Si and Ramon are friends. They want to set up a photography business. They would take pictures at weddings, birthdays and other special events. The business will be a partnership. Based on their primary market research, Si believes there is enough demand. Ramon has produced a business plan which shows they need $8000 for a shop and $4000 for equipment. They plan to spend $500 on promotion, but cannot agree on the best method to use.

Mark scheme

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

1. [2] Clear understanding [2] – 2 [or more] people who agree to own and run a business together [2]
2. [1] Some understanding [1] – e.g. 2 or more people run a business
3. Do not accept features
4. [2] Application [2 × 1] - award 1 mark for each relevant method
5. Points could include: questionnaire/survey, interview, consumer panel, observation, focus group
6. Note: Do not accept field research/internet – too vague
7. [4] Knowledge [2 × 1] – identification of relevant sources [max 2]
8. Application [2 × 1] - award 1 mark for each relevant explanation
9. Relevant points might include:
10. • Bank loan [k] so can spread cost of cameras over a period of time [app]
11. • Savings [k] so no need to pay interest on the $4000 [app]
12. • Borrow from family and friends [k]
13. • Leasing [k] as there may not be enough demand [app]
14. • Hire purchase [k] so their new business does not have to pay a large one off cost [app]
15. • Government grant [k]
16. • Additional partner [k]
17. Do not accept retained profits or overdraft as this is a new business
18. Application marks may be awarded for appropriate use of the following: new business, $4000, partnership, cameras or examples of relevant equipment [not equipment on its own], business plan
19. [6] Knowledge [2 × 1] - award 1 mark for each relevant advantage [max 2]
20. Application [2 × 1] - award 1 mark if relevant reference to Si and Ramon's business
21. Analysis [2 × 1] - award 1 mark for each relevant explanation
22. Relevant points might include:
23. • Support loan applications [k] as bank/lenders will want to know that the $12500 [app] can be repaid [an]
24. • Clear aims/guidance for business [k] so they know what they have to do to get there [an]
25. • help decision making [k] as Si believe there is customer demand for service before start [app] so will not waste time and money targeting the wrong people [an]
26. • helps understand the possible risks [k] as they might not have run a business before [app]
27. • provides an estimate of costs [k] for the photography business [app] so they will know how much they need [an]
28. • provides a checklist [k] as they set up [app] so that they don't forget any important task [an]
29. Application marks may be awarded for appropriate use of the following: $12500/$8000/$4000, $500 photography business, new business, set up
30. [6] Knowledge [1] – award 1 mark for identification of relevant method(s) [max 1]
31. Application [1] – award 1 mark if relevant reference made to Si and Ramon's business
32. Analysis [2] – award up to 2 marks for relevant development of point(s)
33. Evaluation [2] – justified decision as to which method of promotion is best option to use
34. NOTE: For 6 marks must explain why chosen method is better than the other option
35. Relevant methods might include: advertising [can include leaflets, posters, radio, television, newspapers, direct mail, social media, websites], sponsorship, promotional pricing (short-term discounts), special offers, branding, competitions, PR.
36. Note: do not accept internet – too vague
37. Application marks may be awarded for appropriate use of the following: – photography, pictures, new business, $500, partnership, weddings, birthdays, special events