Yanis owns a busy restaurant in the city centre. He employs 4 skilled chefs and 6 workers to serve in the restaurant. All employees are on part-time contracts. The chefs are paid a high hourly wage rate, but receive no bonuses. Yanis is worried that too many chefs leave. He is thinking of other ways in which he could motivate the chefs. Yanis wants to open another restaurant but is worried about problems linked to growth. He has prepared a balance sheet as part of his business plan. An extract is shown in Table 2. The current ratio was 1.2:1 in 2016. Table 2: Extract from balance sheet as at 30 September 2017 ($000) Non-current assets | 160 Current assets | 60 Current liabilities | 40 Non-current liabilities | 120

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [1] Executive summary
2. [1] Business aims OR targets OR vision statement
3. [1] Marketing OR any element of mix e.g. pricing, product, place or promotion
4. [1] Market research OR Competition
5. [1] Human resources OR number of employees OR skills needed
6. [1] Production details OR break even
7. [1] Organisational and management details e.g. structure, type of business, name and location of business
8. [2] Clear understanding: e.g. resources owned by business to use for more than one year
9. [1] Some understanding: e.g. things that are owned OR last for more than a year
10. [2] Good application: Correct answer 1.5 (times) OR 1.5:1 OR 3:2
11. [1] Some understanding: correct formula OR 60/40
12. [2] Good application: improved OR increased [1] so better able to repay short term liabilities [1]
13. [1] Some understanding: improved OR has more current assets to repay debts
14. [1] Increased OR improved by 0.3
15. [1] Knowledge Access to finance
16. [1] Analysis so could ask the bank for a loan to help purchase
17. [1] Application his new restaurant
18. [1] Knowledge Cash flow problems OR lack of working capital
19. [1] Application as need to buy additional ingredients
20. [1] Analysis so try to arrange higher credit limit
21. [1] Knowledge Need to recruit more workers
22. [1] Analysis so needs to decide on a suitable way to advertise vacancies
23. [1] Application such as catering magazines
24. [1] Knowledge Communication problems
25. [1] Analysis could hold regular meetings to keep everyone informed OR involved with his chefs or serving staff
26. [1] Application (restaurant staff)
27. [1] Knowledge Competition or lack of demand
28. [1] Analysis so could use promotions
29. [1] Knowledge Government OR legal controls
30. [1] Analysis so may ask for legal advice to check he is not breaking any laws
31. [1] Application when selling food
32. [1] Knowledge Ability to manage or control two locations
33. [1] Analysis so could recruit a manager to oversee the second restaurant
34. [1] Application (restaurant)
35. [1] Knowledge Having a consistent quality
36. [1] Knowledge Depends on reason why people are leaving
37. [1] Application as only a part-time contract
38. [2] Analysis (part-time)
39. [1] Knowledge Little incentive with current method to work harder
40. [1] Application as no bonuses
41. [2] Analysis (no bonuses)
42. [1] Knowledge May not be able to afford alternative methods
43. [1] Application as planning to open another restaurant
44. [2] Analysis (new restaurant)
45. [1] Knowledge Workers may expect high wages
46. [1] Application as skilled
47. [2] Analysis (skilled)
48. [1] Knowledge Current system offers flexibility to employees
49. [1] Knowledge Could offer bonuses
50. [2] Analysis which increases costs so may not be able to expand
51. [1] Application (costs/expansion)
52. [1] Knowledge Increase hours
53. [1] Knowledge Offer job rotation
54. [2] Analysis so there is more variety