Explain one business objective for ET and one other objective that a social enterprise like Daycare might have.

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

1. [8] (a) One mark for each objective (max of 2). Award a maximum of 3 additional marks for each explanation of the objective - one of which must be applied to this context. Relevant answers might include: Business objective for ET: Survival – to not go bankrupt in the first year of operation – to cover costs; Profit - to provide a return on investment – for the owners who risked their own money; Growth of the business – to possibly increase sales – leading to increased revenue in the future; Market share – attract a higher number of customers – possibly leading to higher revenue. Other objectives for social enterprise, Daycare: Service to the community/help local people – to create jobs for people in the local area – support disadvantaged groups in society/make a profit to put back into local initiatives; Provide childcare to enable low-income parents/carers to go out to work – increase their incomes – raising their living standards; Provide education for the pre-school children of low-income families – Provides access to education that otherwise would not be provided; Improves the likelihood of these children being more successful when they do go to school/may improve their ability to earn higher incomes in the future/get a better paid job; To provide funds to reinvest back into the social enterprise – by making a profit; To break-even. For example: To provide a service to the community (1) to look after the pre-school children (app) and support disadvantaged groups in the society that cannot afford to pay for these services (1) so it will allow parents/guardians to go to work and improve their family's income (1). Application might include: pre-school children; theatre; performances; actors; pay fair wages; tourists; low-income area; 24 part-time employees; provides education for children under 5.
2. [12] (b) Level 3 (9-12 marks): Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of both options. Well-justified recommendation. Candidates discussing both options in detail, in context and with a well-justified conclusion including why the alternative option was rejected should be rewarded with the top marks in the band. Level 2 (5-8 marks): Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one option. Judgement with some justification / some evaluation of choices made. Candidates discussing at least one option in detail and applying it to the case should be rewarded with the top marks in the band. Level 1 (1-4 marks): Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the options with little/no explanation. Simple judgement with limited justification / limited evaluation of choices made. Candidates outlining both options in context should be rewarded with the top marks in the band. Level 0 (0 marks): No creditable response. Relevant points might include: Option 1 - Advantages: Fewer employees are required to put on a performance – reducing total variable costs; Costs for scenery and costumes is the lowest of the two options – $1000 lower than Option 2; Total cost is the lowest of the two options - at $1210 per performance; Lowest price per seat at $10 – so likely to sell all the tickets ensuring the estimated revenue is received. Option 1 - Disadvantages: The average wage cost is the highest – $20 higher than Option 2; Makes a loss of $210 for each performance; Lowest revenue gained for each performance of the two options – $1000 per performance. Option 2 - Advantages: Has the lowest wage cost per employee of the two options - at $10 per actor; Makes the highest profit per performance of the two options - at $260 per performance; Has the highest revenue of the two options - at $2500 – $1500 higher than Option 1. Option 2 - Disadvantages: Has the highest number of employees per performance – 17 more than Option 1 – highest total wage costs; Highest cost of the two options – $2240 per performance; Highest price per person - $25 each – may not sell all tickets so revenue may be lower than estimated at $2500. Recommendation Justification may include: ET should choose Option 1 to have in the theatre as it has the cheapest total cost at $1210 per performance. As the theatre is new it should try to keep its costs as low as possible. Option 2 has much higher costs to put on the performances and ET may not have the funds to do this. Also the price per ticket is higher for the other option and as the theatre is located in a low-income area of Main City the theatre may not sell all 100 seats and the estimated revenue may not be received. ET should choose Option 2 for the theatre as it makes a profit of $260 per performance when the revenue is $2500.