Identify and explain how two stakeholder groups of WA are likely to be affected by the reduction in profit in 2018.

Mark scheme

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

1. [8] Knowledge - award one mark for identifying a relevant stakeholder group [2 x 1 marks]
2. [8] Analysis - award one mark for a relevant explanation how each stakeholder group will be affected [2 x 1 marks]
3. [8] Application - award two application marks for explaining in context how each stakeholder group will be affected [2 x 1 marks]
4. [8] Answers are likely to include: Shareholder / Directors / Owners / Family: Lower dividend likely to be paid – lower return on their investment
5. [8] Shareholder / Directors / Owners / Family: Need to change business objectives to try to increase profit again – may require further investment – changes to the way the company is operated
6. [8] Employees: Less likely to be given a wage increase – less motivated
7. [8] Employees: May have to accept a reduction in wage rates or longer hours for same pay
8. [8] Suppliers: Asked to reduce price of wood – less wood purchased
9. [8] Suppliers: Slower to get paid for wood supplied – worse cash flow
10. [8] Accept other stakeholder groups e.g. customers, competitors, government, bank, local community.
11. [8] Indicative response: Supplier (k) that sells wood to WA to make the furniture (ap) may not be paid as quickly if the profit is lower (an). Supplier may have to lower the price of its wood to help WA reduce its costs (ap).
12. [8] Possible application marks: Family owned Itd company; small business; started 10 years ago; furniture; wood from sustainable forests; selling price $200 and $250 per item; environmentally friendly business objective; 2 brothers and a sister; 20 employees; 10% above minimum wage.
13. [8] Note - Do NOT reward reduction in profit as application because this is in the question.
14. [12] Relevant points might include: Introduce piece rate: Taylor's theory – money motivates
15. [12] Introduce piece rate: Increases pay – by rewards for producing a higher output
16. [12] Introduce piece rate: However: Wage costs may increase
17. [12] Introduce piece rate: However: Quality might be reduced if rush to produce more output
18. [12] Introduce piece rate: However: Less likely to be applicable to office staff and so may not be fair
19. [12] Give shares in WA to employees: Employees now receive payment from dividends
20. [12] Give shares in WA to employees: Increased rewards from higher output / profit
21. [12] Give shares in WA to employees: Maslow - increased sense of belonging
22. [12] Give shares in WA to employees: However: Existing shareholders of this private limited company will lose some control
23. [12] Give shares in WA to employees: However: May lead to reduced dividends per share or less retained profit
24. [12] Give shares in WA to employees: However: Shares may not easily be sold (Ltd) – workers may prefer cash to shares
25. [12] Introduce job rotation: Makes the work more interesting / less boring
26. [12] Introduce job rotation: Change tasks performing regularly
27. [12] Introduce job rotation: However: Increases training requirements as each worker currently only performs one task
28. [12] Introduce job rotation: However: Quality may be lower if less specialised in tasks
29. [12] Introduce job rotation: However: May mean sometimes a worker does a job not liked
30. [12] Introduce job rotation: However: May only be motivating in the short term until the worker gets used to the new tasks
31. [12] Award up to 10 marks using the level levels-based mark scheme below.
32. [12] Level 3: At least 2 x Level 2 + 9–10 marks for well justified recommendation of which way to choose to increase employee motivation and why it is more important than the other ways. 7–8 marks for limited recommendation of which way it should choose to increase employee motivation.
33. [12] Level 2: 4–6 marks Detailed discussion of each way to increase motivation
34. [12] Level 1: 1–3 marks Outline of each way to increase motivation
35. [12] Level 1 - 1 mark for each L1 statement (max of 3 marks) e.g. Job rotation makes the work more interesting.
36. [12] Level 2 - 1 x L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks) e.g. Job rotation makes the work more interesting as the workers change round the jobs regularly and therefore are less likely to get bored. This increases the motivation of the worker but they are less specialised and therefore may not perform each task a well as if they only performed the one task so quality may be lower (L2).
37. [12] Level 3 - For L3 to be awarded there needs to be at least two L2 marks awarded and then a recommendation which justifies which way should be chosen to increase employee motivation.
38. [12] Award up to 2 additional marks for relevant application.
39. [12] Possible application marks: Family owned Itd company; small business; started 10 years ago; furniture; uses batch production to make furniture; each skilled worker only performs one task; individually designed furniture produced using job production; environmentally friendly business objective; reduced profit in 2018; 10% above minimum wage; 20 workers; tables / chairs; paid an hourly wage rate.