BKH is a large public limited company. It has 2000 employees across 18 locations. BKH sells a range of insurance products including house and car insurance. BKH's shareholders want the business to increase profit. The Managing Director knows increasing profit can conflict with the objectives of other stakeholder groups. She said: 'Private sector businesses have different objectives to public sector organisations.' BKH is also planning to expand by taking over another insurance company.

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [2] Government or state-owned businesses/organisations
2. [2] Part of the economy controlled by state/government
3. [1] Partial definition e.g. not owned by individuals
4. [1] Provided/run by government
5. [2] Amount of money left after all costs have been subtracted from revenue.
6. [2] Surplus after total costs deducted from sales revenue
7. [2] (Total) revenue – total cost
8. [2] Gross profit minus expenses
9. [1] Partial definition e.g. revenue minus costs
10. [1] Sales value / value of output / revenue
11. [1] Volume of output / amount of services / amount of sales / number of customers
12. [1] (Value of) capital employed / value of statement of financial position / market capitalisation
13. [1] Market share
14. [1] Number of employees
15. [1] Number of outlets
16. [K] May want low prices / value for money [app] when buying insurance [an] which could reduce revenue
17. [K] Desire high-quality customer service [app] which requires more than 2000 staff [an] increasing costs/expenses
18. [K] May want offices in more locations [app] than 18 [an] which could increase costs
19. [K] May want high/regular pay [app] for its 2000 employees [an] which could lead to higher costs
20. [K] May require job security / contract [app] after the takeover
21. [K] Job satisfaction / motivation / training / promotion
22. [K] Possible purchasing economies of scale / bulk buying [an] leading to lower average costs [an] which could allow for lower prices
23. [K] Reduces competition [an] which could increase market share / sales [an] and therefore increase revenue
24. [K] Economies of scale may not be possible to achieve
25. [K] A business can become too large and may experience diseconomies of scale
26. [Eval] Possible purchasing economies of scale / bulk buying [k] leading to lower costs [an] which could allow for lower prices [an]. Removing a competitor maybe an alternative reason for the takeover [k]. It depends on the business' objectives [eval] if it is a direct competitor increased market share maybe more important than possible economies of scale.