. Table 1.1: SH costs for 2019 Total fixed costs (per year) $12m Variable costs (per customer) $3 Total costs $42m One of the larger rides at SH is the Iron Blaster. The number of customers who use this ride has decreased each year for the last three years. This has led the management of SH to consider its options for internal growth. Option 1 – A new virtual reality (VR) ride This option would involve developing the Iron Blaster into a VR ride. Most of the structure of the Iron Blaster could be used but customers would be given a VR headset to wear during the ride. The cost of developing the VR ride would be $2m. The Iron Blaster ride would be closed for a three month period during the off-peak season for the development to be carried out. No employees would be made redundant or dismissed. Option 2 – A new hotel SH does not currently have a hotel. It could demolish the Iron Blaster to provide the space to build one. Many of the competitors of SH have a hotel near or within their leisure parks. Hotel customers would pay a high price for a room but have free access to the leisure park's facilities. Market research suggests that the average hotel customer would spend twice as long in the leisure park than a non-hotel customer. The cost of developing the hotel would be $15m and take a year to build. All of the employees currently working on the Iron Blaster ride would face redundancy or dismissal.

Mark scheme

Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.

1. [2] A correct definition
2. [1] A partial, vague or unfocused definition
3. [0] No creditable content
4. A business arrangement where two or more businesses (parties) agree to pool resources for a specific task.
5. A business entity created by two or more businesses with a common interest.
6. [3] Explanation of the difference between redundancy and dismissal
7. [1] An understanding of redundancy (may be implied)
8. [1] An understanding of dismissal (may be implied)
9. Redundancy is where an employee is made to leave an organisation because their job role is no longer required.
10. Dismissal is where an employer ends a worker's employment
11. The difference is that redundancy is about the job role not being required any more, whereas dismissal is when the employee is no longer required. (A mark, B and C implied)
12. Redundancy can only happen after two years' service, whereas dismissal can occur at any point in employment. (A mark, B and C implied)
13. [4] Correct answer with or without correct working or $
14. [3] Correct calculation of number of customers
15. [2] Correct calculation of TVC
16. [1] Formula
17. [0] No creditable content
18. Note: A correct answer must (in some way) be expressed in millions (e.g. m)
19. Answer = $110m
20. Quantity = (TC – FC) / VC (per unit)
21. $42m - $12m = $30m (TVC)
22. $30m / $3m = 10m customers
23. 10m x $11 = $110m revenue
24. [2] Explanation of a way to increase sales of entrance tickets in context
25. [1] Explanation of a way to increase sales/revenue
26. [0] No creditable content
27. Note: This question is specifically about 'entrance tickets'. Answers which focus on increasing revenue by other means (e.g. restaurants, fast-track etc.) are unlikely to be contextual. The hotel option gives customers FREE entrance tickets so is unlikely to be contextual.
28. Develop the rides e.g. the VR ride
29. Decrease the price – may be elastic because of competition
30. Selling through different distribution channels e.g. advance tickets, online tickets etc.
31. Promotion - any method in context
32. Access to employees – SH employs 200 f/t workers and 50 seasonal
33. Access to suppliers – restaurants, shops, builders etc.
34. Space - large rides (2 km² of land), car park etc.
35. Access to customers – 10m customers a year
36. Access to raw materials - water rides etc.
37. Infrastructure – ease of access for visitors
38. Option 1: A new Virtual Reality (VR) ride
39. May improve the popularity of the theme park
40. New modern technology (VR) is likely to appeal to the target market (10–18 year olds)
41. Significantly lower cost than hotel ($2m compared to $15m)
42. Less time closed (3 months compared to a year)
43. Can be completed in off-peak time
44. No redundancy payments or risk of unfair dismissal
45. Option 2: A hotel
46. Keep up with competitors
47. New revenue source – high price rooms
48. More opportunity to spend longer time in park – restaurants, shops etc.
49. May be an opportunity to get rid of poorly performing employees (are they the reason why customers have decreased on the Iron Blaster ride?)