Kate is an entrepreneur. Two years ago she left her job as a fashion designer at a multinational company. She started up BBB, a women's sportswear clothing business. BBB targets a market segment of high income consumers. BBB's products are sold in 3 retail shops and also through its website. Kate said: 'I saw a gap in the market and took the risk. Obtaining the finance I needed from the bank was not easy. I enjoy making decisions such as using leaflets to promote the clothes.' BBB's revenue target for next year is $500 000.

Mark scheme

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

1. [2] Clear understanding: A person who organises/ operates/ takes the risk for a new business venture; A person who combines all factors of production to make a product or service; Some understanding [1] : e.g. Someone who starts a business
2. [2] Knowledge [2 × 1] award 1 mark per reason; Points might include: Asking for too much money OR seen as too high a risk OR not certain able to repay; does not have an accurate/ has an inaccurate business plan; no security/collateral; lack of experience/ relatively new to the market; unproven product/ lack of credit history/ no documents; Do not accept 'not well known 'as it is unclear how this relates to finance.
3. [4] Knowledge [2 × 1] - award 1 mark for each relevant reason; Application [2 × 1] - award 1 mark for each relevant reference to this business; Points may include: To be her own boss [k] instead of working for a multinational business [app]; To make her own decisions [k] e.g. how to promote clothes [app]; She believes the business could be successful / make profit [k] as she spotted a gap in the market [app]; To work on something she enjoys [k]
4. [6] Knowledge [2 × 1] - award 1 mark for a relevant reason; Application [2 × 1] - award 1 mark for each explanation in context; Analysis [2 × 1] - award 1 mark for each relevant explanation; Relevant points might include: Able to tailor goods to specific needs OR know what to produce [k] e.g. clothes for high income women [app] so that costs / materials are not wasted producing wrong products [an]; To help decide best place to sell [k] as sportswear [app] needs a specialist shop to increase sales[an]; Research is simpler/help identify customer needs [k] as know which women to ask [app] so products better meet customer needs [an]; Help target advertising [k] such as where to use leaflets [app] to ensure maximum number of people see them [an]; Help set prices [k]; Identify gaps in the market [k]
5. [6] Knowledge [1] – award 1 mark for identification of relevant issue(s); Application [1] – award 1 mark for a relevant reference made to this business; Analysis [2] – award up to 2 marks for relevant development of point(s); Evaluation [2] – justified decision made as to whether using leaflets is the best way for Kate to promote her products; Relevant points might include: Leaflets can contain lots of information about her products [k] these can be handed out outside gyms [app] to attract appropriate target market which could lead to increased sales [an]; Leaflets can be handed out in the local area [k] around the 3 retail shops [app] which is cost effective [an]; People may throw leaflets away or see leaflets as litter [k]; Cheaper than television or radio [k]; Award 1 knowledge mark for any other appropriate methods of promotion; For evaluation, answers must have considered the suitability of leaflets.