Lewis is a hairdresser. He rents a small shop which he uses as a hairdressers called Braid Runner (BR). Lewis is a sole trader and he set up BR 25 years ago. BR is the smallest of all the hairdressers in city Y. Lewis works on his own. He has repeat customers who have been using BR for many years. However, there are many large franchises in city Y which offer a much cheaper haircut than BR. Lewis is considering increasing the price of a haircut and he has outlined the costs and revenue of the business in Table 2.1. Table 2.1: Costs and revenue of BR Lewis would like to employ another hairdresser so that he can work fewer hours in BR. The new employee would have to be able to work in BR on their own. They would be responsible for taking bookings, dealing with customers and some financial transactions. Lewis has drawn up a person specification (see Fig. 2.1) that will be placed on a job website. Fig. 2.1: Person specification created by Lewis

Mark scheme

Marking points from the official mark scheme (Oct/Nov 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. Content: A correct definition should include the following elements (allow one mark for each element): • The amount of money for a product or service • charged to a customer
5. Exemplar: Amount paid by a customer [2]
6. Exemplar: Amount of money to consume [2]
7. Exemplar: Value to the customer [2]
8. Exemplar: Amount charged by a business to the customer [2]
9. Exemplar: What the customer pays [1]
10. Exemplar: Amount charged by a business [1]
11. Award one mark for each point of explanation: An element of explanation of franchises: Up to 2 further marks. • May pay a royalty • Can be restrictive • May pay an initial fee • May pay advertising costs • Likely to increase sales • Examples
12. Award one mark for each point of explanation: Understanding of the use of logo, products etc. from an established business [1 mark]
13. Content: Where a business sells the rights to use its logo, products, ideas, etc... to another business. A business which has bought the rights to use another businesses' logo etc...
14. Exemplar: Pay to use the logo, products. May have to pay royalties but is likely to increase sales [3] Three points
15. Exemplar: Pay to use the logo, products. May have to pay royalties [2] Only one development
16. Exemplar: Where a business sells the rights to use its logo, products, ideas, etc... [1] Main understanding only
17. Exemplar: May have to pay royalties but is likely to increase sales [0] No understanding of the use of logos etc
18. [3] Correct answer with or without correct working or 'haircuts'
19. [2] Correct formula (may be implied) and correct calculation of contribution
20. [1] Correct formula or correct calculation of contribution
21. [0] No creditable content
22. Content: Formula: Fixed costs / (Price - selling price (contribution)). $675 / ($8 - $3.50). $675 / $4.50 (contribution). Answer = 150 (haircuts)
23. OFR: Common incorrect answers: 150 [3] Correct answer does not need units
24. OFR: Common incorrect answers: formula [1] Basic understanding
25. Level 2b: Explanation of one limitation of using break-even analysis in context [3]
26. Level 2a: Explanation of one limitation of using break-even analysis [2]
27. Level 1a: Identification of one limitation of using break-even analysis [1]
28. Content: • Variable costs (3.50) may change – especially with a new hairdresser starting • Fixed costs per week (675) may change • Lewis may need to change the price ($8) especially with competition in the city • It assumes every haircut is the same price, but Lewis may charge less for children, OAPs etc.
29. OFR (from Q2(b)(i))
30. Examples: Identification of a limitation: Only a prediction. Explanation: So does not take unexpected debts into consideration. Possible context: E.g. may increase from £3.50 if new hairdresser starts
31. Examples: Identification of a limitation: Only an estimate. Explanation: Fixed costs may change. Possible context: From $675
32. Examples: Identification of a limitation: Assumes all services charged same price. Explanation: But may vary with discounts. Possible context: E.g. may charge less for OAP haircuts
33. Level 2: Shows understanding of small business in context [3-4] / Good analysis of one disadvantage and one advantage of being a small business in context [4] / Good analysis of one disadvantage or one advantage of being a small business in context [3]
34. Level 1: Shows knowledge of small business [1-2] / Limited analysis of one disadvantage and one advantage of being a small business [2] / Limited analysis of one disadvantage or one advantage of being a small business [1]
35. Content - Advantages: • Easier to organise – Lewis is the only employee (at the moment), only one set of bookings etc. • Flexibility - Lewis can quickly and easily respond to marketing form the franchises - they however are unlikely to be able to respond as quickly. • Personalised customer service – Lewis has many repeat customers – this suggests he has a good relationship which is probably lacking in a bigger business.
36. Content - Disadvantages: • Access to finance – Lewis may struggle to obtain finance because he on his own and may have limited assets. Shop is rented. • Larger franchises may be able to gain economies of scale which will not be available to Lewis – they are able to charge lower prices and undercut Lewis. • Limited funds to compete against the competition – they are likely to be able to afford above the line promotion methods whereas Lewis is unlikely to be able to access these.
37. Example of knowledge (K): Unlimited liability. Application/context (APP): Sole trader. Analysis (AN + DEV): So personal possessions are at risk and could lose his house
38. Example of knowledge (K): Easy to organise. Application/context (APP): There is only one employee (himself). Analysis (AN + DEV): Does not have to create rotas which reduces time taken for paperwork
39. Justified evaluation based on argument in context [7]
40. Developed evaluation based on argument in context [6]
41. An evaluative statement based on argument in context [5]
42. Shows understanding of two aspects of a person specification in context [4] / Argument based on two aspects of a person specification in context [4]
43. Shows understanding of one aspect of a person specification in context [3] / Argument based on one aspect of a person specification in context [3]
44. Shows knowledge of two aspects of a person specification [2] / Limited analysis of two aspects of a person specification [2]
45. Shows knowledge of one aspect of a person specification [1] / Limited analysis of one aspect of a person specification [1]
46. Content: Lewis needs an employee to work on their own, be responsible for bookings, deal with customers and do some financial transactions. • Hairdressing qualification makes sense and would be a good way to differentiate between those who might be able to do the job and those who cannot however is a formal qualification needed if the experience is in place? • A-Levels (or high school standards) in Mathematics and Business seems a high level of qualification for what Lewis needs. May restrict the number of applicants. • It may be illegal to set an age limit - why does the employee need to be between 18 and 30 years old? May restrict applicants and Lewis may end up fined. • Specifying a female may be illegal. Why would a female make a better hairdresser? Is it to compliment Lewis (who may specialise in men's hair) in which case the person specification may be poorly written (need someone who specialises in women's hair) • No experience, as essential, seems unlikely – Lewis needs them to work on their own the desirable column should be essential to get what he wants and not waste his time sifting through applications which are unsuitable (for trainees). • Why is ability to work in a team essential when the person will be working on their own? • Good communication makes sense and should help Lewis to maintain his loyal customers. • What does friendly mean – why is it desirable? Is this linked to customer service – could be more specific.
47. Examples: K: Provides a list of essential and desirable. APP: E.g. hairdressing qualification. AN: Limits applicants to those who can do the job. DEV: Saves interviewing time. EVAL: The PS are useful because they limit the number of candidates and any illegal/wrong elements can be easily changed to ensure only quality applicants apply
48. Examples: K: May be illegal/discriminatory. APP: Between 18-30. AN: May lead to a fine. DEV: Which reduces profits.