O-LevelBusiness StudiesFinancial information and decisions7115/21 · Oct/Nov 2014 · Q520 Marks

Identify and explain two possible effects on DOTT Bank employees if DOTT Bank was taken over by PB Bank.

(a)Identify and explain two possible effects on DOTT Bank employees if DOTT Bank was taken over by PB Bank.[8]
(b)Consider the advantages and disadvantages to PB Bank of taking over DOTT Bank. Recommend whether PB should take over DOTT Bank. Justify your answer by using appropriate calculations based on the data in Appendix 2.[12]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2014). The mark or mark type is shown in brackets.

[8] Content:
- Some employees may lose their jobs
- There may be opportunities for promotion/demotion
- Jobs may be changed with different responsibilities added
- Demotivated
- Change in working conditions/pay
- Training implications for employees
- Relocation/move area/move branch.
The marks available for this question are as follows: 2 marks for knowledge; 4 marks for analysis and 2 marks for application.
1 mark for each effect identified plus 2 explanation marks for each effect plus 1 application mark. (4 marks × 2 effects)
Effect: Some employees may lose their jobs (1 knowledge mark).
Explanation: Some employees may lose their jobs (1) because there may be other employees at PB Bank who can do their job. (2) PB will want to make cost savings and there may be, for example, counter staff at the bank who are no longer needed as branches may be merged. (3) (Plus 1 application mark for answering in the context of branch banks).
[12] Content:
Takeover – Have existing customers of DOTT Bank; quick method of expansion; Expensive;
Internal growth – low cost; slower process; more control over growth.
DOTT bank ROCE 15% (L2) whilst PB 10% (L2);
Current ratio PB 1.5 (L2) whilst DOTT 0.8 (L2); Accept fractions
If method is correct but final answer is wrong (L1)
3000 customer per branch on average for PB (L2) whilst DOTT 4000 customers per branch (L2).
Level 1: 1 mark for each statement e.g. to takeover of DOTT Bank would be a quick method of expansion for the bank (1 mark)
Level 2: 5 marks for the first level 2 answer and then one extra mark for each additional level 2 answer up to maximum of 8 marks e.g. the current ratio for DOTT Bank is 4/5 whereas the current ratio for PB Bank is 1.5. 6 marks for two level 2 calculations.
Level 3: Detailed discussion of at least three level 2 calculations and then a recommendation at the end which justifies which is the best option to choose compared to the other option.