Country S is enjoying an economic boom. During this time, businesses have increased their profits and unemployment has fallen. The only problem is inflation. All Active is a private limited company. It owns 20 sport and fitness clubs in country S. The Managing Director said: 'This is a good time to expand by opening 5 more clubs. Finding the right locations is important. We will need to recruit more employees.' He cannot decide whether it would be an advantage for All Active to become a public limited company.

Mark scheme

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

1. [2] Knowledge [2 × 1] award one mark per stage identified
2. Points might include: Job analysis, job description, person specification, advertising, shortlisting, interview, selection.
3. Note: Answer must be from the business viewpoint not the applicant.
4. [2] Clear Understanding [2] – strong rise in level of economic activity OR Period of time when GDP rising rapidly
5. [1] Some Understanding [1] - e.g. economy doing well [high GDP] or rise in level of economic activity or GDP rising
6. Do not credit characteristics of economic boom as these are stated in the stem
7. [4] Knowledge [2] award up to 2 marks for identification of points/knowledge of unemployment
8. Application [2] award up to 2 marks for relevant explanation in context of All Active
9. Relevant points might include:
10. • customers have more income [k] so can spend money on luxuries such as leisure activities [app]
11. • problem recruiting workers [k] as need more for each club [app]
12. • higher wages may be needed [k] for the new staff [app]
13. • more people in work [k] less time to spend at sports club [app]
14. Application could include: Leisure/sports clubs, new workers/expansion/more clubs, gym membership, fitness is an elastic product
15. [6] Knowledge [2 × 1] – identification of relevant sources [max 2]
16. Application [2 × 1] - award 1 mark for each way if relevant reference made to their business
17. Analysis [2 × 1] - award 1 mark for each relevant explanation
18. Relevant points might include:
19. • customers/level of demand[k] need to be in places where people are interested in fitness [app] as they will get more customers [an];
20. • availability of suitable land [k] as likely to need a large space [an] to build a sports club [app];
21. • government regulations [k] which could stop them from building in some locations [an];
22. • competitors [k] customers might be loyal to a rival gym [app] so difficult to gain customers [an]
23. • suppliers [k] training equipment is heavy [app] so costs of transport will be high [an]
24. • Infrastructure/transport links/utilities [k]
25. • access to employees [k] as they will need trainers [app] to help/advise customers [an]
26. • cost of land/rent [k]
27. Application marks may be awarded for appropriate use of the following: equipment, sport/fitness, gym, trainers
28. [6] Knowledge [1] – award 1 mark for identification of relevant issue(s). Positive or negative points allowed [max 1]
29. Application [1] – award 1 mark if relevant reference made to All Active's business
30. Analysis [2] – award up to 2 marks for relevant development of point(s)
31. Evaluation [2] – justified decision made as to whether All Active should become a public limited company. Candidate's final decision can be either for or against the statement.
32. Relevant points might include:
33. Advantages:
34. • Access to greater sources of finance [k] so help fund expansion [an] of 5 more clubs [app]
35. • Greater prestige/status [k] so might be able to attract better managers/employees [an]
36. Disadvantages:
37. • More legal requirements to meet [k]
38. • Already have limited liability [k] as private limited company [app] so is there much benefit [eval]
39. • business is already successful [k] as profits have increased [app] so might have funds for expansion already [an]
40. • Greater Risk of takeover [k]
41. Application marks may be awarded for appropriate use of the following: 5 more clubs, private limited company, fitness, 20 clubs, increasing profits