Tebo has recently been made redundant from his job as a car mechanic. He is thinking of setting up his own business. Even though he has no management experience, he knows that managing cash flow will be important to the success of the business. Tebo is considering whether to apply for a FIXIT franchise. This franchise would cost $15000, which would use all of his savings. FIXIT is a car repair franchise, with 36 franchisees.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2015). The mark or mark type is shown in brackets.

1. [2] Clear understanding e.g. The worker is no longer required through no fault of their own [2]
2. [1] Some understanding e.g. means that his job role has gone [1]
3. Note: If the answer includes dismissed, fired or sacked plus any relevant point maximum 1 mark
4. [2 × 1] Application: 1 mark per function
5. Points might include: organise/co-ordination, planning, control, decision making or practical examples e.g. motivation, recruitment, delegation, strategic tasks
6. Do not accept any task which can be completed by any employee e.g. pay bills, training
7. [2] Knowledge award up to 2 marks for identification of points/knowledge of cash flow
8. [2] Application award up to 2 marks for relevant explanation in context of Tebo's business
9. Relevant points might include:
10. • Cash flow needed to pay its day to day expenses [k]
11. • Business could fail due to lack of cash [k] if used all his savings to buy franchise [app]
12. • Help reduce need for finance [k] for a new business [app]
13. • Able to predict/plan for cash flow problems [k]
14. • Help a business get a loan [k]
15. Application marks may be awarded for appropriate use of the following: car repair, no management experience, $15000/all his savings, new business, FIXIT franchise.
16. [2 × 1] Knowledge – identification of relevant factor [max 2]
17. [2 × 1] Application - award 1 mark for each way if relevant reference made to Tebo's business
18. [2 × 1] Analysis – award 1 mark for each relevant explanation
19. Relevant points might include:
20. • Demand/customers [k] – he needs to be convenient so that he can get sales [an];
21. • personal preference [k] – he might want to locate near his home [an],
22. • cost of property/rent [k] if too high he might not be able to afford it [an] especially if used all his savings for the franchise [app];
23. • suitable/size of space [k] as will need access for cars [app]
24. • legal controls [k] as garage is likely to be noisy [app] there might be rules which restrict where he can go [an]
25. • competition [k]
26. • franchisor's views [k] if he becomes a franchise [app]
27. • transport links/access [k]
28. • availability of suitable employees [k] as need mechanics [app]
29. • near to supplier [k] because the car repair equipment might be heavy [app]
30. Note: accept franchisor as the supplier if it is made clear that they supply materials/equipment.
31. Application marks may be awarded for appropriate use of the following: franchisees, car repair, $15000/all his savings, new business, redundant, FIXIT franchise, cash flow important, workshop.
32. [1] Knowledge – award 1 mark for identification of relevant point (s) [max 1]
33. [1] Application – award 1 mark if relevant reference made to Tebo/FIXIT business
34. [2] Analysis – award up to 2 marks for relevant development of point(s)
35. [2] Evaluation – justified decision as to whether buying a FIXIT franchise is the best way for Tebo to start his business
36. Points might include:
37. • Less chance of business failure [k] if he set up his own business, it would take time to build a reputation [an]
38. • Training provided [k] as he has no management experience [app]
39. • Lower advertising/training costs [k] as he has used all his savings to buy the franchise [app] so he may not be able to afford advertising/training [an]
40. • Supplies from central source [k] so less suppliers to deal with [an] so has more time to do repairs [app]
41. • Banks more likely to lend to franchisee [k] the $15000 needed [app] as seen as lower risk [an]
42. • Recognition [k] FIXIT already has 36 franchisees [app]
43. • Lack of control [k] as FIXIT will have a say in many decisions [an]
44. • Problem at one franchise affects all others [k] of the 36 [app] might lower his revenue [an]
45. • Less profits as only received a percentage [k] so if successful, it will not maximise profits [an]
46. • Does Tebo want the responsibility? [k]
47. Application marks may be awarded for appropriate use of the following: 36 (franchisees), car repair, no management experience, $15000/all his savings, cash flow important.
48. Note: Candidate's final decision can be either for or against the statement.