Car Wash (CW) CW is a national chain of car wash businesses. Each car wash is a franchise of CW and is owned and managed by an entrepreneur who is local to the area where the car wash is based. As well as washing cars, each CW franchise offers customers the opportunity to have the interiors of their cars cleaned for an additional payment. Every entrepreneur who wants to set up a CW franchise must present a plan to CW for the business, including market research information. An entrepreneur called Palesh has recently submitted a proposal for a new franchise in a town that does not currently have a CW car wash. Palesh selected a sample of people on the main street in the town to carry out his market research. He asked them about how often they would use the car wash service and how much they would be willing to pay. Based on his market research, Palesh has forecast the cash flow for the first two months of trading (see Table 1). Palesh will have an opening balance of 10000 at the start of Month 1. Table 1: Cash flow forecast | | Month 1 () | Month 2 ($) | |---|---|---| | Cash inflow | 20000 | 20000 | | Cash outflow | 25000 | 10000 | CW car washes are labour intensive businesses. Employees work outside and they often get very wet from the water used. Each car is washed by two employees, one for the wheels and one for the rest of the car. A third employee is responsible for cleaning the interior of the car if this is required by the customer. Palesh plans to employ 12 employees to work in shifts at the car wash. The opening hours will be 06:00 until 22:00, seven days a week. Palesh is aware that he will need to keep costs low, so he will pay each employee a low hourly wage. However, he is also aware that this may lead to human resource problems.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [2] A correct definition will contain: What the franchisee gains (i.e. use of name/logo/trading system/operations system etc...)
2. [2] A correct definition will contain: What the franchisor gains (i.e. royalties/license fee/percentage of profits/sales etc...)
3. [1] A partial, vague or unfocused definition
4. [2] Exemplar: A business that pays a licence fee/royalties to use the logo and trading systems of an existing business
5. [1] C: Example of a quality, i.e. qualities required by an entrepreneur; innovation, self-motivation, creativity, multi- skilled, leadership, confidence.
6. [1] B: Makes the decisions/runs/manages/leads a business venture/owns/starts a business
7. [1] A: Takes the risk
8. [3] Content: Someone who takes the financial risk of starting and managing a new venture. Qualities may include innovation, self-motivation, multi-skilled, leadership, confidence, risk taking.
9. [3] Correct answer (with or without working or $)
10. [2] Correct calculation of net cashflow for both months (can be one calculation or two)
11. [1] Formula or one correct calculation of net cashflow; i.e. cash inflow-cash outflow (can be month 1 or month 2)
12. [Formula] Opening balance + net cash flow (Cash inflow – cash outflow)
13. [Calculation] Opening balance: $10 000
14. [Calculation] Cash inflow: $40 000
15. [Calculation] Cash outflow: $35 000
16. [Calculation] Closing balance: $15 000
17. [3] Explanation of one benefit of cash flow forecasting used in context
18. [2] Identification of one benefit of cash flow forecasting in context
19. [1] Identification of one benefit of cash flow forecasting
20. [Content] Palesh can show the cash flow forecast to CW to help get the franchise
21. [Content] One of the major causes of new business failure is poor cash flow. A cash flow forecast will help Palesh to foresee any potential problems such as not having enough cash to pay wages
22. [Content] Allows Palesh to see when he may need extra finance
23. [Content] May help Palesh to get external finance if required
24. [4] Good analysis of one (or more) advantage(s) AND one (or more) disadvantage(s) of market research techniques in context
25. [3-4] Shows understanding of market research techniques in context
26. [1-2] Shows knowledge of market research techniques
27. [Advantages] Quick - reduces costs to Palesh
28. [Advantages] This is primary research which can be more up-to-date than secondary
29. [Advantages] Cheaper than other methods that may require more preparation time
30. [Advantages] Focused on the local area where Palesh is planning to set up his business
31. [Disadvantages] Choose random – surely Palesh is only interested in people who have cars
32. [Disadvantages] On high street – is this the best place to sample people who might want to use a car wash?
33. [Disadvantages] Limited questions – e.g. could have asked what time of day might use the car wash
34. [7] A justified recommendation for Palesh based on the given argument(s) of one or more motivation methods in context
35. [6] A developed recommendation for Palesh based on the given argument(s) of one or more motivation methods in context
36. [5] An evaluative statement/recommendation based on the given argument(s) of one or more motivation methods in context
37. [4] Argument (two-sided) based on one or more motivation methods in context
38. [3] Argument (one-sided) based on one or more motivation methods in context
39. [3-4] Shows knowledge of motivation methods in context
40. [1-2] Shows knowledge of motivation/motivation methods
41. [Content] Payment methods are unlikely to be in context as Palesh has already stated he must pay a low wage. Commission/bonus or piece rate could be viable options as both of these keep costs linked to revenue. Alternatively, fringe benefits (such as free car washing) could be an option.
42. [Content] Job rotation - there may be some way of moving employees around the different jobs to stop them becoming demotivated
43. [Content] Job enlargement – there may be some additional responsibilities (such as a supervisor role) that Palesh could utilise
44. [Content] Job enrichment – unlikely to be much scope, but it may be possible to allow employees to decide on certain aspects of their role
45. [Content] Team working
46. [Content] Quality circles
47. [Content] Target setting – This may work as a motivational tool as long as there are enough cars to maintain the targets (could be linked to bonus or profit sharing scheme)
48. [Content] Delegation
49. [Content] Empowerment
50. [Content] Participation – Allowing workers to participate in decisions about the business may be a useful form of motivation, especially in a new business
51. [Example Eval] However, not all workers are motivated by the same methods so Palesh might need to use more than one non-financial method of motivation. (EVAL – statement)
52. [Example Eval] As car washing can be boring some workers might be motivated by more interesting work such as extra responsibilities maybe as supervisors or by changing roles during a shift so not always being the person who cleans inside cars (EVAL – developed)
53. [Example Eval] Working conditions mean that employees work outside and they will get wet which could make them feel miserable and more likely to take days off or leave the job which could result in a bad reputation for CW. (ANAN)
54. [Example Eval] However, if Palesh was to ask some to take on extra responsibilities he might have to offer higher pay and this might not be possible as it would raise costs so Palesh might have to consider less costly motivation methods such as team working where the team can decide how they will complete the necessary tasks. This would fit in with Palesh's cost concerns. (EVAL – justified)