Nadia graduated, last year, with a degree in business management. Nadia is friendly and creative with lots of ideas. Whilst at university, she set up her own business providing online tutoring services. Her friend, Emma, helped Nadia with the accounts and planning of tasks. The business is so successful that Nadia has decided to expand the business and operate it as a social enterprise. As a sole trader she is aware of the need to raise finance for her business and intends to mainly use crowd funding. She estimates that expansion costs will be 50000. Nadia carried out some primary research by sending a questionnaire to 1000 A Level students. She used the results to prepare the following forecasts to support her appeal for crowd funding. See Tables 2.1 and 2.2. Table 2.1: Forecast sales 2020 | Tutoring Package | Price () | Quantity of sales | | :--------------- | :-------- | :---------------- | | Single session | 25 | 225 | | Short course | 200 | 175 | | Full course | 275 | 125 | Table 2.2: Forecast costs 2020 ($000) | Total direct costs | 30 | | Total indirect costs | 15 | Nadia keeps costs low by employing first year university students as tutors. She pays each tutor $10 an hour. Tutors work from their own homes. Other employees include Ali, an information technology specialist, and Sorrel, a marketing expert. Ali and Sorrel are both part-time employees as Nadia cannot afford to employ full-time specialists. As this is an Internet-based business, Nadia expects Sorrel to carry out an Internet-based marketing campaign. Ali provides technical support. Nadia feels that she is good at listening to employees and has an understanding of their concerns. She wants to inspire her young employees to feel a part of the business. However, she is concerned that the management functions she has to perform might be too much for one person. She also thinks that her laissez-faire leadership style may not be appropriate for this type of business. At university, she often worked in a group with Emma. She noticed that Emma is good at organising tasks and directing others. Emma would take charge of the group and make all the decisions. Nadia would like to work with Emma but Emma does not want to be just an employee.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [2] A business that uses profit (1) for the benefit of the community (1)
2. [2] Profits are used for the community/beneficiary and not just for shareholder dividends
3. [2] Profit is not the main aim, main aim is to benefit society/beneficiary
4. [1] Triple bottom line: social, environmental and financial
5. [0] The business does not make profits
6. [3] Raising money for a project or venture, (A) from a large number of people, who each contribute a relatively small amount, (B) typically via the Internet. (C)
7. [3] A source of finance, where many small investors each contribute a small amount for benefits such as being able to buy the first production run
8. [2] A source of finance where many small investors each contribute a small amount for benefits
9. [1] Many small investors
10. [3] E.g. or some other way of showing good understanding; Often using the internet ; may be incentives; Many small investors
11. [2] Each investor contributes a small amount
12. [1] Source of finance/investment
13. [3] Correct answer ($30000 or 30)
14. [2] Correctly calculates total revenue
15. [1] Attempt (e.g. formula or identifies data)
16. [1] Revenue - (total costs) = profit OR Revenue - (direct costs) = profit
17. [2] Revenue = (225 × $25) + (175 x $200) + (125 x $275) = $75000
18. [3] $75 000 - ($30000 + $15000) = $30 000 (profit for the year)
19. [3] $75 000 – $30 000 = $45 000 (gross profit)
20. Accept either gross profit or Profit for the year figures
21. [3] 30 000 or 30
22. [3] 45 000 or 45
23. [2] 75 000 or 75
24. [3] Explanation of an internet based marketing method in context
25. [2] Explanation of an internet based marketing method
26. [1] Identification of an internet based marketing method
27. Context and content is likely to come from: Ads on internet sites - internet based business, above the line – expensive, can they afford this given low profits
28. Context and content is likely to come from: Below the line – target students or parents? Contact schools/colleges? Social media, viral marketing.
29. [1] Ads on internet sites
30. [1] Above the line method
31. [1] As this is an internet based business
32. [1] Social media
33. [1] Viral marketing
34. [1] As A-Level students often use social media
35. [4] Understanding of two elements of emotional intelligence in context
36. [4] Developed analysis of two ways a leader can use emotional intelligence in context
37. [3] Understanding of one element of emotional intelligence in context
38. [3] Developed analysis of one way a leader can use emotional intelligence in context
39. [2] Shows knowledge of two elements of emotional intelligence
40. [2] Limited analysis of two ways a leader can use emotional intelligence
41. [1] Shows knowledge of one element of emotional intelligence
42. [1] Limited analysis of one way a leader can use emotional intelligence
43. Knowledge - Emotional Intelligence (EI): recognising and managing your emotions and those of others.
44. Knowledge - Emotional Intelligence (EI): Goleman's four competencies of emotional intelligence: self-awareness, self-management, social awareness, and social skills.
45. Application and analysis- linked to one aspect of knowledge: Nadia's leadership of a start-up internet business employing a young staff - lack of experience.
46. Application and analysis- linked to one aspect of knowledge: All staff are part-time so important to manage well, keep happy and ensure good customer relations.
47. Application and analysis- linked to one aspect of knowledge: Staff unlikely to have many opportunities to meet as working from home which can be alienating and a leader should recognise this and take action to help develop a team spirit/engage employees.
48. K: Self-awareness; APP: Has identified laissez faire management style; AN: Which may not be suitable for a growing business; DEV: So can adapt to a more suitable method
49. K: Awareness of employee needs; APP: Tutors are remote workers and; AN: may not feel a connection with the business; DEV: Which could lead to poor tutor engagement
50. 1. Self-Awareness: without any obstruction. She will be able to recognise emotions as they arise in response to an action or situation. As a result, she will be in a better position to address problems/future complications.
51. 2. Self-Management: Will help Nadia stay in control so that she is unlikely to make hasty decisions or let her anger take over her behavior. This will help her to maintain respect from her employees.
52. 3. Social Awareness: Nadia should be aware of the emotions of others and able to pick up on what is going on around her. She should be able to sympathise with others and give helpful feedback. This is a critical skill for leaders, who work closely to inspire and motivate a team. If the leader is unable to empathise with their employees, she will find it difficult to obtain respect or loyalty.
53. 4. Social skills: Nadia should be able to clearly convey directions and know what to say in order to inspire and motivate others. An important skill for leaders, communication can be a deciding factor in whether the team listens or not. She should be able to handle any disagreements that arise between employees, customers, and other parties. In conjunction with the above skills, leaders can use their emotional intelligence to develop a more effective workplace.
54. [7] Justified evaluation based on arguments in context
55. [6] Developed evaluation based on arguments in context
56. [5] An evaluative statement based on arguments in context
57. [4] Understanding of two characteristics of legal ownership in context
58. [4] Arguments based on changing legal ownership in context
59. [3] Understanding of one characteristic of legal ownership in context
60. [3] Arguments based on changing legal ownership in context
61. [2] Shows knowledge of two characteristics of legal ownership
62. [2] limited analysis of two factors of decision making by firms
63. [1] Shows knowledge of one characteristic of legal ownership
64. [1] limited analysis of one factor of decision making by firms
65. Context must be explicit not just implied and based on the leadership styles, structure of the firm and changing from sole trader to partnership
66. Context/content: Leadership styles may clash – autocratic v laissez-faire/Loss of control/Conflict may arise
67. Context/content: Nadia will have to share profits (forecast only $30k/45k profit)
68. Context/content: Emma may not want to form a business partnership with Nadia. She may have a job she is happy with or she may have her own business
69. Context/content: Emma could contribute additional capital but does she have enough resources to 'buy-in'?
70. Context/content: Emma's skills and expertise could complement Nadia's / Decision making shared
71. Context/content: Shared risks
72. Context/content: Help Nadia to expand the business
73. Context/content: Running a business is not the same as leading a group project – Emma may not be as skilled in business
74. K: Sole trader makes all business decisions; APP: Emma often takes charge; AN: And an autocratic leadership style could disenfranchise casual employees; DEV: Which may affect employee retention and recruitment; EVAL: Nadia should form a business partnership as she has identified her leadership style is not appropriate
75. K: Partnership profits are shared; APP: Nadia will have to share profits (forecast only $30k/45k profit); AN: So Emma may want to charge more; DEV: Which could take the focus away from the social enterprise; EVAL EVAL: And Emma could take control of employee and task management (EVAL EVAL) Leaving Nadia free to concentrate on other aspects such as marketing and growth.