Moeen and Ali plan to start up a small luxury hotel in the centre of a city in country R. They have a budget of $30000 to pay for all costs. After researching different types of business organisation, as shown in Table 2, Moeen thinks the hotel should be a private limited company. If the business is to be successful, Ali knows choosing the right location will be important. He cannot decide whether to recruit full-time or part-time employees. Table 2: Private sector business organisations in country R (millions) | Sole trader | 3.0 | | Partnership | 0.5 | | Private limited company | 1.2 | | Other types of business organisation | 0.3 |

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2016). The mark or mark type is shown in brackets.

1. [1] Sales value OR value of output OR revenue
2. [1] Market share
3. [1] Capital employed/value of balance sheet
4. [1] Number of employees
5. [2] 10%
6. [1] e.g. number of partnerships/total number of businesses OR 0.5m/5m
7. [2] Access to more capital [k] which could help increase their budget/so can afford to create luxury image [app]
8. [2] Benefit from limited liability [k] if new business fails [app]
9. [2] Continuity of existence [k] if anything happens to one of them will not have to close hotel [app]
10. [1] Separate legal identity [k]
11. [1] Control over who buys shares [k]
12. [3] Competition [k] from other hotels [app] so might not gain as many customers [an]
13. [3] Cost of land [k] as has to be city centre [app] which is likely to be more expensive [an]
14. [3] Availability of suitable land [k] as need a large space [an] OR available space for parking [k] for guests [app]
15. [1] Close to customers/level of demand [k]
16. [3] Infrastructure, e.g. water, electricity, internet OR transport links [k] so employees/customers can get there without any difficulty [an]
17. [3] Image/environment [k] the wrong site might not suggest luxury [app] making it difficult to attract customers [an]
18. [1] Government regulations [k] could stop them from opening in some locations [an]
19. [3] Access to suitable employees [k] as need full/part-time [app] to provide customers the right level of service [an]
20. [1] Close to suppliers [k]
21. [2] More flexible hours [k] as it is a hotel [app] need staff all the time [an]
22. [2] Easier to ask workers to work at busy times [k] if more guests [app] more employees are needed [an]
23. [2] When not working no need to pay wages [k] so is less expensive than full time [an] as which could help this new business [app]
24. [2] Need to recruit/train more employees [k] so uses up more of budget [app] which will take time [an]
25. [1] May leave for full time job elsewhere [k]
26. [2] Consistency of service [k] helps its luxury image [app] so could help boost reputation/ attract more customers [an]
27. [1] Workers likely to be more committed to business [k]
28. [1] Easy to communicate/update [k] as employees always there [an]
29. [1] Internal pool of candidates for future promotion [k]
30. [1] Fewer workers needed [k]