George has worked in a small flower shop for 10 years. He does not like the autocratic leadership style of his manager and wants to leave. He will decide whether to start up his own business or buy a BunchesRUs franchise. The franchise would cost him $5000 but BunchesRUs would offer training and support. For either option, George will need both finance and to recruit 2 part-time employees. George knows building customer relationships will be important to the success of his business.

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: where the manager expects to be in charge / control of the business and to have their orders followed
2. Managers takes decisions without consulting employees [2]
3. Some understanding [1]: e.g. Manager takes / make all decisions Or employees have no say in decisions
4. [2] Application [2 × 1] award 1 mark for each source
5. own savings
6. bank loan OR overdraft
7. government grants
8. micro-finance
9. borrow from friends and family
10. trade credit
11. lease / hire purchase
12. [4] Knowledge [2 × 1] Award 1 mark for each reason identified
13. Application [2 × 1] Award 1 mark for each explanation in context
14. Increase sales [k] of its flowers [app]
15. Increase retention / customer loyalty [k] so customers keep returning to his shop [app]
16. Help build reputation / act as free advertising / recommendations [k] for this new business [app]
17. Opportunity for feedback / help identify customer needs [k]
18. Provide a competitive advantage [k] so can compete against the franchise [app]
19. [6] Knowledge [2 × 1] Identification of relevant advantage / disadvantage
20. Application [2 × 1] Award 1 mark for each way if relevant reference made to this business
21. Analysis [2 × 1] Award 1 mark for each relevant explanation.
22. Advantages:
23. More flexible OR able to extend hours [k] of the shop [app] to maximise possible sales [an]
24. When not working no need to pay wages OR only pay for hours worked [k] helps lower labour costs [an] which is important for a new business [app]
25. Can help attract workers who only want to work a few hours OR help keep workers [k]
26. Provide different skills or experience or ideas [k]
27. Disadvantages:
28. Can take longer / more expensive to recruit (as need more part-time workers for each full time equivalent) [k] so takes him away from other important jobs [an] when setting up his new business [app]
29. Can be less committed to business OR more likely to leave [k]
30. May create problems when trying to offer a consistent level of service [k] which doesn't help build customer relationships [app] leading to fewer (loyal) customers [an]
31. Communication / coordination OR supervision is more difficult [k]
32. [6] Knowledge [1] Award max. 1 mark for identification of relevant issue(s)
33. Application [1] Award 1 mark for a relevant reference made to this business
34. Analysis [2] Award up to 2 marks for relevant development of point(s)
35. Evaluation [2] Justified decision made as to whether George should buy a BunchesRUs franchise
36. Reasons for:
37. Help offered by franchisor [k] for training and support [app] which saves costs [an]
38. Competition [k] if does not accept franchise, someone else may accept it leading to lower sales [an] as it may be more difficult for him to compete against an established brand name [an]
39. Established brand name of franchise [k] may persuade people to buy from him [an] even though it is a new business [app]
40. Reasons against:
41. Gives George less control [k] and as he didn't like the autocratic style of his old manager [app] may want the freedom to make his own decisions [an]
42. High cost [k] of $5 000 [app] could be too expensive / not be able to afford as it's a new business [an]
43. He has experience [k] as he has worked in a flower shop [app] so support of franchisor is less important [an]
44. Has to pay percentage of sales revenue to franchisor [k]