Min is a sole trader who is the owner and overall manager of FC. Min started the business as a restaurant but FC has grown so that it now operates in the primary, secondary and tertiary sectors. Min sees this as FC's unique selling point (USP). Min allocates costs and revenues to each section of the business. She then calculates the profit margin for each section (see Table 3). Table 3: Overview of FC | Sector | Activity | Employees | Annual revenue ($000s) | Profit margin | |---|---|---|---|---| | Primary | Catching fish using FC's own boat | 1 captain <br> 2 fishermen | 50 | 2% | | Secondary | Cooking fish in FC's own kitchen | 1 head chef <br> 2 assistant chefs | 70 | 1% | | Tertiary | Serve the cooked fish with chips and vegetables in FC's own restaurant | 1 restaurant supervisor <br> 3 servers <br> 1 cleaner | 200 | 15% | Min considers herself to be an excellent manager, having studied business at university. She manages her employees using Herzberg's motivation theory. Min has had an objective of growth but she is now happy with the size of FC. She intends to change the objective to profit maximisation.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [2] A factor that differentiates a product from its competitors
2. [2] A feature that differentiates a product service
3. [2] A feature that sets you apart from competitors
4. [1] A special feature of your product
5. [3] Hygiene factors which may demotivate and motivation which does not demotivate but motivates e.g. a bonus (is a motivator)
6. [2] Hygiene factors which may demotivate and motivation which does not demotivate but motivates
7. [1] Motivating factors and hygiene factors
8. [3] 31 700 with or without working
9. [2] 1000 + 700 + 30 000
10. [2] 100 + 70 + 3000 = 3170 (one error – decimal place)
11. [2] OFR (formula wrong way round)
12. [1] 18% of 320 000 = 57 600
13. [1] Revenue x profit margin
14. [3] May make one aspect of the business seems unprofitable – however all interdependent
15. [3] If a fish is bad/inedible – which part of the business should have the waste as a cost?
16. [3] The restaurant and kitchen are part of the same building – how can costs be separated (utilities, rent etc.)
17. [3] The kitchen staff could easily be seen as restaurant staff
18. [3] Min makes the decision – what qualifies her as able to allocate the costs?
19. [3] How would which costs apply to each area E.g. kitchen or restaurant
20. [3] To be able to know which costs are in which area E.g. is the chef secondary or tertiary
21. Content: Revenue – whole business or individual part. What to compare it to?
22. Content: Number of customers – only applicable to the restaurant
23. Content: Number of employees
24. Content: Capital employed – kitchen, restaurant, boat, etc.
25. Content: Market share
26. Developed analysis: Revenue: 31 700 (context), Can compare with other businesses (analysis), So that Min/potential investors can judge the success of the business (developed analysis)
27. Developed analysis: Number of customers: Who buy fish and chips (context), Will tell Min the size of her market (analysis), However is only applicable to the restaurant (developed analysis)
28. Developed analysis: Number of employees: E.g. 3 chefs (context), Shows Min how much growth year on year (analysis), However does not take into account productivity/automation (developed analysis)
29. Developed analysis: Capital employed: Kitchen, boat and restaurant (context), Can show growth over years (analysis), Which may attract future investors/ allow bank loan (developed analysis)
30. Developed analysis: Market share: Met growth objective (context), Satisfied initial objectives (analysis), However the market may have shrunk (developed analysis)
31. Content: Min as owner this may increase her personal income – better lifestyle, etc.
32. Content: Employees - may see a reduction in costs as a way of increasing profits, so may lead to redundancies or cut in wages, longer hours, etc.
33. Content: Customers - may be lower quality standards (costs cutting) and prices may increase
34. Content: Government - increase in taxation revenue
35. Content: Local community – increased trade, noise, etc.
36. Content: Competitors – May see a chance to compete with lower prices, attracted by higher profit margins.