Cambridge International General Certificate of Secondary Education

0450 Business Studies June 2023

Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/11
Short Answer/Data Response 11

Key messages

• As in previous sessions candidates should be reminded to learn precise definitions for all
key terms and to use a different point of application and analysis for each point of
knowledge. A point can only be credited once within a given answer.
• Effective evaluation is an area which continues to require development. Candidates should
be reminded that evaluation must include a justified decision that follows on from the points
raised in the answer. A repetition of points already explained in the answer will not gain
evaluation marks. The mark scheme for each part (e) question includes one example of
how evaluation may be demonstrated in the answer.

General comments

Candidates this session found some of the questions quite challenging. This was particularly true of
Questions 2(a), 2(d) each of the part (e). Candidates had quite limited knowledge of some aspects of these
topics. This led to candidates trying to alter the questions asked to fit with their knowledge base. This was
most noticeable in Questions 1(d), 2(d) and 4(e).

Candidates would benefit from a greater depth of knowledge of topics 1.3.3, 1.4.1, 6.2.1 and 6.3.1

Comments on specific questions

Question 1

(a) Candidates were generally aware of this term and recognised that the key elements were the focus
and higher skills level. Weaker responses lost marks by confusing specialisation with division of
labour.

(b) This topic was well understood by most candidates. Some responses confused methods of
production with management to achieve lean production. Such responses incorrectly stated lean,
JIT and Kaizen.

(c) Candidates did not clearly understand this topic. Better responses identified the benefits of fewer
complaints and less reworking for this manufacturing business. Some strong responses struggled
to apply both of their knowledge points to the business in the stem of the question and simply
repeated carpet in each answer. Weaker responses incorrectly explained that this would increase
quality or missed the focus of the question and described the benefits to the customer not WLT.

(d) This question produced a range of responses. The best answers explained the benefit of increased
access to new markets and the potential threat of increased competition for this manufacturing
business. Responses needed to develop fully to gain both explanation marks available. Candidates
for example who identified increased competition as a threat could not explain the potential of this
on WLT. Some candidate’s lost marks by confusing globalisation with international trade. A
noticeable number of candidates discussed the dangers of child labour, cultural differences and
quotas which were irrelevant to the question asked.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

(e) This was a challenging question for candidates and a mark of one or two was common as
candidates struggled to provide effective analysis. The strongest answers recognised the
improvements may reduce mistakes reducing wastage costs but at a financial cost in terms of
training time and money. The weakest answers simply repeated the word efficiency or stated that
output would increase rather than output per worker.

Question 2

(a) A common error was to define a cashflow problem i.e., cash inflow less than cash outflow rather
than identify the reasons why this might occur. The most common correct answers were a fall in
demand and allowing customers too long a credit period.

(b) Over 80 per cent of candidates correctly calculated these two figures. Some candidates lost a mark
by indicating incorrectly that X was a negative figure.

(c) A wide variety of suitable cash inflows were given in answer to this question. A small number of
candidates did not attempt this question. An error evident in several responses was to state
investors and trade receivables which are not inflows of money. Better responses precisely
identified funds from investors and payments to clear trade receivables.

(d) Some candidates found this to be the most challenging part (d) question on the paper. Advantages
were often explained correctly but a suitable disadvantage was not always clearly identified. A
common incorrect answer was that funds would be limited as this was not a PLC. The question
required a disadvantage of the private limited companies not a discussion of why PLC would be
better. The strongest responses were able to explain how limited liability would benefit the owners,
but that legal formalities would be a disadvantage.

(e) Candidates frequently misunderstood this question. The strongest answers identified that a lack of
finance, a small market size or the fear of diseconomies of scale would limit the ability of a
business to expand. Very few candidates were able to offer effective evaluation, those who
attempted it often simply repeated points already credited as analysis. Weaker answers offered
general statements such as ‘because it is expensive to change’. Such points were too vague for
credit.

Question 3

(a) Some candidates confused a job description and person specification. Often such candidates were
able to gain one mark by showing some understanding of the term. The weakest responses simply
reordered the words and stated that this was a ‘description of the job’ gaining no credit.

(b) All five levels of Maslow were presented in answering this question. Some candidates however,
provided answers which were confused such as psychological or self – fulfilment. These answers
were not rewardable. A small number of candidates did not answer this question.

(c) This question was generally, well answered by most candidates who explained the qualifications,
skills or experience required for this delivery business.

(d) This question produced a range of responses. Candidates who understood suitable methods of
finance frequently repeated the same application and analysis points in both parts of the question.
Most frequently this was by explaining loans would have interest and retained profit would not. This
mirror argument was not sufficient to gain both analysis marks. Several responses confused profit
and revenue with retained profit. The weakest responses stated short-term sources such as an
overdraft which is unlikely to be sufficient to purchase 20 vehicles. Several candidates did not
attempt this question.

(e) Candidates struggled to gain the analysis and evaluation marks available in this question, many
simply identified two points of knowledge concerning part-time workers. The strongest answers
focused on the view that part-time workers would be more flexible and would create an overall
lower wage bill. Weaker answers explained incorrectly that part time workers would be less tired or
lack skills. Such candidates seemed to be unaware that highly skilled consultants are often
employed on a part time basis as their specialist skills are not required full time.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

Question 4

(a) This question was well answered the most common correct answers being sample size, bias, and
poorly worded questions. Weaker responses incorrectly stated that a key factor was the type of
research completed. Primary research was often stated incorrectly as being more accurate.

(b) This topic was not well understood. Very few candidates provided two distinct benefits. Many
gained one mark by showing some awareness that segmentation would make research simpler.
The weakest responses incorrectly stated that segmentation would allow a business to ‘charge a
higher price’. Some candidates did not attempt this question.

(c) Candidates who recognised that the question required an explanation of methods NLR could use to
be more environmentally friendly scored highly. The best responses identified an action, such as
using recyclable material and linked this to the skin care producer. Many candidates confused
environmentally friendly and ethical actions. Such responses often explained that the business
should not test products on animals. These responses gained zero marks.

(d) There were few good answers to this question. Knowledge marks were awarded for correctly
stating either two stages of the product life cycle or pricing methods. Responses which stated a
stage of the life cycle life and then explained how prices would set in this stage scored highly. Such
responses were able to clearly apply their answers to the situation described in the question stem.
Responses which identified pricing strategies by name often struggled to develop in the context of
the question set. The weakest responses confused the product and business cycle and stated peak
and trough as their two stages. A small but significant number of candidates did not attempt this
question.

(e) A mark of 2 or 3 was common on this question. Better responses stated two functions of
packaging. Very few responses effectively explained the link between brand image and packaging
to gain the analysis marks available. Those that did often gained one knowledge mark by
explaining the potential to attract customers or stand out from competitor’s products. The weakest
responses explained the importance of brand image with no link to packaging which was the key
focus of the question.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/12
Short Answer/Data Response 12

Key messages

• Definitions need to be clear and precise.

• Candidates should be encouraged to use information from the stem to help answer part (c) and part (d)
questions as this provides the basis for application. Different points of application are needed to access
both application marks within the same question.
• Candidates should not use the same analysis for both points within the same question.
• Evaluation requires candidates to make a supported judgement which should follow on from points
raised in the answer, and clearly answer the question set. A decision alone, or summary of points made,
are not evaluation. An example of an answer which includes evaluation can be found in mark scheme
for each part (e) question.

General comments

This was an accessible paper with most candidates demonstrating good knowledge of most topics. Many
candidates continue to find accessing the application, analysis and evaluation marks more challenging.

Parts (a) and (b) of each question were generally well attempted. However, definitions often lacked the
necessary precision to access the marks available.

Candidates should be reminded that questions can be set on any area of the syllabus. It was clear that some
candidates were not familiar with topics such as why markets are competitive and the stages of the business
cycle.

For most part (c) (excluding 3c which only assessed knowledge) and all part (d) questions, candidates
needed to use information from the stem to link their answers to the scenario to access application marks.
Candidates should not use the same application for more than one point in their answer.

Candidates must understand which skills are being assessed in each question. Some candidates included
analysis in part (c) questions and application in part (e) questions. However, part (c) questions only assess
knowledge or knowledge and application, while part (e) questions assess knowledge, analysis and
evaluation. No other skills can be awarded in these questions.

Developing evaluation skills is important. The School Support Hub provides skills exercises which candidates
might find helpful. Many responses still do not include any decision in part (e) questions. Of those
candidates who did attempt an evaluative comment, most were unable to provide reasoned statements to
support the decision made. One approach is to make a choice, provide a reason for this decision, and then
explain why it is better than the alternative discussed.

Comments on specific questions

Question 1

(a) This question was well answered by most candidates.

(b) Candidates who understood break-even charts did well on this question. A common mistake was to
represent break-even output as a financial value instead of as units. Break-even output was 500
units and break-even revenue was $60 000.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

(c) There were many excellent answers to this question. A common mistake was to use the same
application for both answers. Other candidates focused on the impact of higher prices on sales -
forgetting that a break-even chart assumes all items are sold.

(d) This question was poorly answered by most candidates. Responses which gained knowledge
marks did tend to gain application for relevant references to this watch manufacturer. However,
most candidates struggled to develop their points. Many candidates continue to make incorrect
assumptions about full-time employees. For example, they must be more skilled, efficient or
motivated which is not necessarily true as this depends on the job and/or the person. Other
candidates defined the term or simply stated they would produce more because they were there for
longer periods of time. These answers were not awarded any marks.

(e) Good knowledge of job production was evident in most responses. Better responses were able to
develop the points made. Instead of analysis weaker responses identified additional knowledge
points. A common error was repetition. For example, stating job production has no economies of
scale while batch production allows for some economies of scale is classed as a mirror argument
so will only be credited once. Flow production was mentioned in many responses, but this is not
appropriate for a small business. Other candidates applied their answer to FBW which was
unnecessary in this generic question. Where a decision was made, this was either not supported or
repeated earlier points made so did not count as evaluation.

Question 2

(a) The best answers identified ways stated in the mark scheme such as help set objectives and
support requests for loans. A common mistake was a lack of precision. Answers such as help
decision making, avoid problems or be more organised were too vague. Other candidates identified
elements of a business plan which was not the focus of this question.

(b) A well answered question by most candidates.

(c) Good knowledge was evident in most responses with speed and no written record typical
advantages and disadvantages respectively. A common mistake was a lack of application which
meant candidates missed two potential marks. Other candidates outlined general factors such as a
language barrier which could refer to any method of communication. Some candidates made vague
references that using a phone was easy without indicating why this might be the case.

(d) Most candidates could identify at least one factor with skills and access to finance popular choices.
Better responses were able to access the application marks by recognising that Meena was a sole
trader or that she was looking to expand her house-cleaning business. Most candidates found it
difficult to offer relevant development. A common mistake was to focus on who should be the
partner rather than whether she should have one.

(e) Candidates were clearly familiar with the concept of market research and most candidates were
therefore able to access the knowledge marks. Better responses tended to gain the analysis marks
for explaining either the advantages or disadvantages of the methods discussed. The best answers
then used this information as the basis for their evaluation. However, to access both evaluation
marks, they needed to focus on this research being for a new product or service. Some candidates
described a method without identifying it which was necessary to access any marks. Other
candidates made vague statements such as it would be easy to gather information or commented
on the accuracy of the data gathered. A small number of candidates had the wrong focus as they
identified reasons for carrying out primary market research.

Question 3

(a) Most candidates understood the term but did not gain the second mark as they said the tax was on
imported goods without stating what an import was. A common mistake was to confuse an import
tariff with a quota. Many responses lacked precision as they referred to money or costs which could
be confused with the general costs of international trade. Other candidates identified reasons why
tariffs were introduced.

(b) This question was poorly answered by most candidates. A common mistake was to identify factors
affecting demand rather than reasons why some markets are more competitive.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

(c) Most candidates could identify at least one stage with growth the most popular correct answer. The
most common mistake was to confuse the business cycle with the product life cycle.

(d) This question was split into two parts. Many candidates understood that an import quota is likely to
reduce the amount of goods that could be imported. Better responses developed this point to show
how this might affect the business in terms of lower output or having to find alternative suppliers. A
common mistake was to confuse quotas with tariffs. Most candidates found the second part more
challenging. Many confused currency appreciation with currency depreciation, so wrongly assumed
that imports would be more expensive.

(e) This question produced a range of responses. The best answers understood the role retailers could
play through wider distribution and advertising and explained how this could lead to higher sales or
lower costs. Most candidates had some knowledge of distribution channels, but many had the
wrong focus as they discussed the advantages to retailers, wholesalers or customers rather than
manufacturers. Weaker responses struggled to develop the points made. Without analysis,
candidates could not access evaluation marks.

Question 4

(a) Many candidates showed partial understanding of the term but did not provide a clear definition. A
common mistake was to define profit or identify uses of profit. Other candidates reordered the
words which showed no understanding.

(b) Most candidates either understood that a current asset was owned or that it was held in the
business for less than one year. The best answers mentioned both elements. One common
mistake was to refer to ‘a short period of time’ without specifying what this meant. Some repeated
the word ‘asset’ or gave examples which did not define the term. Other candidates confused assets
with liabilities by saying the assets were owed to others.

(c) Many candidates understood that working capital is used to pay day-to-day expenses. However,
most candidates found it difficult to outline a second reason. Common mistakes were to offer
different examples of costs such as paying employees and suppliers which could only be awarded
once. Other candidates confused working capital with profit. Some responses defined the term
which was unnecessary.

(d) This question produced a range of responses. Candidates generally did better when considering
the effect on employees as stakeholders, but often struggled to explain the effect on suppliers.
Stronger responses recognised promotion could be an opportunity for employees while suppliers
might gain additional orders. They then developed these points to show the effect on wages and
revenue respectively. There were many mistakes and misunderstandings. For example, some
assumed suppliers would provide raw materials to CPF ignoring the context which states CPF was
a retailer. Other candidates assumed the expansion would mean employees being made
redundant or receiving lower wages, while suppliers would not be paid. Some responses focused
on the effect on CPF instead of the named stakeholders.

(e) Good knowledge was evident in many responses, but most candidates struggled to develop their
points. Instead of analysis candidates tended to identify additional points of knowledge. A common
mistake was repetition. Stating a loan incurs interest but equity does not is the same point and will
only be credited once. Care is needed when using abbreviations. For example, PLC is commonly
used to refer to a public limited company so such answers could not be credited. Some candidates
compared the advantages and disadvantages of the two types of limited companies which did not
answer the question. Definitions of a private limited company were unnecessary.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/13
Short Answer/Data Response

Key messages

• Definitions must be clear and precise.

• Candidates should be encouraged to use information from the stem to help answer part (c) and part (d)
questions as this provides the basis for application. Different contextual references are needed to
access the two application marks within the same question.
• Candidates should not use the same analysis for both points within the same question.
• Evaluation requires candidates to make a supported judgement which should follow on from points
raised in the answer, and clearly answer the question set. A decision alone or summary of points made
is not evaluation. An example of an answer which includes evaluation can be found in the mark scheme
for each part (e) question.

General comments

The paper proved to be accessible and produced a wide range of marks. Overall, candidates showed good
knowledge of concepts, but many found accessing the application, analysis and evaluation marks more
challenging.

The part (a) and (b) of each question were generally well attempted. However, many candidates lacked the
necessary precision in definitions or range of knowledge to access all the marks available.

It is important for candidates to be reminded that questions can be set on any area of the syllabus. It was
clear that some candidates were not familiar with topics such as mass market and communication barriers.

For most part (c) (excluding 2(c) which only assessed knowledge) and all part (d) questions, candidates
need to use information from the stem to link their answers to the scenario to achieve application marks.
Candidates should not use the same application for both points within a question.

Candidates must understand which skills are being assessed in each question. Some included analysis in
part (c) questions and application in part (e) questions. However, part (c) questions only assess knowledge
or knowledge and application while part (e) assesses knowledge, analysis and evaluation. No other skills
can be awarded in these questions.

Candidates need to develop their evaluative skills. Of those candidates who did attempt an evaluative
comment, many were unable to provide reasoned statements to back up the decision made. One approach
is to make a choice, provide a reason for this decision and then explain why it is better than the alternative
discussed.

Comments on specific questions

Question 1

(a) There was a lot of confusion about the term ‘mass market’. Full definitions were rare. Some gained
marks for understanding it would have many customers. Only the best responses recognised the
sales were for a single product. Many candidates did not score any marks on this question as
answers about lots of products or many sellers were incorrect.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

(b) This question was well answered by most candidates. Those who understood how a cash flow
forecast works gained both marks. The most common incorrect answer was for Y where
candidates wrote $0, as the candidates did not realise net cashflow was a negative value.

(c) This question proved challenging for most candidates. Better responses recognised that cash is
needed to pay pay-to-day expenses or for use in emergencies. Unfortunately, many forgot to link
points to the context so missed the opportunity to gain application marks. A common
misconception was to confuse cashflow with profit so answers about funding expansion were not
credited.

(d) Many candidates gained knowledge for identifying ways such as asking customers to pay sooner
or asking creditors for longer to pay. Better responses then explained how each way could increase
cash inflows and reduce cash outflows respectively. However, many answers lacked precision by
referring to cashflow without stating which element of it was affected. Others confused cashflow
with profit or revenue. Some candidates discussed the impact on production which ignored the fact
the business was a retailer. For applied questions, it is important to read the question and context
carefully.

(e) Most gained knowledge for identifying ways such as loyalty schemes or good customer service.
Only the best responses were able to develop points to show how the method worked. Instead of
development, most simply stated that it would ‘increase customer loyalty’ or used other words such
as ‘customers would return’, which is another way of saying the same thing. Some candidates
explained ways to increase sales which is a different question.

Question 2

(a) Most candidates understood that quality control involves checking the work. However, many
struggled to provide a precise definition. Some confused the term with quality assurance, which
involves carrying out checking throughout the production process, rather than just at the end.
Others misread the question so identified reasons for quality control.

(b) Most candidates achieved one mark for identifying actions a pressure group might take but some
struggled to identify a second way. There were a range of mistakes. Some candidates identified
ways a business might try to be environmentally friendly or identified actions only available to
governments. Other candidates identified reasons why a pressure group might want to influence
decisions.

(c) Many candidates were able to identify two or three benefits of increasing efficiency with fewer
mistakes and increased output being typical responses. Most candidates struggled to identify four
benefits. A common mistake was to assume that efficiency would increase sales.

(d) Good knowledge was evident in most responses. Better answers then used the information from
the scenario to help access the application marks. Analysis was generally limited as most
candidates tended to repeat the knowledge point. A common mistake was to identify costs and
benefits to the business rather than a third party.

(e) Most candidates were able to identify at least one factor, namely storage space or perishability.
Better answers were then able to develop these points to show why each might be a factor to
consider when deciding how much inventory to hold. Instead of analysis, many candidates simply
repeated the knowledge point or identified another factor. Evaluation was limited or not attempted.

Question 3

(a) This was another question where candidates who had learned the definition gained both marks.
Most candidates gained marks for understanding that it was about who reports to whom. A
common mistake was to confuse span of control with other concepts such as chain of command or
organisational chart. Others made vague statements which attempted to reuse the word control
without linking it to the number of employees.

(b) This question was well answered by most candidates. Candidates were not penalised for the
spelling of laissez-faire if the meaning was clear. A common mistake was to offer vague
descriptions of different leadership styles without identifying them.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

(c) Most candidates understood that delegation could allow managers time to focus on other tasks or
increase employee motivation. A common mistake was to forget to identify who the point related to.
For example, some candidates said it would ‘reduce workload’ without reference to the managers.
Other candidates made vague statements about communication barriers or increased efficiency.

(d) Good knowledge was evident in most answers. Better responses did develop points in context. For
example, a better reputation could result in higher sales for this insurance business. Some
candidates had the wrong focus so discussed problems of being unethical while others explained
how a business could be ethical. Neither approach was awardable. Many missed out on application
marks as there was no attempt to link points to the scenario.

(e) This was a challenging question for most candidates. Knowledge marks were generally awarded
for identifying other barriers to communication. All candidates struggled to develop points. Without
analysis, evaluation cannot be considered. Many candidates misinterpreted this question so
focussed on communication in general rather than the problems caused by a lack of feedback as a
barrier to communication. Other candidates identified ways to encourage feedback or reasons why
people communicate. These answers could not be credited.

Question 4

(a) Most candidates could identify at least one way with loans being a typical response. A common
error was repetition. Many candidates identified two types of financial support which can only be
awarded once. Others made vague comments such as offering to help with something. Some
candidates identified reasons why a government might support start-ups. Such answers were not
credited.

(b) Candidates tended to score either two or zero marks on this question. A common mistake was to
identify types of markets, namely mass or niche, instead of stating ways a market can be
segmented.

(c) This question was well answered by most candidates. The best responses outlined two
characteristics and used the information provided to link their points to Meena, who was planning to
start a jewellery business. Weaker responses tended to offer vague descriptions without identifying
a specific characteristic. Some candidates wrongly outlined features of a manager or sole trader.

(d) Candidates were clearly familiar with the concept of sole trader and therefore most were able to
access at least one of the knowledge marks. Many candidates then gained application marks for an
appropriate reference to jewellery or for recognising the business was a start-up. Weaker
responses struggled to develop points made. The most common answer was ‘not having to share
profit’ but no awardable analysis was offered for this. Many candidates wrongly assumed that
sharing profit would mean less profit, but this is not necessarily true as a successful business might
generate more profit for the two partners to share.

(e) Good knowledge was evident in some responses. However, most candidates struggled to develop
points in enough detail to gain analysis. Without analysis it is not possible to access evaluation.
One way to access analysis could be to consider other methods of market research and explain the
advantages and disadvantages of these alternative approaches. This could then form the basis for
deciding whether government sources are the best method for a start-up business to use. A
common mistake was to identify reasons for using market research. Some candidates compared
primary and secondary methods of market research in general terms rather than discussing
individual methods.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/21
Case Study 21

Key messages

Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one (a)
question that will usually be generic. Applying answers to the case will ensure responses are appropriate for
each given situation.

• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both parts (a) and (b) for
application. In this particular case study candidates were expected to refer to a large business that
operates a chain of 500 fast-food restaurants. It is advisable for candidates to ask themselves about the
size of the business, is it a service or manufacturer and what is the type of business organisation? This
may add to the quality of their answers.
• Candidates should try to give a full explanation of positive and negative consequences of a business
decision when this is asked for. Responses require developed reasoning rather than simple description;
listed points generally only gain Level 1 whereas an explanation of a point could move the answer to
Level 2. Few well developed points will score higher marks than a long list of simple statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.

General comments

Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of VP, a large business operating fast-food restaurants, provided an accessible scenario
for candidates. Those who applied their answers to the context of VP boosted their marks much further. The
majority of candidates seemed to have time to complete the paper and attempted all questions.

Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Also, the question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees. Many candidates showed good
knowledge and understanding of the full range of the syllabus that was assessed, but it was clear that certain
topics were not as well understood. The weakest understanding was of short- and long-term business
finance and economic influences on business.

Overall, the standard was good with very few weak scripts. Candidates often provided answers in context
which enabled access to application marks. However, candidates should make sure that different examples
of application are included in each section of (a) questions (not 1a on this paper) and the
conclusion/recommendation should also be applied to the case in (b) questions. A lack of analysis and
evaluation resulted in answers remaining in the lower-level mark band. Candidates should aim to consider
the consequences/implications/long term/short term/balance issues of the decisions to secure Level 2 or
Level 3 marks in the conclusion/recommendation.

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 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

Comments on specific questions

Question 1

(a) The majority of candidates could name and explain four barriers to communication for a business
and offered an appropriate explanation. The business operates 500 restaurants across Country Z
so one barrier would be caused by a long chain of command where messages could easily be
distorted as they passed through each level of the hierarchy. Many responses mentioned problems
with the sender or receiver, but the most common response focused on the barrier to
communication of poor technology. Internet failure, lack of computers and weak technology skills
amongst the workers were often discussed. Some responses offered only bullet points with
insufficient explanation to earn the full marks available.

(b) This question required candidates to consider two ways that VP can purchase its inventory, either
by head office or restaurant managers. In the discussion about the head office purchasing the
inventory, many candidates identified the benefit of bulk buying ingredients which would bring
advantages of purchasing economies of scale reducing unit costs. This would then increase profit
margins for VP. However, it might be necessary to store some ingredients in a warehouse because
not all branches would order the same amount at the same time. This kind of developed
explanation earned Level 2 reward. Simple statements which mentioned that head office could
retain responsibility and control for ordering ingredients for all 500 restaurants earned only Level 1
reward. Consideration of the restaurant managers ordering their own inventory often cited the
benefit of local suppliers being able to deliver much more quickly in response to changes in
demand. More importantly the food would be fresher which would enhance the reputation of VP’s
restaurants. However, the restaurant managers are already very busy and may not have the time
to order ingredients.

Question 2

(a) Knowledge of the topic of delegation was generally strong. Many candidates identified the
advantages of restaurant managers delegating tasks to assistant managers as an opportunity for
the manager to focus on other tasks and to give the assistant manager the chance to develop new
skills and gain experience in a managerial role. The disadvantages of delegation were well
considered. The restaurant manager would still carry the responsibility of the quality of food served
and the reputation of the restaurant, whilst lack of experience on the part of the assistant manager
might require extra training in customer service or food hygiene knowledge. There were four
application marks in this question, so it was possible to earn maximum marks by making four clear
points with reference to the context of VP Restaurants in each part of the response. Some weaker
responses offered repetition of points or answered in a generic style.

(b) Some candidates found this question quite challenging. Using the information from the case study,
they were asked to compare country A and country B as possible locations for new restaurants. In
Country A the higher average variable costs and higher wage rates would lead to higher costs
overall. Even though VP might charge $20 for each meal they would have to be mindful of the high
level of competition which might require an expensive marketing campaign. This would further
increase costs and reduce profit margins. The option of locating new restaurants in Country B
would allow VP to operate with much lower variable costs and wage rates. Since unemployment
was high it would likely be easier to recruit cooks and servers for the new restaurants. However,
high unemployment would make it less likely for customers to afford fast food because the average
disposable income would be quite low. This might keep sales below the expected level and
therefore restaurants might not be profitable. To earn Level 3 credit in the conclusion responses
needed to make a justified judgement about which option would be the ideal choice. The best
answers avoided repeating points made earlier in the response and related to why one location
was more suitable and the other less suitable for VP.

Question 3

(a) This was a well-answered question. Many candidates were able to outline the aim of gaining higher
profit or accessing new markets as a possible reason for expansion. The benefits of operating on a
large scale to reduce unit costs from bulk buying of food ingredients was often discussed by
candidates. Other strong responses explained that expansion would help VP gain a larger share of
the market which could strengthen the brand image and develop customer loyalty. To gain the
highest number of marks on this question additional explanation was required which also referred

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

to the context of VP’s restaurants. Some responses briefly mentioned several reasons for
expansion instead of developing the explanation of just two points.

(b) This question required candidates to consider the benefits and limitations of VP entering a new
country as a joint venture or franchising. Not all responses showed good knowledge of these two
methods of operating a business. The discussion about operating as a joint venture often
mentioned the benefit of sharing ideas and using the partner’s knowledge of the local market
before the restaurants opened in the new country. This would make it less risky for VP and less
expensive in terms of market research. However, the joint venture might result in disagreements
and an unequal sharing of the workload and resources. The possibility of franchising the VP brand
would reduce the start-up costs of new restaurants for VP. The franchisee would make the bulk of
the investment in premises and kitchen equipment rather than VP. VP would benefit from the fees
paid by the franchisee and expansion of the restaurants could occur quite rapidly. Some weaker
candidates wrongly assumed that VP themselves would be franchisees and made contradictory
arguments in their response.

Question 4

(a) This question required candidates to explain, using an example, the reason why VP might need
short-term and long-term finance. Strong responses mentioned that VP would need short-term
finance to pay day-to-day expenses such as paying wages to more than 25, 000 restaurant
workers. This might require an overdraft from the bank to enable wages to be paid on time every
week. Long-term finance might be needed for the restaurants that needed to update ovens and
cooking equipment. This would be very expensive. A bank loan might be an appropriate method of
finance in this case so that VP could spread repayments over a few years. This topic did not seem
to be well-known by quite a large number of candidates. Some responses offered brief mention of
debts without explaining a specific reason for needing finance and, more importantly, not linking
their answer to VP itself.

(b) The discussion about the impact of three changes in the economy of Country Z resulted in some
varied responses. It was often mentioned that an increase in interest rates would not only increase
repayments on any loans taken by VP but also reduce consumer spending in the economy as a
whole. As a result, sales of fast-food at VP might fall and profits decrease. Many candidates argued
that there would be a significant impact on VP following the depreciation of the exchange rate in
Country Z. Imported food ingredients would cost much more, especially since 30 per cent of VP’s
ingredients were imported. It might mean that the business buys from local suppliers instead of
importing to keep their costs down, but the quality of the food may not be as good as the imported
food supplies. Many candidates suggested that introducing legal controls for listing ingredients in
its meals would not have a major impact on VP. They already reprint menus frequently when new
meals were introduced so listing would require just a little more time and attention to detail. Better
recommendations did more than offer repeated earlier points – they weighed up the impact, large
or small, which resulted from the economic changes. The best answers justified their decision with
reasoned argument about which would affect VP the most.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/22
Case Study 22

Key messages

Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one (a)
question which will be generic. Applying answers to the case will ensure responses are appropriate for the
given situation.

• To do well in this paper, candidates must make clear reference, or application, to the accompanying
case study. Specific marks are allocated throughout the mark scheme in both (a) and (b) questions for
application. In this particular case study, candidates were expected to refer to a start-up theatre
business. It is advisable for candidates to ask themselves about the size of the business, whether it is a
service business or a manufacturer, and the type of business organisation.
• Candidates should try to give a full explanation of both the positive and negative consequences of a
business decision when this is asked for. Responses require developed reasoning rather than simple
description; listed points generally only gain Level 1 whereas an explanation of a point could move the
answer to Level 2. A few well developed points will achieve higher marks than a long list of simple
statements.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced argument
earlier in the answer. A recommendation or conclusion should justify the option chosen, without full
repetition of the previous analysis, be applied to the case and make reference to why the alternative
option(s) was rejected.

General comments

Candidates had generally been well prepared for this examination and understood what was expected of
them. The context of ET, a start-up theatre business, provided an accessible scenario for candidates. Those
who applied their answers to the context of ET achieved higher marks. The majority of candidates seemed to
have time to complete the paper and attempted all questions.

Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. The question
should be read carefully to ensure answers are appropriate and clearly address the question asked, such as
answering from the point of view of a business rather than its employees.

Many candidates showed good knowledge and understanding of the full range of the syllabus that was
assessed, but in some cases it was clear that certain topics were not as well understood. The weakest
understanding was of incorporated and unincorporated businesses, the objectives of a social enterprise, the
importance of preparing a cash-flow forecast and the roles of marketing.

Overall, the standard was good, with very few weak scripts, which was in line with previous years.
Candidates often provided answers in context which enabled them to access the application marks.
However, candidates should make sure that different examples of application are included in each section of
(a) questions, and that the conclusion/recommendation is also applied to the case in (b) questions. A lack of
analysis and evaluation resulted in answers remaining in the lower level mark band. Candidates should aim
to consider the consequences / implications / long-term / short-term / balance issues of the decisions to
secure Level 2 or Level 3 marks in the conclusion/recommendation.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

Comments on specific questions

Question 1

(a) The majority of candidates were able to state at least three, if not four, characteristics of an
entrepreneur as well as explaining some of these characteristics. The most popular characteristics
were risk-taker, hard worker, effective communicator, creative and innovative. A few candidates
stated the characteristics but explained the characteristics using the same term in the explanation,
for example, being creative... an entrepreneur should be creative to be successful or a risk-taker…
that the entrepreneur would have to take risks. Some candidates attempted to apply their
explanations to ET even though this was a generic question. The weakest responses did not focus
on the personal attributes of the entrepreneur but on other factors for a successful business, such
as having sufficient capital and drawing up a business plan.

(b) This was a challenging question. Many candidates were able to identify the benefits and drawbacks
of partnerships and private limited companies. However, they did not always compare them with
each other but with sole traders or public limited companies. Some responses included mirror
arguments, such as listing ‘not a separate legal identity’ for partnerships and ‘separate legal
identity’ for private limited companies which could only be credited once. Weaker responses
confused limited and unlimited liability, and private limited companies with the public sector. The
concepts of personal liability, continuity, ease of setting up and privacy of information were well
understood and well explained in stronger responses. However, only the strongest candidates
could justify which option to choose and which one to reject without repeating earlier points.

Question 2

(a) This question was well answered with the majority of candidates identifying survival or profit as the
objective for ET and helping the community as the objective for Daycare. A large number of
candidates could explain the objectives well and in context. However, weaker responses did not
focus on one objective, or they focused on how the objective could be achieved rather than why ET
or Daycare would have that objective. An error made by some candidates in the first section about
ET’s objectives was to think that profit is acquired in order to pay expenses rather than being the
surplus after those expenses have been met. A minority of candidates got confused and thought
ET was running Daycare.

(b) This question differentiated candidates into those that could carry out calculations using the data
provided and those who could not. It should be emphasised to candidates that when the question
says justify your answer using suitable calculations then calculations should be included in the
answer. Answers need to go beyond comments such as makes a loss and give the actual figure.
Weaker responses gave a basic answer and included a comparison of the figures from Appendix 2,
such as the forecast revenue is higher for Option 2. Some answers simply said the revenue was
high, but it is not known whether this is true. Some candidates stated that Option 1 made a loss
and did not include the actual figure but did calculate the actual profit for Option 2. Stronger
candidates could calculate both the profit and loss figures. Some candidates also calculated the
profit margins for both options as well, although this was not necessary to make a valid
recommendation. The most popular recommendation was to choose Option 2 as it made a profit,
and this was argued to be important for a new business. A smaller number of candidates argued
that the low-income area may not yield many customers who could pay the higher price for Option
2 and therefore Option 1 should be chosen as the profit was only a forecast and may not be
achieved. A minority of weaker responses made assumptions about staff motivation or the quality
of the performance, which was based on their own opinions rather than the actual information
provided in the appendix.

Question 3

(a) This question was not well answered by the majority of candidates. The most common error was to
confuse cash flow with profit. Stronger candidates recognised the use of cash flow in planning,
decision-making, for obtaining a bank loan, ensuring there is cash for day-to-day activities and
avoiding a liquidity problem. For those candidates who were able to identify appropriate reasons,
most were not able to apply them to the case study and therefore did not gain the second mark for
each reason. A number of candidates discussed cash inflows and outflows separately. The terms
‘revenue, expenditure, finance, money’ were used instead of ‘inflows, outflows, cash, working
capital.’ It was important for candidates to recognise that this was a forecast not a report on the

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

previous period. Another reason for weaker answers was the amount of repetition, for example
candidates gave multiple examples of expenses as cash outflows that could be monitored via the
cash-flow forecast.

(b) Many candidates could discuss the importance of identifying customers’ needs. Weaker responses
offered repetition of the question and often resulted in overlapping answers between the three parts
of the question. Better responses discussed in detail why identifying a specific target market was
important and also recognised the significance of providing suitable performances at a price that
would satisfy customers, particularly in a low-income area. Additionally, these candidates
established a connection between maintaining a strong reputation through excellent customer
service and gaining customer loyalty, ultimately leading to an increase in revenue and market
share. Many candidates did provide a justified conclusion with ‘identifying customers’ needs’ most
likely to be seen as the most important because the other two roles are based on this. A small
minority of candidates did not answer the question as they explained how the three roles could be
achieved rather than why they were important, for example, providing a description of primary
research methods to identify customers’ needs.

Question 4

(a) The majority of candidates answered this question well and discussed the leadership styles of
autocratic and democratic with laissez-faire being the least popular style. Many candidates then
went on to explain how each leadership style was used including its benefits and/or drawbacks.
The most common errors confused democratic leadership with delegation. Weaker responses
included explanations that were too vague, for example it was not always clear if an explanation
was for democratic or laissez-faire. Many answers were generic and hence application marks were
not gained so full marks were not achieved, even if the response had a good explanation of each
leadership style. Some weaker candidates mixed up the explanation of the leadership style, for
example they explained autocratic under the heading of democratic.

(b) Candidates were able to consider the three ethical issues. Strong responses often discussed:
better motivation and increased costs when paying fair wages; support for the local community and
reduced transport costs but then the quality of the costumes may be lower when buying from
suppliers in the local area; and gaining a better brand image increasing sales to ethically minded
consumers but increased costs for refreshments supplied by producers that do not damage the
environment. Responses from weaker candidates lacked development and so remained in the
Level 1 mark band. These included simple statements such as ‘it will be more expensive’ rather
than explaining why this was a disadvantage to the business by increasing costs which might lead
to higher prices and consequently lower sales. A small number of candidates thought that paying
fair wages meant paying the same amount to all employees and felt that most qualified employees
would be demotivated by this. Stronger responses demonstrated their understanding by outlining
the drawbacks of each change and offering a conclusive judgment on the change that was likely to
have the most significant impact on ET. This did not just repeat earlier points but justified the
choice by providing reasoning as to why this particular change would have a greater effect
compared to the other two changes.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

BUSINESS STUDIES

Paper 0450/23
Case study

Key messages

Candidates should be reminded that throughout this paper they are expected to apply their business
knowledge and understanding to an unseen case study or business scenario. This is apart from one of
the (a) questions which will be generic. Applying answers to the case will ensure responses are appropriate
for the given situation.

• To do well in this paper, candidates must make clear reference, or application, to the
accompanying case study. Specific marks are allocated throughout the mark scheme in both (a)
and (b) questions for application. In this particular case study, candidates were expected to refer to
a business that manufactures rugs. It is advisable for candidates to ask themselves about the size
of the business, what type of product it offers and the type of business organisation it is. This may
add to the quality of their answers.
• Candidates should try to give a full explanation of positive and negative consequences of a
business decision when this is asked for. Responses in (b) questions require developed reasoning
rather than simple description; listed points generally only gain Level 1 whereas an explanation of a
point could move the answer to Level 2.
• Several questions on this paper ask candidates to make a justified recommendation or conclusion.
Candidates should be reminded that it is important to offer a decision based on a balanced
argument earlier in the answer. A recommendation or conclusion should justify the option chosen,
without full repetition of the previous analysis, be applied to the case and compare the options by
making reference to why the alternative option(s) was rejected.

General comments

Candidates had been well prepared for this examination and understood what was expected of them. The
context of RR, a manufacturer of rugs, provided an accessible scenario for candidates. Those who applied
their answers to the context of RR boosted their marks much further.

Candidates must be reminded to take careful note of how many marks are awarded for each question, so
they are clear about the extent of developed explanation that is required for each answer. Many candidates
showed good knowledge and understanding of the full range of the syllabus that was assessed, but in some
cases, it was clear that certain topics were not as well understood. The weakest area of understanding was
of the role of directors and managers in a company and possible problems experienced by a business as it
expands.

Overall, the performance of candidates was broadly comparable with previous years. Application marks were
often gained but candidates should make sure that different examples of application are included in each
section of an (a) question and the conclusion/recommendation should also be applied to the case in (b)
questions. Candidates should aim to consider the consequences/implications/long term/short term/balance
issues of the decisions to secure Level 2 or Level 3 marks in the conclusion/recommendation.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

Comments on specific questions

Question 1

(a) This question proved accessible for the majority of candidates, with many being able to correctly
identify reasons such as producing in a lower cost country, producing nearer to the market,
increasing market share, avoiding barriers to entry and remaining competitive if other companies
were becoming multinationals. However, several candidates provided answers to a question about
how a company can become a multinational and not why a business might become a multinational.

(b) The majority of candidates listed rewardable answers, such as television advertisements will be seen
by a large number of potential customers or that billboards are lower cost than television. However,
many did not go on to explain why these points were an advantage or a disadvantage to the
business. This question was well applied with many candidates using the data provided in Appendix
1 to explain their points. To move the answer to higher levels the recommendation needed to justify
the choice of one method of promotion without repeating earlier points and explain why the
alternative methods were seen as less suitable.

Question 2

(a) Many candidates seemed able to identify problems with expansion, often explaining the likelihood
of diseconomies of scale such as lack of commitment or poor communication. There were fewer
candidates who could provide sufficient depth and explanation to their answers to score the highest
marks in this question. In some cases, marks were limited as candidates gave two explanations for
the same point, for example, two reasons why finance may be limited for the investment. Weaker
responses lost marks by identifying problems in a vague manner, such as stating that ‘it is
expensive’, without making it clear why expansion was expensive and why this meant it was a
problem. Answers were not often applied which limited the number of high scoring answers as both
reasons needed to be applied to the context.

(b) Most candidates could identify three suitable methods for communicating with employees. Popular
methods included telephone/mobile phones, email, letter, noticeboards, and face-to-face meetings.
However, there were often just lists of advantages and disadvantages of each method which
limited answers to Level 1, such as it is cheaper, quicker, allows feedback, rather than giving
explanations of why these were advantages and disadvantages with the method. Again, application
was often not evident and this resulted in answers not gaining the highest marks in the level.

Question 3

(a) This proved to be a difficult question for many candidates as they did not seem to be aware of the
roles of directors and mangers in a business. Weaker responses focused on the chain of command
provided in Appendix 2 and simply described the organisation chart, for example managers pass
information to the supervisors but report to the directors. The focus of the responsibility was not a
factor in many answers. The role of employees was the best answered responsibility as candidates
knew that their role was to manufacture the rugs and some recognised that supervisors had the
role of ensuring employees completed their work correctly. Only the strongest responses explained
each responsibility and also explained each one in the context of this business.

(b) Candidates generally seemed to find this question accessible, and application was more readily
included in responses. Weaker responses provided mirror arguments, such as there being
improved motivation when training is provided but poor motivation if technology is introduced and
the employees fear job losses. Weaker responses often used the same training argument for both
options and therefore restricted their marks. For example, training would be required for employees
to use the machinery which would be expensive and then stating that training is expensive for the
second option. Better responses moved into Level 3 by justifying which one of the methods would
be best to increase the productivity of employees and justifying why the alternative was rejected,
without repeating earlier points.

© 2023
 Cambridge International General Certificate of Secondary Education
0450 Business Studies June 2023
Principal Examiner Report for Teachers

Question 4

(a) The majority of candidates identified an opportunity and a threat to the business of using
ecommerce. A popular opportunity was that the ability to access a wider market enabled an
increase in sales, whilst the most popular threats included being expensive to set up and maintain
the website, and customers not being able to see and feel the rugs before buying so being put off.
Application was readily gained by answers having references to rugs and new markets in other
countries. To gain full marks many answers would have needed to explain in greater detail why it
was an opportunity or a threat for the business.

(b) There seemed to be a definite divide between candidates who could only make comparative
statements about the two sets of figures and those candidates who could calculate the gross profit,
profit, gross profit margin and profit margin. Better responses made use of the figures to undertake
appropriate calculations and then went on the make a clear judgement which accessed Level 3.
However, there were some candidates who knew how to carry out the calculations and could make
basic interpretations of an income statement but did not have the more detailed understanding of
the causes behind the changes in figures. This was reinforced by weaker answers which assumed
that an increase in the cost of sales was a benefit to the business. Better answers did recognise
that the cost of sales could have increased due to the additional raw material needed as there were
more sales (indicated by the higher sales revenue), but then did not see the significance of cost of
sales increasing at a faster rate than revenue, hence the fall in the gross profit margin. Answers
were usually well applied as even weaker responses made use of the figures in Appendix 3.

© 2023
 Grade thresholds – June 2023

Cambridge IGCSE™ Business Studies (0450)

Grade thresholds taken for Syllabus 0450 (Business Studies) in the June 2023 examination.

Minimum raw mark required for grade:

Maximum raw
mark A B C D E F G
available
Component 11 80 43 34 25 21 17 13 9
Component 12 80 39 31 24 19 15 11 7
Component 13 80 39 31 24 19 15 11 7
Component 21 80 39 31 24 19 15 12 9
Component 22 80 43 35 26 22 17 13 9
Component 23 80 43 35 26 22 17 13 9
Component 50 90 67 57 48 40 33 24 15

Grade A* does not exist at the level of an individual component.

The overall thresholds for the different grades were set as follows.

Maximum
Combination of
Option mark after A* A B C D E F G
components
weighting
P1 90 50 77 67 57 48 40 33 24 15
X 160 11, 21 99 82 65 49 40 32 25 18
Y 160 12, 22 98 82 66 50 41 32 24 16
Z 160 13, 23 98 82 66 50 41 32 24 16

Learn more! For more information please visit www.cambridgeinternational.org/igcse or contact Customer Services
on +44 (0)1223 553554 or email info@cambridgeinternational.org
 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/21

Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*9557593015-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

06_0450_21_2023_1.15
© UCLES 2023 [Turn over
 2

Vegetable Palace (VP)

VP was started 10 years ago in country Z. It is a public limited company. VP has a chain of 500 fast-food
restaurants that operate across country Z. The VP brand is famous for its vegetarian food, this means
none of its meals contain meat.

VP has a head office in Main City where all the directors and senior managers work. There are many
barriers to communication. Each VP restaurant has a Manager, an Assistant Manager and 50 employees
who cook and serve the meals. Restaurant Managers are often very busy and they are considering
delegating some of their tasks to the Assistant Managers.

The ingredients for the restaurants are ordered in bulk by head office and then distributed from its
warehouse to each of the restaurants. However, some senior managers think that Restaurant Managers
should purchase their own ingredients from local suppliers. This would mean the ingredients would be
fresher and would allow variations in the meals served.

VP wants to expand into another country. It will choose between the two countries shown in Appendix
2. VP will also need to decide how to enter a new market in another country. It has the option of forming
a joint venture with another business or franchising the VP brand. The choice of finance will need to be
considered for the expansion and the amount of finance will depend on the option chosen.

Appendix 1

Advertisement for VP's restaurants

Choose VP for the finest vegetarian meals. Our service is the fastest possible!

You will receive your meal in less than 5 minutes – guaranteed!

Delicious and varied meals for even the biggest of appetites and all at competitive prices.

New meals are being introduced all the time.

There is a VP restaurant near you – we look forward to serving you soon.

© UCLES 2023 06_0450_21_2023_1.15

 3

Appendix 2

Summary of the two possible countries that VP could choose to locate its new restaurants.

Country A Country B

Average variable cost Average variable cost

Raw materials
$6 per meal $2 per meal

Low unemployment High unemployment

Labour
$10 per hour for each employee $5 per hour for each employee

Many competitors Few competitors

Market
Average price per meal = $20 Average price per meal = $10

Appendix 3

Email from VP’s Managing Director to VP’s Marketing Director

To: VP’s Marketing Director

From: VP’s Managing Director

Date: 31 March 2023

Re: Economic changes in country Z

Did you see the news this morning that interest rates will be raised from 3% to 5% later today? This will
have several effects on our business in country Z.

The news also said that the exchange rate in country Z has depreciated. We will have to consider how
this will affect our business, especially as we import 30% of our ingredients into country Z.

There are also new legal controls being introduced that mean we have to list all the ingredients used in
each of our meals on the menu. We do reprint menus every time we change the meals, but it is something
to consider.

Speak later today.

© UCLES 2023 06_0450_21_2023_1.15

 4

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_21_2023_1.15

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/22

Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*2035001524-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

06_0450_22_2023_1.14
© UCLES 2023 [Turn over
 2

Everyone Theatre (ET)

Zane and Zaara are both actors. They plan to start up a theatre in a low-income area of Main City. Zane
and Zaara believe that helping the community is as important as being successful entrepreneurs.

The theatre will be a private sector business and Zane and Zaara have to decide whether to start up as
an unincorporated business (partnership) or as a limited company. Zane is planning to prepare a cash-flow
forecast for the first year. Zaara knows they will need to set business objectives for the theatre and also
decide on a leadership style to use when managing employees. ET will have 24 part-time employees
as shown in the organisational chart in Appendix 1.

Zane and Zaara plan to put on performances in the evenings for local people and tourists. There will be
100 seats in the theatre but not all the seats will be sold if the price is too high. The Marketing Manager,
Zaara, will need to decide which performances to put on, what price to charge and which refreshments
to sell. Zaara will also need to decide between the two possible options for the first performance when
the theatre opens. Information on the two options is shown in Appendix 2.

In the daytime the theatre building will be used by Daycare, a local social enterprise. Daycare takes care
of young children up to the age of 5 so that low-income family members can go out to work. It also
provides education for the children which helps their development and progress before they start school.
Some of Daycare’s objectives are different to those of ET.

Appendix 1

Proposed organisational chart for the theatre

Marketing Manager (Zaara) Finance and Administration

Manager (Zane)

Backstage e.g. Actors Promotion Cleaners Ticket office

costumes and (10) (2) (3) (3)
scenery
(6)

Note: The numbers in brackets are the number of part-time employees who work in each department.

© UCLES 2023 06_0450_22_2023_1.14

 3

Appendix 2

Forecast data for the two possible options for ET’s first performance at the theatre

For each performance Option 1 Option 2

Number of actors/employees 7 24

Average wage cost per actor/employee $30 $10

All other costs including scenery, costumes and

$1000 $2000
promotion

Forecast revenue assuming all 100 seats are sold $1000 $2500

Appendix 3

Email from Zane to Zaara

To: Zaara

From: Zane

Date: 1 April 2023

We want to support the local community and we need to make decisions about the following.

Should we:

• Pay fair wages even though they may be higher than those paid by competing theatres?
• Only buy costumes produced in the local community?
• Purchase all refreshments from suppliers that do not pollute the environment?

© UCLES 2023 06_0450_22_2023_1.14

 4

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

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 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/23

Paper 2 Case Study May/June 2023
INSERT 1 hour 30 minutes

INFORMATION
• This insert contains the case study.
*3747335787-I*

• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.

This document has 4 pages. Any blank pages are indicated.

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 2

Regency Rugs (RR)

RR manufactures rugs made from wool. It only sells its products in country Z. Many of RR’s competitors
are multinational companies. RR is a private limited company which has been operating for 5 years and
has a reputation for excellent customer service. RR’s directors want the business to expand but are
aware that this can have problems as well as benefits.

RR produces machine manufactured rugs in its factory. These rugs are standardised and have a similar
design so they are quick to produce. They are sold at a low price.

RR’s Operations Manager wants to increase the productivity of the workers in the factory. This could
be achieved by introducing new technology or by increasing employee training. The cost of both options
will need to be considered.

RR’s directors are considering expanding by selling its rugs in new markets in other countries. The
Managing Director thinks that using ecommerce will be the best way to achieve this expansion. A website
would need to be created to enable the business to take orders for their rugs and to receive payments
from customers. RR will need to communicate the expansion plans to its employees.

The Marketing Manager knows that RR needs to identify a suitable method of promotion for its rugs
when it enters the new markets. Market research has been carried out to help identify the best method
of promotion to use. An extract from this research can be found in Appendix 1.

Appendix 1

Extract from the market research results for the new markets in other countries

90
80
70
% of population

60

50
40
30
20

10
0
watch TV watch sport drive a car

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Appendix 2

Organisational chart for RR

Managing Director

Finance Director Operations Director Marketing Director Human Resources

Director

Financial Factory Manager Sales Manager Administration officer

Assistants
(2)
Factory Supervisors Salesperson
(3) (3)

Production employees
(30)

Appendix 3

Extract from RR’s income statement

2021 2022

Revenue $25m $32m

Cost of Sales $10m $16m

Expenses $10m $8m

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
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publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_23_2023_1.13

Cambridge IGCSE™

BUSINESS STUDIES 0450/11

Paper 1 Short Answer/Data Response May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 23 printed pages.

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0450/11 Cambridge IGCSE – Mark Scheme May/June 2023
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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies - Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Define ‘specialisation’. 2

Award 2 marks for a full definition. Award 1 mark for the

partial definition.

When people/businesses/countries concentrate on what

they are best at [2]
OR
Focusing an individual or group on one particular skill or
process that they are suited to or for which they possess the
correct skills [2]
OR
Way in which work is divided so each worker concentrates
on a specific task [1] so they become expert at it [1]

Partial definition, e.g. Workers do only one job [1] Other

appropriate responses should also be credited.

1(b) Identify two methods of production. 2 Only award the first two responses given.

Award 1 mark per method (max 2). Two from: Do not award answers such as lean production or cell
 Job (production) production.
 Batch (production)
 Flow/mass (production)

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Question Answer Marks Notes

1(c) Outline two advantages to WLT of using quality 4 To use words from the stem as application, the reference
assurance. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant advantage (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2).  Carpets
 40%/exported
Points might include:  Globalisation
 Reduces faults/errors at all stages of production/fewer  Specialisation
mistakes [k] when making carpets [app]  60 (employees)
 Less waste/less rework (of faulty products) [k] which  Efficiency
could help improve efficiency [app]  Manufactures/production
 Encourages teamwork which may motivate worker [k]
among its 60 employees [app] Other appropriate examples can be credited.
 Fewer customer complaints/fewer customer
returns/replacements [k] Do not award:
 Better brand image/improve/maintain reputation [k]  improve customer satisfaction
 Reduce inspection costs/do not need to hire inspectors [k]  better quality
 Allows business to know at what stage mistakes happen  increase sales
[k]  lower cost on its own
 encourages teamwork/motivation on its own.
Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(d) Explain one opportunity and one threat of globalisation 6 To use words from the stem as application, the reference
for WLT. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each opportunity/threat (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Award one mark for each relevant explanation  Carpets
(max 2).  40%/exported
 Specialisation
Opportunities might include:  60 (employees)
 Increase potential sales/access to more markets [k] as it  Efficiency
exports 40% of its products [app] increasing revenue  Manufactures/production
[an]
 Cheaper raw materials from other countries [k] to Other appropriate examples in context can be credited.
manufacture [app] which can improve the profit margin
[an] Accept sales as either [k] or [an] but not both.
 Labour may be cheaper [k] reducing (labour) costs [an]
 Economies of scale or relevant examples [k]
 Global brands are more recognised/desirable [k]

Threats might include:

 Increased competition [k] leading to a reduction in
market share [an]
 Employees may leave if WLT cannot pay as much as
international competitors [k] so may lose some of its 60
employees [app] increasing recruitment costs [an]
 Over dependent on supplies from other countries [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Do you think improving labour skills is the best way for 6 This is a general question so there are no marks for
a manufacturing business to increase efficiency? application.
Justify your answer.
For evaluation to be awarded justification will usually follow
Award up to 2 marks for identification of relevant points. on from relevant analysis of points.
Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to whether Do not award as [an]:
improving labour skills is the best way for a manufacturing  increased productivity
business to increase efficiency.  profitability
 lower cost
Points might include:  more output

Improving labour skills:

 Able to work faster [k] which will increase output per
worker [an]
 Fewer mistakes are made [k] leading to less
rework/wastage [an]
 Training takes employees time [k] which will lower
output in the short-term [an]
 Increase training costs [k] which will increase unit costs
[an]
 Workers are more versatile/ flexible [k]

Other ways might include:

 Automation/machinery [k] allows operation with fewer
employees [an]
 Lean production/Just-in-time/Kaizen [k] therefore lower
cost per unit [an]
 Improved motivation or methods of motivating, e.g. piece
rate [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Justification might include:

Improving labour skills can mean that employees make
fewer mistakes.
[k] leading to less rework [an]. Whereas automation [k]
allows the business to operate with fewer employees [an].
Improving labour skills is the best way, because automation
could lead to redundancies which may demotivate the
remaining employees [eval] and potentially leading to less
output overall [eval].

Question Answer Marks Notes

2(a) Identify two reasons why a business might have cash- 2 Only award first two answers given.
flow problems.

Award 1 mark per reason (max 2). Points might include:

• Too much inventory
• Growing too quickly/overtrading
• Allow customers/ trade receivables too long to pay
• Paying suppliers/ trade payables too quickly
• Seasonal /low demand
• Poor (financial) planning

Other appropriate responses should also be credited.

2(b) Calculate X and Y. 2 $ sign not required.

Award 1 mark for each correct calculation (max 2).

X = $10 000 or 10
Y = $20 000 or 20

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Question Answer Marks Notes

2(c) Identify four examples of a cash inflow. 4 Only award the first four responses given.

Award 1 mark per example (max 4). Points might include: Can award ‘sales’ if the candidate does not identify specific
 (Cash) sales/revenue examples (of cash or credit sales).
 Payments from trade receivables/money from credit
sales Can allow ‘additional income from renting assets’.
 Grants
 Bank loan Allow Debt factoring if seen.
 Sponsorship
 Sale of non-current assets Do not award trade receivables alone.
 Funds from investors/share issue/capital introduced by
owner
 Dividends from shares in other companies
 Interest received from savings/bonds/investments

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(d) Explain one advantage and one disadvantage to LMA of 6 To use words from the stem as application, the reference
becoming a private limited company. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant advantage/disadvantage
(max 2). Award 1 mark for each relevant reference to this The following words are likely to be appropriate for this
business (max 2). Award 1 mark for each relevant question:
explanation (max 2).  Restaurant
 Partnership
Points might include:  Remain small
Advantages:  20 years ago
 Limited liability [k] so personal assets are not at risk if  Family(-owned)
the business is not able to repay its debts/ only liable
for the amount invested [an] Other appropriate examples in context can be credited.
 Separate legal identity [k] so the owners are not held
responsible for the actions of the business [an] which is
not true for a partnership [app]
 Able to raise finance by selling shares [k] to fund
expansion [an] if the business decides it does not want
to remain small [app]
 Continuity [k]
 Can choose who buys shares [k]

Disadvantages:
 More legal formalities [k] which takes time away from
other activities [an] in the restaurant [app]
 Separation of ownership and control [k] so the owners
may not be involved /agree with business decisions
taken [an] as the directors may not listen to the family
[app]
 Expensive/time consuming to change to this form of
business organisation [k]
 Accounts must be made available [k]
 Dividends may/ be paid [k] reducing retained profit [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Explain two reasons why a business might remain 6 This is a general question so there are no marks for
small. Which reason is likely to be most important? application.
Justify your answer.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to which reason
is likely to be the most important reason why a business
might remain small.

Points might include:

 Access to capital/lack of finance [k] which makes it
difficult to fund expansion/working capital [an]
 Small market [k] so there is not sufficient demand [an]
 Lack of skills/knowledge to expand/larger business
more difficult to manage [k] so more likely to make
mistakes if expand [an]
 Lack of workers [k]
 Type of industry/service industries (offer a personal
service)/specialised products [k] where close contact
maybe needed [an]
 Personal objectives/owner’s objectives or example such
as better communication with customers, keeping
control [k] which might help retain/increase customer
loyalty [an]
 Market dominated/controlled by a few large competitors
[k] so will struggle to attract more customers [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Justification might include:

One reason is the size of the market [k] as there may be
insufficient customers [an]. Another reason is lack of finance
[k] making it difficult to fund expansion [an]. The size of
market is a more important reason why a business might
remain small as without customers there is no revenue
[eval], which is likely to reduce the need for finance anyway
[eval].

Question Answer Marks Notes

3(a) Define ‘job description’. 2

Award 2 marks for a full definition. Award 1 marks for a

partial definition.

Outlines the responsibilities and duties to be carried out by

someone employed to do a specific job [2]
OR
A list of the key points about a job, job title, key duties,
responsibilities, and accountabilities [2]
OR
A description of the tasks, role, and responsibilities of a
particular position [2]
OR
What the job entails/explains the job with a list of suitable
content [2]

Partial definition, e.g. What they must do in a job/list of

content [1]

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Question Answer Marks Notes

3(b) Identify two levels from Maslow’s hierarchy of needs. 2 Only award the first two responses given.
Do not award examples such as job security.
Award 1 mark per level (max 2). Two from: Do not award answers such as ‘psychological’ or ‘basic
 Physiological/physical needs’ as too vague.
 Safety/security
 Social/(love and) belonging
 Esteem
 Self-actualisation

3(c) Outline two factors DZD should consider when deciding 4 To use words from the stem as application, the reference
which applicants to recruit. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for identification of each relevant
factor (max 2). The following words are likely to be appropriate for all
Award 1 mark for each relevant reference to this business responses on this question:
(max 2).  Delivery business or examples such as parcels
 60 employees
Points might include:  Large business
 Experience [k] of delivering parcels [app]  (20) vehicles
 Qualifications or relevant examples such as do they  Part-time
have a driving licence [k] to drive the (20) vehicles [app]  Planning to expand
 Skills or examples such as good at communication [k] as  Maslow
will work in a large business [app]  Human resource director
 Whether they match the requirements of business/job or
examples such as physical ability/know the area [k] Other appropriate examples in context can be credited.
willing to work part-time [app]
 Whether they match the culture of the business [k]
 Performance during interview/testing [k]
 Age [K]
 References [K]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(d) Explain two sources of finance DZD might use for the 6 To use words from the stem as application, the reference
new vehicles. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for each relevant source of finance (max 2).
Award 1 mark for each relevant reference to this business The following words are likely to be appropriate for this
(max 2). question:
Award 1 mark for each relevant explanation (max 2).  Delivery business or examples such as parcels
 Planning to expand/expansion
Points might include:  Large business
 Bank loan [k] as able to purchase immediately [an] so  20 (vehicles)
there is no delay to the planned expansion [app]
 Retained profit [k] as it's a large business [app] as no Do not award ‘vehicles’ as application as stated in question.
need to repay [an] Other appropriate examples can be credited.
 Leasing [k] of the 20 [app] vehicles as do not need to Do not award short-term options such as overdraft as not
make a large initial payment [an] appropriate in this context.
 Hire purchase [k]
 Grant [k]
 Selling of assets [k]
 Owner’s capital/share issue [k]
 Debenture [k]
 Crowdfunding [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Do you think a service business should only employ 6 This is a general question so there are no marks for
part-time workers? Justify your answer. application.

Award up to 2 marks for identification of relevant points. The focus should be on the benefit/cost to the business not
Award up to 2 marks for relevant development of points. the worker.
Award up to 2 marks for justified decision as to whether a
service business should only employ part-time workers.
Do not award points such as part-time workers are likely to
Points might include: be less tired, more motivated, lack skills, do not have a
contract.
Part-time:
 When not working no need to pay wages [k] helping to Do not award answers which confuse part-time with
reduce labour costs [an] temporary/seasonal workers.
 Need to recruit/train more employees [k] taking more
time/money [an]
 Could allow the business to recruit wider range of skills
[k]
 More flexible hours/less likely to take time off for
appointments [k]
 Easier to extend worker hours at busy times [k] or [an]
 Some employees may not be willing/want part-time jobs
[k] so may miss out on possible candidates if not
offered full-time option [an]

Full-time:
 Able to offer consistency of service [k] so could improve
reputation/increase customers [an]
 Workers may be committed to business [k] which could
increase the productivity of the business [an]
 Easier to communicate/update [k]
 Less workers needed [k]

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Question Answer Marks Notes

3(e) Other appropriate responses should also be credited.

Justification might include:

Part-time employees are only paid when they are working [k]
reducing labour costs [an]. However, consistency of service
may fall [k] which could damage the business reputation [an].
A service sector business especially should not have only
part-time employees as service quality is vital for customer
loyalty [eval] and therefore sales. [eval].

Question Answer Marks Notes

4(a) Identify two factors that might affect the accuracy of 2 Only award the first two answers given.
market research.

Award 1 mark per factor (max 2). Points might include:

 Sample size
 Sample chosen/who is asked
 Interviewer experience/interviewer bias
 Wording of the questions
 Who carried out research
 Age of information/when data gathered/information
might be out of date
 People’s actions do not always match what they say
 Anonymity
 Bots or use of AI

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(b) Identify two benefits to a business of using market 2 Only award the first two responses given.
segmentation.

Award 1 mark per benefit (max 2).

Points might include:

 Able to tailor goods to specific needs of segment/know
what to produce
 Identify gaps in the market
 To help decide best place to sell
 Research is simpler
 Help focus spending/make best use of resources
 Help target promotion/advertising
 Help set prices
 Help increase sales/revenue

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(c) Outline two ways NLR might respond to environmental 4 To use words from the stem as application, the reference
pressures. must be appropriate, (i.e. make sense) in relation to the
point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be appropriate for this
Award 1 mark for each relevant reference made to this question:
business (max 2). • Skincare or examples such as hand cream
• Packaging
Points might include: • 85% of consumers/customers
 Reduce amount of materials used/wastage [k] when • Product life cycle
making its skincare products [app] • Market research
 Use recycled materials [k] for the packaging [app] • Branded
 Develop environmentally friendly products [k] based on
its market research [app] Other appropriate examples can be credited.
 Buy energy efficient/environmentally friendly
machinery/use renewable energy [k] Do not award environmental pressures as [app] on its own
 Offer different sizes/only make to order/reduce number as stated in question.
of products available [k]
 Alter/reduce transport use [k]
 Promote/support environmentally friendly causes [k]
 Ask customers to reuse containers (when buying from
shops) [k] as 85% of consumers (want the business to
respond to environmental pressures) [app]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(d) Explain how NLR’s pricing decisions might be affected 6 Attract customers/To use words from the stem as
at two different stages of the product life cycle. application, the reference must be appropriate, (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant stage of life cycle/pricing
method (max 2). The following words are likely to be appropriate for this
Award 1 mark for each relevant reference to this business question:
(max 2). Award 1 mark for each relevant explanation (max  Skincare or examples such as hand cream
2).  85%
 Market research
Points might include:  Packaging
 During introductory stage [k] the business may set a low  Environmental pressures
price to attract customers [an] to their hand cream [app]  Branded (product)
 At growth stage [k] prices may be lowered due to  Market segmentation
increased competition [an]
 At maturity stage [k] price is likely to be similar to Other appropriate examples in context can be credited.
competitors to retain market share [an] for the branded
products[app]
 During decline stage[k] discounts might be offered to
maintain sales/ sell of remaining inventory [an]
 Skimming pricing [k] can be used at the introductory
stage to recover development costs [an] of new
packaging [app]
 Penetration pricing [k] in some market segments [app]
 Cost plus pricing [k]
 Competitive pricing [k]
 Promotional pricing [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think promoting the brand image is the most 6 This is a general question so there are no marks for
important role of packaging? Justify your answer. application.

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.
Award up to 2 marks for justified decision as to whether
promoting the brand image is the most important role of
packaging.

Points might include:

 This can help the product attract customers/stand out
against competitor's products [k] which can help
increase/maintain sales [an] leading to higher revenue
[an]
 Protect the product [k] so the product does not get
damaged/can be kept fresh [an] which can help reduce
the amount of wastage [an]
 Ease of storage/transport [k] which could lead to lower
storage/transport costs [an]
 Provide information about the product [k]
 Legal requirements [k] as a business might have to
identify the ingredients to avoid legal action [an]
 Easy to open the container and use the product [k]

Justification might include:

Packaging helps the product stand out against competitor's
products [k] helping increase sales [an]. Protecting the
product is important [k]to keep the product fresh [an] This is
the most important role because damaged goods will not
sell [eval] Therefore, brand image is not the most important
role although customers need to be aware of the product, to
buy. [eval]

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Cambridge IGCSE™

BUSINESS STUDIES 0450/12

Paper 1 Short Answer/Data Response May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 24 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies – Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Identify two reasons why a business might offer training to its 2 Only award the first two responses given.
employees.

Award 1 mark per reason (max 2).

Points might include:

• To introduce a new process/new equipment
• Improve efficiency/productivity
• Increase output
• Reduce mistakes/fewer errors/better quality goods or services
• Improve employee skills
• Increase knowledge
• Improve motivation
• Help reduce labour turnover
• Decrease the chance of accidents
• Familiarise new employees with business/other employees

Other appropriate responses should also be credited.

1(b) Calculate the following values using Fig. 1.1: 2

Award 1 mark for each correct answer.

Break-even output: 500 (watches) [1]

Break-even revenue: $60 000 OR 60 000 [1]

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Question Answer Marks Notes

1(c) Outline two possible effects on FBW’s break-even chart if the prices of 4 To use words from the stem as application,
its products are increased. the reference must be appropriate (i.e.
make sense) in relation to the point being
Award 1 mark for each relevant effect (max 2). made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Points might include:  Watches
 Reduce/lower break-even output [k] below 500 units [app]  5 (employees)
 Increase the margin of safety [k] above 100 [app]  Training (every year)
 Increase contribution per unit [k] when using job production [app]  Job production
 Increase revenue [k] from sale of its watches [app]  600 units (sold)
 Reduce break-even revenue [k]  500 (break-even output)
 Increase profit margin [k]  100 (margin of safety)
 Increase (potential) profit/reduce (potential) loss [k]  $4000 (profit at 600 units)
 $60 000 (break even revenue)
Other appropriate responses should also be credited.
Other appropriate examples can be credited.

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Question Answer Marks Notes

1(d) Explain two benefits to FBW of having full-time employees. 6 To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for identification of each relevant benefit (max 2). sense) in relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2).  Watches
 5 (employees)
Points might include:  (Regular) training
 Workers likely to be more loyal/committed [k] so lower labour  Job production
turnover/lower cost of recruitment [an] for its 5 employees [app]  600 units sold
 Easy to communicate/update [k] when making its watches [app] so could  500 (break-even output)
be more efficient [an]
 Consistent standard of work [k] leading to better reputation [an] which is Other appropriate examples can be
helpful as using job production [app] credited.
 Fewer workers needed [k] so less training required [an]
 Less employees to manage [k] so managers can focus on other issues
[an]
 Employees become more familiar with the business [k]
 Always available/can find when needed [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Do you think job production is the best method of production for a 6 This is a general question so there are no
small business to use? Justify your answer. marks for application.

Award up to 2 marks for identification of relevant points. Some points could be written as an advantage
or a disadvantage of each method but only
Award up to 2 marks for relevant development of points. award once.

Award up to 2 marks for a justified decision as to whether job production is Some points can be [k] or [an] but do not
the best method of production for a small business to use. award the same point twice.

Points might include:

Do not award:
Job production: Comparisons between batch and flow e.g.
 Meet exact customer requirements [k] which increases customer batch production not greatly affected by
loyalty/sales [an] machine breakdown, batch is flexible/can
 Unique/high-quality products [k] can charge higher price [an] change production easily as not appropriate
 Products made to order/can take a long time to make [k] so low output for this question.
[an]
 No economies of scale [k] leading to higher average cost [an]
 Skilled labour is needed [k] increases labour/training costs [an]
 Requires a lot of employees/labour intensive [k]

Batch production [k]:

 Some economies of scale [an]
 Able to produce more [an] so unit costs lower [an]
 Can produce range/variety of products [an]
 Demotivated employees [an] increasing labour turnover [an]
 Machines must be reset between batches [an]
 Added cost of moving/storing semi-finished goods [an]
 Warehouse space is needed [an]/increases storage costs [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Justification might include:

Job production allows a business to produce goods that meet exact
customer demands [k] so able to charge a higher price [an]. However, skilled
labour can cost more [k] which can lead to high labour costs [an]. Overall, I
think job production is not the best method for a business, especially if it is
small as the number of sales may not cover the additional cost of the labour
[eval] so the business is unable to make a profit. [eval]

Question Answer Marks Notes

2(a) Identify two ways a business plan can help a business to reduce risk. 2 Only award the first two answers given.

Award 1 mark per way (max 2).

Points might include:

 Help secure funding/attract investors
 Can show whether/when extra finance needed/help budgeting
 Help set goals/objectives/provide sense of direction
 Help monitor/check/track progress
 Test feasibility of idea/identify demand
 Help set (suitable) prices
 Understand level/type of competition
 Help identify skills/employees needed
 Help allocate resources (appropriately)

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(b) Identify two possible reasons why a business might want to expand. 2 Only award the first two answers given.

Award 1 mark per reason (max 2).

Points might include:

 Increase sales/revenue
 Increase profit
 Widen customer base/target new markets
 Increase market share
 Increase reputation/more prestige/status
 Increase output
 Spread risk/diversify
 Gain economies of scale

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(c) Outline one advantage and one disadvantage to Gloria of using 4 To use words from the stem as application,
telephone calls as a method of communication with her employees. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant advantage/disadvantage
(max 2). The following words are likely to be
appropriate on this question:
Award 1 mark for each relevant reference to this business (max 2).  (House) cleaning
 4 employees
Points might include:  Sole trader
 Can help share her workload
Advantages:
 Instant/quick to contact [k] her 4 employees [app] Other appropriate examples can be
 Opportunity to get immediate feedback [k] about cleaning jobs [app] credited.
 Can talk to employees who are anywhere/elsewhere [k]
 Can leave a message/voice note [k]

Disadvantages:
 Technical problems e.g. no internet/signal [k] so will not help reduce her
workload [app]
 No hard copy/nothing to refer to [k]
 Receiver may not answer the phone/might be busy when call [k]
 Not face to face/no body language [k]
 May only be able to speak to one person at a time [k]
 Cannot show data/chart over a phone [k]
 Cost [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(d) Explain two factors Gloria should consider when deciding whether to 6 To use words from the stem as application,
take on a business partner. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant factor (max 2).
The following words are likely to be
Award 1 mark for each relevant reference to this business (max 2). appropriate for this question:
 (House) cleaning
Award 1 mark for each relevant explanation (max 2).  Expand/repair service
 4 employees
Points might include:  Effective communication is important
 Have to share responsibilities/management/control [k] of the cleaning  Reduce her workload
business [app] which could lead to conflict [an]  Sole trader
 Offer skills (or examples of) [k] which could lead to business  Market research
opportunities [an] such as the repair service [app]
 May offer experience/expertise/knowledge [k] increasing efficiency [an] Other appropriate examples can be
to help reduce the workload [app] credited.
 Access to finance/capital [k] so can grow faster/upgrade equipment [an]
making it easier to expand [app] Takes time to make decisions is [k] or [an]
 Different objectives/ways of working [k] which could lead to slower but do not award the same point twice.
decision-making/conflict [an]
 Whether want to share decision-making/take longer to make decisions Reduce workload can be [k], [app] or [an]
[k] but may lead to better decisions [an] but only award once.
 Someone to share risk/losses/costs [k]
 Whether wants/have to share any profit [k] compared to staying as a Conflict/argument is [an] only.
sole trader [app]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Explain two methods of primary market research a business could use 6 This is a general question so there are no
to find out the demand for a new product or service. Which would be marks for application.
the best method to use? Justify your answer.
Some points could be written as either
Award up to 2 marks for identification of relevant points. advantages or disadvantages of different
methods but only award once.
Award up to 2 marks for relevant development of points.
Some points can be awarded as [k] or [an]
Award up to 2 marks for a justified decision as to which is the best method of but only award once.
primary market research for a small business to use to find out the demand
for a new product or service.

(Postal) questionnaire/survey [k] – apply to either method:

 Customer opinions/preferences/suggestions can be gathered [an]
 Large amounts of information can be collected [an]
 Detailed information can be gathered [an]
 Allows many people to be asked (the same questions) [an]
 Questions may be poorly worded/difficult to phrase questions
properly/people interpret questions in a different way [an]
 People may not tell the truth/say what they think sounds good [an]
 Customers may not complete/return the questionnaires [an]
 May have to pay someone with the right skills to design the
questionnaire properly [an] which increases the cost [an]

Online survey [k] – additional specific points

 Data can be quickly presented/analysed using IT tools [an]
 Fast/quicker response time (than other forms of survey) [an]
 Cheaper than interviews/postal questionnaire/focus group etc. [an]
 No representative needed to carry it out [an]

(Postal) questionnaire/survey [k] – additional specific points

 Carrying out questionnaire takes time/money [an]
 Analysing results takes time [an]

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Question Answer Marks Notes

2(e) Interview [k]

 Allows for detailed information to be gathered [an]
 Can explain questions [an]
 Interviewer bias possible (if interviewer is not properly trained) [an]
 Expensive [an]
 Time consuming to carry out [an]

Focus group [k]

 Highly detailed responses [an]
 Chance to ask follow-up questions [an]
 Some group members can influence what others say [an] leading to
unreliable results [an]
 Can only ask a few people [an]
 Expensive [an]
 Time consuming [an]

Observation [k]:
• Seeing what people do can be more accurate than what they say [an]
• More expensive (than other methods) [an]
• Test marketing/product trials [k]:
• Cost of any mistake is limited to a small output [an]
• Takes longer for final product to reach main market [an]

Other appropriate responses should also be credited.

Justification might include:

One method is a questionnaire [k] which allows many people to be asked the
same questions [an]. Another option is a focus group [k]. This might be better
because it could provide highly detailed responses [an]. Although fewer
people can be asked, the ability to ask follow-up questions is important
especially when offering a new product [eval] so the extra detail could allow
the business to make more informed decisions increasing the chances of
success [eval].

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Question Answer Marks Notes

3(a) Define ‘import tariff’. 2 First mark for understanding it is a tax.

Idea of from another/into the country is 1
Award 2 marks for a full definition. Award 1 mark for a partial definition. only.

A tax placed on imported goods when they arrive into a country [2]
OR
A specific form of tax imposed on imported goods [2]

Partial definition e.g. type of tax [1] OR tax on imported goods [1]

Other appropriate responses should also be credited.

3(b) Identify two reasons why some markets can become more competitive. 2 Only award the first two answers given.

Award 1 mark per reason (max 2). Do not award:

Factors affecting demand/spending patterns
Points might include: e.g. changes in population, spending on
 Globalisation/free trade advertising, lower prices/actions of
 Internet/ecommerce/social media/developments in technology competitors
 Improvements in transport/infrastructure
 New legal controls/provide grants/removal of tariffs/quotas
 Increase in competitors

Other appropriate responses should also be credited.

3(c) State the four stages of the business cycle. 2 Award the first four responses only.

Award 1 mark per stage (max 4). The order does not matter.

 Recession
 (Economic) growth
 Boom
 Slump/depression

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Question Answer Marks Notes

3(d) Explain one possible effect of the following changes on VVA when 6 To use words from the stem as application,
importing raw materials: the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant effect [max 2].
The following words are likely to be
Award 1 mark for each relevant reference to this business [max 2]. appropriate for this question:
 School backpacks/bags
Award 1 mark for each relevant explanation [max 2].  45% (raw materials) / 55% locally
 Retailers
Points might include:  Increased level of competition

Introduction of import quotas in country X: Other appropriate examples can be credited.

 Limit/reduce the amount of imports [k] as import 45% of these [app]
which could reduce output/may have to find more (local) suppliers [an] Do not award: Tariff as [app].
 May mean have to find local/alternative suppliers/may not be able to
find suitable suppliers [k] leading to increase time/cost [an]
 Fewer imports possible [k] leading to fewer (potential) sales [an]
 Lower production [k]

Appreciation of country X's exchange rate:

 Imports become cheaper [k] reducing VVA’s costs [an] of its school bags
[app]
 Imports become cheaper [k] so may be able to lower prices [an]
 Lower import price [k] so could increase its profit margin [an]
 Imports become cheaper [k] so can import more [an]
 Can import more (materials) [k] so can increase output [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Do you think retailers are the best channel of distribution for a 6 This is a general question so there are no
manufacturing business to use? Justify your answer. marks for application.

Award up to 2 marks for identification of relevant points. Points must focus on viewpoint of
manufacturing business.
Award up to 2 marks for relevant development of points.
Some points can be presented as
Award up to 2 marks for a justified decision as to whether using retailers is advantages/disadvantages of different
the best channel of distribution for a manufacturing business to use. channels but only award point once.

Points might include: Some points can be written as [k] or [an] but
only award once.
Retailers:
 Wide distribution/access to customers/sell in different places [k]
increase sales/revenue [an]
 Retailers will carry out/pay for advertising/promotional activities [k] raise
awareness/increase sales [an]
 Can sell in large quantities/higher sales [k]
 Manufacturer can hold less inventory [k] lower storage costs [an]
 Price may be higher [k] leading to fewer sales [an]
 No direct contact with customers [k] so difficult to build/maintain
customer relationship [an]
 Loss of (some) control of marketing mix/promotion/price/product [k]
 Retailer takes some of the profit [k] which reduces profit margin [an]
 Manufacturer must pay delivery costs to the retailers [k]

Other options could include:

Sell direct to customers/direct selling/online/internet/ecommerce open own
shops [k]
 All/more profit goes to manufacturer [an]
 Can sell at a lower price [an] leading to more sales [an]
 Can control all/more of the marketing [an]
 Allows for direct customer contact/feedback/market research [an]
 Increased delivery costs/customers over a wide area/[an]
 May need to employ extra workers (to manage paperwork/pack) [an]

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Question Answer Marks Notes

3(e) Use wholesalers [k]

 Wholesalers will buy in bulk/large amounts [an]
 Saves storage space for manufacturer [an]
 Loss of control over marketing mix [an]
 Takes part of the profit [an]
 Agents (when selling in other countries) [k]
 Have local market knowledge [an]

Other appropriate responses should also be credited.

Justification might include:

Retailers offer a wide distribution [k] which can help increase potential sales
[an]. Selling direct to customers [k] would mean the business could keep all
the profit [an]. I think selling to retailers is better as the high sales will
increase the total revenue [eval] which will offset the lower profit margin.
[eval]

Question Answer Marks Notes

4(a) Define ‘retained profit’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

Profit (left, or) reinvested back into the business, (after all payments have
been made) [2]
OR
Profit (remaining after all expenses, tax and dividends have been paid), which
is ploughed back into the business [2]

Partial definition e.g. profit /money to reinvest [1] OR profit left after dividends /
shareholders paid [1]

Other appropriate responses should be credited.

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Question Answer Marks Notes

4(b) Define ‘current assets’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

Items owned by/belong to business and used within one year [2]
OR
Resources that the business owns and expects to convert into cash before
the date of the next statement of financial position [2]

Partial definition e.g. items in the business for less than one year/12
months/within a financial year [1] OR assets owned

Other appropriate responses should be credited.

4(c) Outline two possible reasons why working capital is important for CPF. 4 To use words from the stem as application,
the reference must be appropriate (i.e. make
Award 1 mark for each relevant reason (max 2). sense) in relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2) The following words are likely to be
appropriate for this question:
Points might include:  (4) shops/retailer/stores
 To pay day-to-day expenses/(short term) debts or examples such as pay  30 (employees)
wages [k] for its 30 employees [app]  Clothes
 To pay for unexpected expenses/emergencies [k] especially as the  Private limited company
business is looking to expand [app]  Plans to expand
 To ensure the business has a good credit reputation [k] for the 4 shops  Retained profit is low
[app]
 Ensures the business can take advantage of special offers/discounts on Other appropriate examples can be credited.
bulk purchases [k] of its clothes [app]
 To cope with seasonal demand [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(d) Explain one way each of the following stakeholder groups might be 6 To use words from the stem as application,
affected by CPF’s plans to expand its business. the reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be
Award 1 mark for each relevant reference to this business (max 2). appropriate for this question:
 (4/new) shops/retailer/stores
Award 1 mark for each relevant explanation (max 2).  30 (employees)
 Clothes
Points might include:  Private limited company
 Low retained profit
Employees:
 Opportunities for promotion [k] for the 30 employees [app] so may be Other appropriate examples can be credited.
able to benefit from higher wages [an]
 Work extra hours [k] at the new shop [app] so gain extra payments/which Some points can be [k] or [an] but only
may lead to mistakes [an] award once.
 Greater variety/different tasks/work to do [k] making the work more
interesting/less boring for them [an]
 More job security [k] increasing motivation [an]
 Employees may have to move location [k] so long time to get to
work/travel costs increase [an]

Suppliers:
 Additional orders/sales/produce more [k] of clothing [app] leading to
additional revenue [an]
 Security/certainty of regular orders [k] so able to plan effectively [an]
 May struggle to meet extra demand [k]
 May have to distribute goods to a new area [k] increasing transport costs
[an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think it is better for a private limited company to use debt (e.g. 6 This is a general question so there are no
a loan) or equity (issuing more shares) as a source of long-term marks for application.
finance? Justify your answer.
Some points could be written as either
Award up to 2 marks for identification of relevant points. advantages or disadvantages of different
sources but only award once.
Award up to 2 marks for relevant development of points.
Some points can be written as [k] or [an] but
Award up to 2 marks for a justified decision as to whether it is better for a only award a point once.
limited company to use debt (e.g. a loan) or equity (issue shares) as a source
of long-term finance.

Points might include:

Debt:
 May be difficult to raise additional finance [k] if banks/suppliers
concerned about its ability to repay existing loans [an]
 No change of ownership [k] so lenders have no say in decisions [an]
 Can receive all the money at once/at the same time [k]
 Must pay interest [k] which increases costs/cash flow problems [an]
 Need to repay [k]
 Need security [k] which can lose if unable to repay debt [an]

Equity/issue shares:
 No interest/finance costs to pay [k] so no extra cash outflows [an]
 Permanent source of capital/no need to repay [k]
 Can only sell to friends and family/small number of shareholders [k]
which can limit the amount of capital raised [an]
 Dividends expected/paid to shareholders [k] so less retained profit [an]
 Give up some ownership [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Justification might include:

Using debt may be difficult to raise additional finance [k] if banks are
concerned about its ability to repay existing loans [an]. Selling shares
means no interest [k] so no extra cash outflows [an]. Equity is better because
if the business has financial difficulties debt is still expected to be repaid
[eval] which increases the risk of the business failure. [eval]

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Cambridge IGCSE™

BUSINESS STUDIES 0450/13

Paper 1 Short Answer/Data Response May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 24 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond
the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However, spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion).

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer.
 If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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0450/7115/0986 Business Studies - Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Define ‘mass market’. 2 Do not award:

Alternative words for mass e.g. big/large
Award 2 marks for a full definition. Award 1 mark for a partial definition. market.
Lots of sellers, lots of competitors, lots of
Where there is a very large number of sales of a product [2] products as this simply describes a market.
OR
Selling the same product to the whole market [2]
OR
A large market containing lots of customers buying similar products [2]

Partial definition e.g. lots of customers / lots of sales / lots of buyers [1]

1(b) Calculate X and Y. 2 $ sign is not required.

Award 1 mark for each correct calculation.

X: $60 000 or 60
Y: $80 000 or 80 or (80)

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Question Answer Marks Notes

1(c) Outline two reasons why managing cash flow might be important 4 To use words from the stem as application, the
for TDG. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant reason (max 2).
The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
 Bicycles/bikes
Points might include:  Retailer
 To be able to pay wages [k] to its 3 employees [app]  ($10 000) closing balance / cashflow
 Pay suppliers/trade payables [k] for the bikes [app] problem in September
 Pay expenses/heating/rent/advertising [k] to avoid cash flow problem  Customer loyalty
in September [app]  Mass market
 Repay (short-term) debts [k] of the retailer [app]  3 employees
 Predict/plan/prevent cash flow problems [k] such as the $80 000  $80 000 (cash outflow in September) –
shortfall [app] OFR
 Ensure business survival/continue [k]  $40 000(cash inflow in September)
 Cash available for emergency [k]
Other appropriate examples can be credited.
Other appropriate responses should also be credited.
Do not award:
 Invest/expand
 References to profit
 Know how to improve on own [tv]
 Support request for loan/finance

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Question Answer Marks Notes

1(d) Explain two ways TDG could overcome its short-term cash-flow 6 To use words from the stem as application, the
problem in September. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant way (max 2).
The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
 Bicycles / bikes
Award 1 mark for each relevant explanation (max 2).  Retailer
 –$10 000 (closing balance)
Points might include:  Customer loyalty
 Delay payments to suppliers [k] for its bicycles [app] keeping cash in  Mass market
the business for longer [an]  3 employees
 Ask/offer discounts so customers to pay quicker / insist on cash  $80 000 (cash outflow – OFR will apply)
sales [k] so business receives cash sooner [an] but may not help  $40 000
maintain customer loyalty [app]
 Overdraft [k] allows the business to have a negative cash balance Other appropriate examples can be credited.
[an] to cover the – $10 000 [app]
 Bank loan [k] to increase cash inflow [an] above $40 000 [app]  Analysis must show impact on cash flow.
 Delay/not purchase / buy cheaper equipment [k] which prevents cash
outflows [an] Do not award:
 Sell (non-current) assets [k] generates cash inflows [an]  Long-term solutions such as 'introduce
more capital / sell shares', retained profit
Other appropriate examples in context can be credited.  Decrease price / advertise on own
 References to raw materials / production

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Question Answer Marks Notes

1(e) Explain two methods a retailer could use to maintain customer 6 This is a general question so there are no
loyalty. Which would be the best method to use? Justify your marks for application.
answer.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. usually follow on from relevant analysis of
points.
Award up to 2 marks for relevant development of points.
Analysis can be awarded for:
Award up to 2 marks for justified decision as to which is the best method  Explaining how method works
for a retailer to use to maintain customer loyalty.  Negatives of each method

Points might include: Do not award:

 Offer loyalty cards / offer points for every purchase / discount for  Develop / make new products as retailer.
regular/loyal customers [k] so incentive / reward to return [an]  Explanation of customer loyalty for AN.
 Train staff / offer good service/friendly conversations with customer e.g. 'so will keep coming back'. Needs to
[k] which would make them feel welcome [an] say why makes customers keep coming
 Communicate with customers or examples such as through back.
newsletters / social media [k] so they remember your business [an]  Ways to increase sales in general e.g.
 Ask for feedback / carry out market research [k] so know what is advertise / lower prices.
being sold matches customer needs [an]  Customer loyalty as [an] as in question.
 Introduce new / sell high-quality products [k]
 Resolve complaints quickly [k]
 Offer extra services or examples e.g. offer delivery / credit facilities
[k]

Other appropriate responses should also be credited.

Justification might include:

One method is a loyalty card [k] so there is an incentive to return [an]. It

could offer good service [k] so customers feel more welcome [an]. A good
service is better because this may not include any costs which a loyalty
card would [eval] which could help increase profit margin as well as
customer loyalty. [eval]

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Question Answer Marks Notes

2(a) Define ‘quality control’. 2 At end of production is +1 only.

Award 2 marks for a full definition. Award 1 mark for a partial definition. Do not award:
Reasons why quality control is carried out.
Checking of goods at the end of the production process (whether it is the Vague comments such as ensuring quality is
production of the product or a service) [2] good / whether product good enough, meeting
OR customers expectation/standards.
Checking the standard of goods through inspection [2]

Partial definition e.g.

 Checking the work [1]
 Making sure goods are up to standard [1]

2(b) Identify two ways a pressure group might try to influence business 2 Only award the first two responses given.
decisions.
Do not award:
Award 1 mark per way (max 2). Change laws
Spread awareness on own – need how.
Points might include:
 Create negative publicity / publish information about business / write
to newspaper
 Organise customer boycotts
 Organise demonstrations / protests / rally opposition
 Lobby/petition / send letters to government
 Demand interview with company
 Take legal action

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(c) State four benefits to a business of increasing efficiency. 4 Only award the first two responses given.

Award 1 mark for each relevant benefit (max 4). Do not award:
Lower labour turnover/less absenteeism
Points might include: More revenue/sales/profit.
 Reduce average/unit costs
 Fewer mistakes/errors
 Less waste
 Fewer materials needed
 Increase output
 Quicker/faster production
 Reduced inputs needed for the same level of output

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(d) Explain one external cost and one external benefit that may be 6 To use words from the stem as application, the
created by KCL’s business. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant external cost/benefit
(max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant reference to this business (max 2).  Paper/newspapers/books
 Wood (or other appropriate examples of
Award 1 mark for each relevant explanation (max 2). raw materials)
 Factory
Points might include:  Increase efficiency
 (Raw materials from) local suppliers
External cost:  Pressure groups
 Pollution/smoke/fumes created [k] from making paper [app] could  High level of inventory
damage health of people in the community [an]
 Congestion [k] caused by deliveries to the factory [app] so longer to Other appropriate examples in context can still
move about / slow down deliveries to other businesses [an] be credited.
 Use up natural resources [k] to obtain the wood [app] meaning fewer
resources available for other uses/future generations [an] Some points can be [k] or [an] but only award
 Destruction/spoil landscape [k] reducing tourism [an] once.

External benefit: Do not award:

 Provide jobs [k] as it uses local suppliers [app] so low(er) rates of Costs/benefit to business
unemployment [an] Uses of paper e.g. books/newspapers
 Help economic growth [k] which can result in additional taxes [an]
 Improved infrastructure/better road links [k] improving access for
local community/businesses [an]
 New production techniques may be introduced [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Explain two factors a manufacturing business should consider 6 This is a general question so there are no
when deciding how much inventory to hold. Which factor is likely to marks for application.
be the most important? Justify your answer.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. usually follow on from relevant analysis of
points.
Award up to 2 marks for relevant development of points.
Some points can be [k] or [an] but only award
Award up to 2 marks for justified decision as to which is the most once.
important factor for a manufacturing business to consider when deciding
how much inventory to hold. Watch for repetition e.g. high demand, low
demand so high/low inventory.
Points might include:
 Whether product is perishable or not / shelf life [k] to reduce the
amount of wastage [an]
 Level of demand / sales [k] as if high demand needs to hold high
inventory [an]
 Seasons / celebrations/festivals/predictability of demand [k]
 Storage space available [k] could increase storage costs [an]
 Cost of holding inventory [k] as high levels could increase cash
outflows [an]
 Method of production / level of output [k] as flow production may
require high levels of inventory [an]
 Amount of finance available (to buy inventory) [k] as this could cause
cash flow problems / cannot afford to hold large amount [an]
 Delivery / lead time / where products come from / reliability of
supplier [k] so production can continue / meet orders on time [an]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

2(e) Justification might include:

The amount of space available [k] as a larger warehouse may increase

storage costs [an]. Another factor is delivery time [k] as may need higher
levels of inventory to ensure production can continue [an]. Overall
delivery time is more important because if production stops, any costs
saved on storage may be lost as the business still have to pay its workers
[eval] and the lack of available products could lead to fewer sales. [eval]

Question Answer Marks Notes

3(a) Define ‘span of control’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

Number of subordinates reporting to each supervisor / manager [2]

OR
Number of subordinates / employees working (directly) under a manager
[2]

Partial definition e.g. whom you are responsible for [1] OR who reports to
one manager [1]

3(b) Identify two leadership styles. 2 Only award the first two responses.

Award 1 mark per leadership style (max 2). Do not award:

Descriptions of styles.
Points might include:
 Autocratic
 Democratic
 Laissez-faire

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(c) Outline two benefits to PCY of encouraging its managers to use 4 To use words from the stem as application, the
delegation. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant benefit (max 2).
The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
 (4) offices
Points might include:  500 (employees)
 Reduce managers’ workload / managers have time to focus on other  Insurance (services)
(important) tasks [k] such as how the business is  Business customers / farms / factories
organised/managed [app]  Leadership style
 Quality of managers’ work improves / managers likely to make fewer  Being ethical
mistakes [k] in the 4 offices [app]  Communication barriers
 Increase employee motivation [k] of its 500 employees [app]  Span of control
 Builds trust / better working relationship between managers and  Planning to change how business is
employees [k] which could influence its leadership style [app] managed / organised
 Way to develop employee skills / increase employee flexibility /
employees may have better knowledge of issue [k] at the insurance Other appropriate examples can be credited.
business [app] To access [k] – must indicate who the point
refers to e.g. reduce workload of manager.
Other appropriate responses should also be credited. Communication barriers is [app] only.

Do not award:
Benefits to employees e.g. feel trusted.

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Question Answer Marks Notes

3(d) Explain two possible reasons why being ethical is important to PCY. 6 To use words from the stem as application, the
reference must be appropriate (i.e. make
Award 1 mark for identification of each relevant reason (max 2). sense) in relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Award 1 mark for each relevant explanation (max 2).  4 offices
 500 employees
Points might include:  Insurance (services)
 Increased/retain sales / demand / customers [k] from farms /  Business customers / farms / factories
factories [app] leading to higher revenue [an]  Leadership style
 Build / better reputation / brand image [k] leading to better customer  Communication barriers
loyalty / sales / competitive advantage [an] for its insurance [app]  Span of control
 Help attract / motivate / retain employees [k] improving efficiency /  Delegation
better quality of service / less labour turnover [an] from its 500
employees [an] Other appropriate examples can be credited.
 Investors may be more likely / willing to invest [k] increasing the
amount of capital / funds [an] Some points can be [k] or [an] but only once
e.g. customer loyalty
Other appropriate responses should also be credited.
Do not award:
Comply with laws/less risk of legal as being
ethical is different to legal.
Examples of being unethical
Ways to be ethical.

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Question Answer Marks Notes

3(e) Do you think lack of feedback is the main barrier to effective 6 This is a general question so there are no
communication in a business? Justify your answer. marks for application.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. usually follow on from relevant analysis of
Award up to 2 marks for relevant development of points. points.
Award up to 2 marks for justified decision as to whether the lack of
feedback is the main barrier to effective communication in a business. Knowledge can be awarded for:
Problems caused by lack of feedback e.g.
Points might include: mistakes, lower efficiency
Identify other communication barriers.
Lack of feedback:
 Do not know whether message has been understood [k] which could Analysis is for:
lead to errors / wrong actions taken [an] Development / impact of barrier on the
 Do not know whether recipient has received [k] which can lead to business.
delays [an]
Points can be written as either advantages /
Other barriers could include: disadvantages of different barrier but only
 Technical problems e.g. no signal/equipment breakdown [k] so award once e.g. not understood.
message cannot be sent / received [an]
 Too much information sent in message [k] which can lead to Some points can be [k] or [an] but only award
mistakes / slow down decision-making [an] once e.g. Understood, mistakes
 Jargon used / language [k] so receiver cannot understand [an] Lower quality is [an] only.
 Noise / distractions [k] so not able to hear the message [an]
 (Wrong) communication method used [k] so people are unable to Do not award:
access / read message [an] Reasons why communicate.
General issues of poor communication e.g. not
 Message has to pass through too many levels / employees [k] so
know what to do / what doing.
message gets distorted / lost [an]
Focus on why feedback is important or
 Send wrong message / send message to the wrong person [k] so the
problems of giving feedback e.g. demotivated.
actual message is never sent / received [an]
 Problems with receiver or examples e.g. receiver may not listen [k]

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Question Answer Marks Notes

3(e) Other appropriate responses should also be credited.

Justification might include:

Without feedback it is difficult to know whether the message has been

understood [k] which could lead to the wrong actions being taken [an].
There may be no internet signal [k] so the message cannot be sent [an].
Overall, the lack of feedback is the most important barrier because they
are more likely to know whether a technical problem has happened,
whereas with a lack of feedback they may not know until an error is made
[eval] damaging the business's reputation. [eval]

Question Answer Marks Notes

4(a) Identify two ways a government might support business start-ups. 2 Only award the first two responses given.

Award 1 mark per way (max 2). Do not award:

Vague answers such as cover costs, provide
Points might include: cash / money / invest / sponsor / incentives
 Offer financial support or examples such as grants / (low-cost) loans
 Provide training
 Provide information / advice / support/mentors
 Provide low-cost / rent-free property / location
 Offer lower tax rates / tax breaks / tax relief
 Encourage universities to make research facilities available
 Organise business fairs.

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(b) Identify two ways a market can be segmented. 2 Only award the first two responses given.

Award 1 mark per way (max 2). Can award:

 Demographic if age / gender / socio-
Points might include: economic group / social status/ethnic
 Age group not awarded
 Gender  Psychographic if lifestyle, personality or
 Socio-economic group / social status / class attitudes not awarded.
 Location / region / geographic
 Interests / lifestyle
 Family characteristics
 Education
 Occupation
 Use of product
 Ethnic group

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(c) Outline two characteristics Meena will need to become a successful 4 To use words from the stem as application, the
entrepreneur. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for each relevant characteristic (max 2).
Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be appropriate
for this question:
Points might include:  Handmade
 Risk-taking [k] as leaving her job [app]  Jewellery
 Self-motivated / determination / resilience / perseverance [k] for her  Leaving her job /teacher
start-up [app]  Start-up/new business
 Hard-working [k] especially if she decides to be a sole trader [app]  Brother
 Creative [k] as products will be handmade [app]  Sole trader
 Effective communicator [k] as may need to discuss matter with  Partner
partner [app]  Government support
 Self-confident [k]  Market research
 Optimistic/positive [k]  Market segment
 Independent [k]
 Innovator [k] Other appropriate examples can be credited.

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(d) Explain one advantage and one disadvantage to Meena of operating 6 To use words from the stem as application, the
as a sole trader rather than being in a partnership. reference must be appropriate (i.e. make
sense) in relation to the point being made.
Award 1 mark for identification of each relevant advantage/disadvantage
(max 2). The following words are likely to be appropriate
Award 1 mark for each relevant reference to this business (max 2). for this question:
Award 1 mark for each relevant explanation (max 2).  Handmade
 Jewellery
Points might include:  Leaving her job /teacher
 Entrepreneur
Advantages:  Government support
 Keep all the profit [k] from the new business [app] so she has an  Market research
incentive to work harder / so she can decide how to invest it [an]  Market segment
 Can make all/quick decision-making [k] even if it's her brother [app]  Brother
so may be more responsive to changes in demand [an]  Business start-up / new business
 Complete control / own boss [k] less chance for disagreement / no
need to consult anyone before making decisions [an] Other appropriate examples can be credited.
 Has freedom to choose own holidays/work hours [k] to gain a better
work/life balance [an]  Conflict/disagreements is [an] only.
Disadvantages: Do not award:
 No one to share workload/responsibility/control with [k] so less time  Features of unincorporated businesses
to specialise on certain activities [an] such as making jewellery [app] such as unlimited liability, no continuity.
 Access to less finance / partner may provide extra finance [k] so as
need to borrow more/less money [an] or may need more government
support [app]
 Fewer ideas/ less knowledge/experience [k] so less able to compete
[an]
 No one to share any risks / potential loss / costs with [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think accessing government sources, such as statistics, is 6 This is a general question so there are no
the best method of market research for a start-up business to use? marks for application.
Justify your answer.
For evaluation to be awarded justification will
Award up to 2 marks for identification of relevant points. Award up to 2 usually follow on from relevant analysis of
marks for relevant development of points. points.
Award up to 2 marks for justified decision as to whether accessing
government sources, such as statistics, is the best method of market Some points can be written as either
research for a start-up business to use. advantage/disadvantage of different methods
but only award once.
Points might include:  For other methods, must identify it, and
Government sources: not simply describe it.
 Free/cheap to collect [k] which can help keep fixed cost low [an]  Out of date ONLY valid for govt. sources.
 Readily available [k] so can make decisions more quickly [an]
 Provides data on a range of topics/shows trends across whole Do not award:
country/market [k] so can make more informed decisions [an]  General comparisons between primary
 May be out-of-date [k] so information may not be relevant to what the and secondary market research e.g. up-to-
business needs to know now [an] date
 Data may not be relevant /not specific to the business [k] leading to  Reasons for carrying out market research
wrong decisions [an] e.g. find out demand/customer needs and
wants.
Other methods might include:  Vague references to more/less accurate.
 Reports from market research agencies [k] but will have to pay for
information [an]
 Questionnaires/surveys [k] as large amounts of information can be
collected [an]
 Focus groups [k] as can provide highly detailed responses [an]
 Interviews [k] but time consuming to carry out [an]
 Online survey [k]
 Observation [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Justification might include:

Government statistics are cheap to collect [k] which can help keep fixed
cost low [an]. Another option is questionnaires [k] which would allow the
business to collect large amounts of information [an]. However,
government statistics are better because a new business may not be
able to afford the cost of having the questionnaire designed properly
[eval] so it may be better to use government statistics are likely to be
accurate enough so can still prove helpful [eval].

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Cambridge IGCSE™

BUSINESS STUDIES 0450/21

Paper 2 Case Study May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 21 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

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0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in

part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not

rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not
question answering the question asked.

APP Application Indicates appropriate reference to the information in the

context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response

includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response

has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response

includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain four barriers to communication for a business. 8

One mark for each barrier (max 4).

Award a maximum of one additional mark for each explanation of the barrier.

There are no application marks available.

Reasons could include:

 Problems with the sender – the language used is not clear/use of jargon
or technical terms so do not understand instructions
 The message is too long/too much detail is included in the message –
so the main meaning of the message may be lost in the detail
 Problems with the medium/method – the wrong medium is used such as
putting an urgent message on a noticeboard so may not be seen
immediately
 Computer failure/internet connection/technology fails – the message
may not be received
 No feedback is given – so the sender is unaware the message has not
been received
 Problems with the receiver – if a meeting is used and it goes on a long
time then the receiver may stop listening
 The channel/chain of command may be too long – too many people
through which the message is sent it may be distorted
 Language differences – hinder understanding of the message

For example: Problems with the sender (1) they may use language that
includes jargon or technical terms so do not understand instructions (1).

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Question Answer Marks

1(b) Consider the following two ways VP can purchase its inventory. Which 12
way should it use? Justify your answer.

 Head Office purchases the inventory for all the restaurants.

 Restaurant Managers purchase their own inventory from local
suppliers.

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.
Detailed discussion of both ways. Well-justified
recommendation.
Candidates discussing both ways in detail, in context
and with a well-justified recommendation including
why the alternative way is rejected should be
rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one way.
Judgement with some justification/some evaluation of
choices made.
Candidates discussing at least one way in detail and
applying it to the case should be rewarded with the
top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.
Limited ability to discuss the ways with little/no
explanation.
Simple judgement with limited justification/limited
evaluation of choices made.
Candidates outlining both ways in context should be
rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

 Able to make bulk purchases – discounts

received – lowering variable costs/lower unit
cost of food ingredients - possibly reducing
prices/increasing profit
 Easier to standardise the meals/control
Head office quantity and quality of ingredients in
purchases the different restaurants as all the inventory come
inventory for all the from the same food suppliers - maintains
restaurants reputation for good quality fast food
 Increased transport costs for food ingredients
to be taken to each fast-food restaurant
Warehouse storage is required for inventory
before it is sent out to each restaurant –
increases costs

 Managers can order different ingredients for

meals to meet local tastes – increases
demand/improved competitiveness – increases
revenue
 Local suppliers can deliver more frequently
and quickly – ensures ingredients will be
fresh – improves reputation of the
restaurants
 Managers may feel more motivated/trusted –
Restaurant
if allowed to make some decisions and order
Managers purchase
their own ingredients
their own inventory
 May be unable to meet sudden increase in
from local suppliers
demand for specific meals – if ingredients
are not available – may lose customers as
disappointed – lose reputation/customers do
not return
 Restaurant Managers are very busy - so
may not have the time to order ingredients
 Some ingredients may not be available locally
to each restaurant - limiting the availability of
the full menu in some restaurants

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Question Answer Marks

1(b)
Justification might include:
 All inventory is purchased by head office is
the best way for VP to choose as this will
allow considerable cost savings due to
purchasing economies of scale. This will
allow VP to keep prices low and to be more
competitive with other similar restaurants,
possibly increasing revenue. Ordering only
from local suppliers may make it difficult to
Recommendation meet customer demand as food ingredients
may run out if local suppliers are small.
 Each Restaurant Manager purchases their
own inventory is the best way to choose
because each restaurant can meet local
demand, and this will attract more customers
leading to higher revenue. Also the costs of
storage are lower as smaller quantities can
be purchased so profit from selling fast-food
will be higher.

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Question Answer Marks

2(a) Explain two advantages and two disadvantages of VP’s Restaurant 8

Managers delegating tasks to their Assistant Managers.

One mark for each advantage/disadvantage (max 2 advantages/max 2

disadvantages).

Award a maximum of one additional mark for each explanation of the

advantage/disadvantage in the context of VP.

Advantages could include:

 Restaurant Managers cannot carry out every job themselves/reduce
workload – they can then focus on the most important tasks at the fast-
food restaurant and make better decisions
 Restaurant Managers are less likely to make mistakes – as they can
focus on specific tasks such as marketing new menus
 Gives the Restaurant Managers time to assess employees performance
below them in the hierarchy – they can then identify where employees
need more support/training in developing/cooking new recipes
 May increase motivation/feel more trusted for Assistant Managers –
improved speed of serving fast-food
 Assistant Managers may develop new skills Disadvantages could
include:
 Restaurant Managers could lose some control over subordinates –
mistakes may be made leading to worse reputation if food is served
longer than 5 minutes after ordering
 Restaurant Managers may be reluctant to give up some control – if
Assistant Managers do a good job carrying out the delegated tasks such
as ordering new ingredients for the meals
 The Assistant Manager may not have the skills to carry out the tasks that
have been delegated to them/may need additional training – may lead to
poor decisions being made such as unskilled chefs being employed at
the restaurant
 Assistant Managers may not like having tasks delegated to them/feel
overloaded with work by Restaurant Managers

For example: Restaurant Managers can focus on their most important tasks
(1) which will help them to make better decisions for the fast-food
restaurants (app).

Application could include: fast food; restaurant; vegetarians; meals; public

limited company; food outlets across the country; diners; menus; recipes;
cooking; serving; ingredients; 50 employees; receive a meal in less than 5
minutes; service is the fastest possible.

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Question Answer Marks

2(b) Using Appendix 2 and other information, consider the two countries VP 12
could choose to locate its new restaurants.
Which country should VP choose? Justify your answer.

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.
Detailed discussion of both countries Well-justified
recommendation.
Candidates discussing both countries in detail, in
context and with well-justified recommendation
including why the alternative country is rejected
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.
Detailed discussion of at least one country.
Judgement with some justification / some evaluation
of choices made.
Candidates discussing at least one country in detail
and applying it to the case should be rewarded with
the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.
Limited ability to discuss the countries with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both countries in context should
be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

2(b) Relevant points might include:

Benefits Drawbacks

 Gross profit is $14,  There are many

and Country B is competitors so
$8 demand may be
 Highest price per lower – may have
meal at $20 – to reduce price to
possibly highest attract customers –
revenue if demand possibly reducing
remains high revenue
 Many competitors  May have to spend
may indicate that more on marketing
there is high as there are many
demand for fast- competitors in the
food restaurants market in order to
enter the new
market abroad –
Country A
increasing costs
 Higher wage costs
at twice the cost of
Country B – may
lead to higher costs
overall
 Harder to recruit
new workers as
unemployment is
low – may have to
offer more fringe
benefits to attract
employees from
their many
competitors

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Question Answer Marks

2(b)
 Lowest variable  Lower gross profit
cost per meal at between price of
$2 rather than $6 $10 and costs of
in country A – $2 = $8, whereas it
makes it easier to is $14 in country A
charge the lowest  Few competitors
price of $10 per may indicate that
meal demand for
 High vegetarian fast-
unemployment food in country B
makes it easier to is low – VP needs
recruit new to spend on market
employees for the research to be sure
restaurants – there is a market in
more likely to country B –
remain with VP as investment could
few alternative be wasted if there
Country B
employment is not a sufficient
opportunities in demand to make
country B – the expansion
lowering successful
recruitment
costs/training costs
in the future
 Lowest wage costs
at $5 per hour –
reducing total
labour costs
 Low price at $10
per meal may
attract many
customers –
possibly increasing
revenue

Justification may include:

 VP should choose country A as it can charge
the highest price of $20 per meal which may
lead to higher revenue and costs are likely to
be lower as variable costs are lower at $6
which gives a higher gross profit, so after
expenses have been paid, it may lead to
Recommendation higher profit. Country B should not be chosen
because it has a lower price per meal and
unemployment is high and there may be
lower demand.
 VP should choose country B as it has the
lowest wage costs, and it will be easy to
recruit new employees as there is high
unemployment there.

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Question Answer Marks

3(a) Explain two possible reasons why VP wants to expand. 8

One mark for each reason (max 2).

Award a maximum of three additional marks for each explanation of the

reason why VP wants to expand, one of which must be in context.

Answers might include:

 To gain higher profits for the owners – as expansion will lead to
increased sales in new markets abroad – leading to increased revenue
 To lower average/unit costs – gain from economies of scale – such as
bulk buying of food ingredients – a discount will be received from bulk
purchases
 To gain a larger share of the market – may produce a stronger brand
image – might result in greater customer loyalty
 To gain more status and prestige for the owners – from the company
being more well known in country Z – may be listed on stock exchanges
in other countries
 To gain access to new markets/diversification – this would
reduce/spread risk
For example: To gain higher profits for the owners (1) because expansion is
likely to increase revenue, (1) as VP will sell its products in more markets
(1). The higher profits should allow the shareholders of VP to be paid higher
dividends (app).

Application could include: fast food; restaurant; vegetarians; meals; food

outlets across the country; diners; shareholders/public limited company;
ingredients.

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Question Answer Marks

3(b) Consider the benefits and limitations of the following two ways VP can 12
enter a new market in another country. Which way should VP choose?
Justify your answer.
• Joint venture
• Franchising

Level Description Marks

3 Sound application of knowledge and understanding of 9–12

relevant business concepts using appropriate
terminology.
Detailed discussion of two ways. Well-justified
conclusion.
Candidates discussing both ways in detail, in context
and with well-justified conclusion including why the
alternative way is rejected should be rewarded with the
top marks in the band.

2 Sound application of knowledge and understanding of 5–8

relevant business concepts using appropriate
terminology.
Detailed discussion of at least one way.
Judgement with some justification / some evaluation of
choices made.
Candidates discussing one or more ways in detail and
applying it to the case should be rewarded with the top
marks in the band.

1 Limited application of knowledge and understanding of 1–4

relevant business concepts.
Limited ability to discuss the ways with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining both ways in context should be
rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

3(b) Relevant points might include:

Advantages Disadvantages

 VP will share the  It will take time and

risks and costs of effort to find the right
setting up the fast- partner to join with in
food chain in the venture – which
another country with may delay the
its partner in the expansion plans
joint venture – this  There may be
may help VP to management
borrow less capital conflicts between
to expand into the the two businesses
other country – leading to
 VP can gain arguments and
important local inefficiency – higher
knowledge about costs
the market – easier  Profits will have to
to focus meals on be shared – may
local tastes – reduce return on
increasing investment from the
demand/sales/reven expansion – may
ue not be agreeable to
Joint venture
 Less likely to the shareholders of
require expensive VP
market research to  The level of
understand the fast- expertise may not
food market – be the same in the
reducing the costs partner business –
of entering the new may make the
market abroad return on
 Lowering the risks investment unfair
of entering the new  The work and
market abroad - resources may not
more likely to be equally shared
understand local between the two
customs and tastes partners in the joint
– adapt fast-food venture – VP may
meals to meet local have to put more
demand work and resources
as it is the main
partner in the
venture

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Question Answer Marks

3(b)
 Saves time on  Poor quality
expanding into the management may
foreign market – as lead to a lowering of
business operating the reputation of the
fast-food VP brand – if the
restaurants will franchisee in the
make the foreign country
investment does not maintain
 Payment from standard of
franchise fees for delivering fast food
using the VP brand in 5 minutes
- fee goes back to  Low level of control
VP which may by VP Directors –
increase profits – over how the
making a return franchise operates
Franchising from the expansion the vegetarian
for low investment fast-food chain
from VP  The franchisee has
 Lower capital information about
requirement - no the food
need to raise ingredients and
finance for the recipes of VP and
expansion – no may use these
need to sell when the franchise
additional shares agreement has
with possible loss of expired – could
control/no bank loan develop a better
required so no need version and become
to pay interest rates a competitor
increasing fixed
costs

Justification may include:

 Forming a joint venture is the best way to
overcome the problems of entering a new fast-
food market in another country which VP is
unfamiliar with as this will enable VP to
understand this new market by gaining
knowledge from this other business. The local
business will be able to advise and guide VP on
the best locations to choose and the best
meals to serve to meet local demand and
Conclusion
successfully enter this market. Franchising
should not be chosen as the franchisee may
provide poor service and lead to a poor brand
image of VP.
 Selling a franchise to businesses in the new
fast-food market in another country will reduce
the investment required for VP to expand. This
will make it cheaper and quicker to expand into
this new market while still receiving revenue
from the fees charged for the franchise.

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Question Answer Marks

4(a) Explain, using an example, one reason why VP might need: 8

 short-term finance
 long-term finance.

One mark for reason for short-term/long-term finance (max 1).

Award a maximum of three additional marks for the explanation of the

reason why VP needs short-term/long-term finance, one of which must be
in context, and one must include an example.

Answers for short-term finance might include:

 To provide working capital for the business – so that day-to-day
expenses can be paid for – an overdraft may be suitable as it is only
used if needed/potentially reducing interest paid
 To prevent cash-flow problem/improve the cash position of the
business – by taking short-term bank loan – this will provide finance for
a short time to overcome the potential shortage of cash and increase
liquidity

For example: To provide working capital for the business (1) so that
day-to-day expenses can be paid for (1). An overdraft may be suitable as it is
only used if needed which potentially reduces the interest to be paid
(1) when buying food ingredients for the restaurants (app).

Answers for long-term finance might include:

 To purchase long-term non-current assets – as these assets are likely to
be very expensive – so a long-term bank loan may be suitable as it is
repaid over a long period of time reducing the amount of monthly
repayments/outflows each month
 To expand the business – which requires a large amount of money in
order to grow – the issue of shares will not incur interest payments
 To update the business – often involves new technology which is
expensive – so payments may need to be spread over a long period of
time such as with a lease

For example: To expand the business (1) as VP is planning to expand in

another country (app) which requires a large amount of money to grow
(1). VP might choose to issue new shares which will not incur interest
payments (1).

Application could include: fast food; restaurant; vegetarians; meals; public

limited company/shareholders; food outlets across the country; diners; 500
restaurants; 25 000 employees; ingredients; expand into another country.

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Question Answer Marks

4(b) Using Appendix 3 and other information, consider how the following 12
three changes in country Z may affect VP. Which change is likely to
have the greatest effect on VP's profits? Justify your answer.
 Increase in interest rates.
 Depreciation of country Z’s exchange rate.
 New legal controls which require all restaurants to list the
ingredients in their meals.

Level Description Marks

3 Sound application of knowledge and 9–12

understanding of relevant business concepts
using appropriate terminology.
Detailed discussion of two or more changes. Well-
justified conclusion.
Candidates discussing all three changes in detail,
in context and with well-justified conclusion
including why the alternative changes are rejected
should be rewarded with the top marks in the
band.

2 Sound application of knowledge and 5–8

understanding of relevant business concepts
using appropriate terminology.
Detailed discussion of at least one change.
Judgement with some justification / some
evaluation of choices made.
Candidates discussing two or more changes in
detail and applying them to the case should be
rewarded with the top marks in the band.

1 Limited application of knowledge and 1–4

understanding of relevant business concepts.
Limited ability to discuss the changes with little/no
explanation.
Simple judgement with limited justification / limited
evaluation of choices made.
Candidates outlining all three changes in context
should be rewarded with the top marks in the
band.

0 No creditable response. 0

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Question Answer Marks

4(b) Relevant points might include:

• Higher fixed costs from interest paid if bank loan

taken out for expansion of the restaurant chain
in another country – likely to lead to lower
profit
• Customers may buy fewer meals due to interest
rates being increased for 3% to 5% to be paid
on borrowing leaving less money to spend
leading to reduced revenue for VP
Increase in
• As VP is a public limited company it is large
interest rates
and may enjoy financial economies of scale –
leading to relatively lower interest rates charged
on bank loans than smaller businesses –
reducing the impact of the interest payable on
the loans
• Increased interest received on any reserves held
by VP – increase income into the business –
leading to an increase in profit

• Imported food ingredients will now cost more –

leading to higher variable costs – possibly lower
profit margin/higher prices
• Increased cost of imported ingredients may lead
to VP changing to purchase from local suppliers
Depreciation of
- however the quality may be lower
country Z
• When VP has expanded to another country
exchange rate
and set up new restaurants profits sent back to
country Z will exchange for a higher amount of
country Z currency – but capital needed for
expansion will exchange at a lower rate – higher
investment needed

• Increased costs of rewriting all menus – time

taken to work out and list all the ingredients in
meals – will need to be repeated every time a
Introduction of new meal is added to the menu – increases
new legal costs both in the short-run and possibly the long-
controls that run – reducing profit
require all • If VP wants to keep the same mark-up on costs
restaurants to – may lead to increased price of meals –– may
provide lead to lower demand/lower sales – reduced
information profit
about the • All restaurants will have the same costs – so
ingredients in competitiveness may not change
their meals • May attract different target market who didn’t
appreciate the ingredients used by VP – as
these are now listed on menus - may increase
sales

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Question Answer Marks

4(b)
Justification may include:
• Increase in interest rates will have the greatest
effect on profit because VP will need to take out
large bank loans to finance the expansion in
another country leading to a large increase in
costs from the interest payable which will reduce
VP profits. Depreciation will have little effect as
ingredients are only a small proportion of costs
and only 30% of ingredients are imported. The
new legal controls will have little effect on profit
as these are a relatively small cost and the
menus are printed regularly anyway when the
Conclusion of
menus change with the new meals.
which is likely
• Depreciation of the exchange rate of country Z
to have the
will have the greatest effect on profit as 30% of
greatest effect
food ingredients are imported. This will lead to
on profits
a large increase in variable costs which will
reduce gross profit and then profit for VP.
• New legal controls that require all restaurants to
provide information about the ingredients in their
meals will have the greatest effect on profit as
menus will have to all be reprinted every time a
new meal is developed. As VP do this regularly to
encourage customers to return so they do not get
bored with the same meals it will result in a
regular increase in costs and therefore a
reduction in profit.

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Cambridge IGCSE™

BUSINESS STUDIES 0450/22

Paper 2 Case Study May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 20 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in

part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not

rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered question Used when the answer or parts of the answer are not
answering the question asked.

APP Application Indicates appropriate reference to the information in the

context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response

includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response

has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response

includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain four characteristics needed for an entrepreneur to be 8

successful.

Award 1 mark for each relevant characteristic (max 4).

Award a maximum of one additional mark for each explanation of a

characteristic of being a successful entrepreneur.

There are no application marks available.

Relevant characteristics might include:

 Self-confident – strong belief in their own ability and ideas
 Creative – find new and different ways to attract customers
 Independent – willing to go with own ideas
 Hard worker/dedicated – prepared to work long hours
 Risk-taker – willing to risk losing own capital/as a sole trader or
partnership willing to risk losing personal assets
 Effective communicator – able to persuade others
 Optimistic – think positively about new ventures and continue if there are
setbacks
 Innovative – able to develop new products to retain customers
 Good at networking – prepared to learn from others
 Self-motivated/Determined/Passionate/Driven
 Results driven
 Strong leadership qualities
 Resilience
 Experience/Knowledge/Multi-skilled

For example: Self-confident (1) as the entrepreneur has a strong belief in their
own ability and ideas to convince others such as banks to lend to them (1)

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Question Answer Marks

1(b) Consider the advantages and disadvantages of starting up ET as either 12

an unincorporated business or as a limited company. Which should
Zane and Zaara choose? Justify your answer.

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of both options.

3 Well-justified recommendation. 9–12

Candidates discussing both options in detail, in context

and with a well-justified conclusion including why the
alternative option was rejected should be rewarded with
the top marks in the band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of at least one option.

2 Judgement with some justification / some evaluation of 5–8

choices made.

Candidates discussing at least one option in detail and

applying it to the case should be rewarded with the top
marks in the band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss the options with little/no

explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choice made.

Candidates outlining both options in context should be

rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

Advantages Disadvantages

 Partners are in  Unlimited liability –

complete control of could lose all
the business personal
 Do not have to share possessions
profits with  Limited sources of
shareholders – may capital – if only 2
lead to higher profits partners invest in
each if shared the business as
Unincorporated between fewer limited to their own
business owners capital
 Easy to set up the  Partners are
theatre and will responsible for all
have few legal decisions taken by
requirements to either partner if
operate the business mistakes are made –
– reducing effort and may lead to personal
cost to set up financial losses and
may be equally liable

 Limited liability –  Accounts are not

owners personal private – competing
possessions will not theatres may
be used to pay access the accounts
business debts  Not easy to transfer
 Owners and shares as a private
business are limited company –
separate legal may make it difficult
identities – provides to sell shares to
continuity on the family and friends
death of owners  Legal formalities to
Limited company  Can sell shares to set up – may take
raise capital to set- more time and cost
up the theatre – to than a partnership
family and friends –  Legal formalities to
large amounts of operate the
capital may be company – needs to
raised have accounts
audited and
registered with the
government takes
time and increases
costs

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Question Answer Marks

1(b)
Recommendation Justification may include:
 ET should be an unincorporated business
because it is easy to set up the partnership. Zane
and Zaara will have complete control of the
theatre and keep all the profits. There are not
the legal formalities with a partnership that will
increase costs that there are if ET was a private
limited company.
 ET should be a limited company to gain the
benefits of limited liability. If anything goes
wrong with the theatre, then any liability will only
be for an amount invested in the business, all
Zane and Zaara's personal belongings will be
safe.

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Question Answer Marks

2(a) Explain one business objective for ET and one other objective that a 8
social enterprise like Daycare might have.

One mark for each objective (max of 2).

Award a maximum of 3 additional marks for each explanation of the

objective – one of which must be applied to this context.

Relevant answers might include:

Business objective for ET
 Survival – to not go bankrupt in the first year of operation – to cover
costs
 Profit – to provide a return on investment – for the owners who risked
their own money
 Growth of the business – to possibly increase sales – leading to
increased revenue in the future
 Market share – attract a higher number of customers – possibly leading to
higher revenue

Other objectives for social enterprise, Daycare

 Service to the community/help local people – to create jobs for people in
the local area – support disadvantaged groups in society/make a profit
to put back into local initiatives
 Provide childcare to enable low-income parents/carers to go out to work
– increase their incomes – raising their living standards
 Provide education for the pre-school children of low-income families
 Provides access to education that otherwise would not be provided
 Improves the likelihood of these children being more successful when
they do go to school/may improve their ability to earn higher incomes in
the future/get a better paid job
 To provide funds to reinvest back into the social enterprise – by making
a profit
 To break-even

For example: To provide a service to the community (1) to look after the pre-
school children (app) and support disadvantaged groups in the society that
cannot afford to pay for these services (1) so it will allow parents/guardians
to go to work and improve their family’s income (1)

Application might include: pre-school children; theatre; performances;

actors; pay fair wages; tourists; low-income area; 24 part-time employees;
provides education for children under 5.

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Question Answer Marks

2(b) Using Appendix 2 and other information, consider the two options for 12
the first performance at the theatre. Which is the best option for Zaara
to choose? Justify your answer using suitable calculations.

Level Description Marks

3 Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of both options.

Well-justified recommendation. 9–12

Candidates discussing both options in detail, in

context and with a well-justified recommendation including
why the alternative option is rejected should be rewarded
with the top marks in the band.

2 Sound application of knowledge and understanding of

relevant business concepts using appropriate terminology.

Detailed discussion of at least one option.

Judgement with some justification / some evaluation of 5–8

choice made.

Candidates discussing at least one option in detail and

applying it to the case should be rewarded with the top
marks in the band.

1 Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss the options with little/no

explanation.
1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining both options in context should be

rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

2(b) Relevant points might include:

Advantages Disadvantages

 Fewer employees  The average wage

are required to put cost is the highest –
on a performance – $20 higher than
reducing total Option 2
variable costs  Makes a loss of
 Costs for scenery $210 for each
and costumes is performance
the lowest of the  Lowest revenue
two options – gained for each
$1000 lower than performance of the
Option 1 Option 2 two options –
 Total cost is the $1000 per
lowest of the two performance
options – at $1210
per performance
 Lowest price per
seat at $10 – so
likely to sell all the
tickets ensuring the
estimated revenue
is received

 Has the lowest • Has the highest

wage cost per number of
employee of the employees per
two options – at performance – 17
$10 per actor more than Option 1
 Makes the highest – highest total
profit per wage costs
performance of the • Highest cost of the
two options – at two options –
Option 2
$260 per $2240 per
performance performance
 Has the highest  Highest price per
revenue of the two person – $25 each
options – at $2500 – may not sell all
– $1500 higher tickets – so
than Option 1 revenue may be
lower than
estimated at $2500

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Question Answer Marks

2(b)
Justification may include:
• ET should choose Option 1 to have in the
theatre as it has the cheapest total cost at
$1210 per performance. As the theatre is
new it should try to keep its costs as low as
possible. Option 2 has much higher costs to
put on the performances and ET may not
have the funds to do this. Also the price per
Recommendation
ticket is higher for the other option and as the
theatre is located in a low-income area of
Main City the theatre may not sell all 100
seats and the estimated revenue may not be
received.
• ET should choose Option 2 for the theatre as
it makes a profit of $260 per performance when
the revenue is $2500.

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Question Answer Marks

3(a) Explain four reasons why it is important that Zane prepares a cash-flow 8
forecast before starting ET.

One mark for each reason (max 4).

Award a maximum of one additional mark for each explanation of the reason
which must be applied to this context.

Relevant answers might include:

 To manage the cash flows in and out of the business – so that Zane and
Zaara will be aware of how much cash they may have available when
operating the theatre
 To ensure there is cash/working capital available to pay for day-to-day
expenses/short term debts – or they may be unable to put on
performances
 To show the bank to gain a bank loan/overdraft – without a loan
performances may be of poor quality if costumes cannot be purchased
 To show if the business is likely to run short of cash – avoid having a
lack of liquidity for the 2 partners or shareholders
 To help plan ahead – to make decisions about which price to charge so
that all 100 seats are sold
 To see whether the business is achieving its financial objectives
 May need to include it in the business plan

For example: To manage the cash flows in and out of the business (1) so
that Zane and Zaara will be aware of how much cash they may have
available to spend at the theatre (app).

Application could include: theatre; performances; 100 seats; costumes; 2

partners/shareholders; pay fair wages; tourists; low-income area; 24 part-
time employees; costumes produced in the local area; refreshments from
suppliers that do not pollute the environment.

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Question Answer Marks

3(b) Consider the following three roles of marketing for ET. Which role will 12
be the most important for ET to be successful? Justify your answer.

 Identifying customer needs

 Satisfying customer needs
 Maintaining customer loyalty

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of two or more roles of marketing.

3 Well-justified conclusion. 9–12

Candidates discussing all three roles of marketing in

detail, in context and with a well-justified conclusion
including why the alternative roles of marketing are
rejected should be rewarded with the top marks in the
band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one role of marketing.

2 5–8
Judgement with some justification / some evaluation of
choices made.

Candidates discussing two or more roles of marketing

in detail and applying them to the case should be
rewarded with the top marks in the band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss the roles of marketing with

little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining three roles of marketing in context

should be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

3(b) Relevant points might include:

 The Marketing Manager needs to find out what types
of performances will be popular with audiences –
this is to ensure that the shows that are planned will
attract enough customers to buy tickets for most of
the seats – increasing/maximising revenue for the
theatre
Identifying
 Find out what price customers are willing to pay for
customer
seats at the theatre for a performance – if too high
needs
a price is charged then many seats may not be
sold – leading to a loss for that performance
 To find out what types of refreshments customers
wish to buy at the interval – this will help to raise
these sales and provide additional revenue for the
theatre

 Ensuring that the performances are what the

audience expects – this improves the reputation of
the theatre – so customers tell their friends about the
Satisfying theatre – increasing sales of seats for
customer performances
needs  If performances are on days which are not
convenient for customers then fewer seats will be
sold – so it ensures the performances are put on
during days that most suit local people and tourists

 Having links with customers to ensure they keep

coming back to the theatre to watch performances –
rather than go to other theatres – as regular visits
to the theatre will maintain its revenue – enabling them
Maintaining
to keep putting on performances/provide liquidity for
customer
the next performance/avoid cash flow problems
loyalty
 Keeping existing customers is preferable to attracting
new ones – as it is often cheaper to market to
existing customers than to find new ones – makes the
theatre’s marketing budget more efficient

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Question Answer Marks

3(b)
Justification may include:
 Identifying customer needs is most important
because if these needs are not understood then the
theatre may plan and pay to put on a performance
that will not attract customers, leading to a loss.
Satisfying customer needs is less important to the
success of the theatre as if the needs have been
identified then it is more likely that these will be met by
the chosen performance. As theatres may keep
attracting new audiences such as tourists then
maintaining customer loyalty may be less important
as long as the different needs of these audiences
have been identified.
Conclusion
 Satisfying customer needs is most important
because if customers are disappointed with the
performance, then they will tell their friends and
family about it and ET will gain a poor reputation.
This may lead to fewer sales of seats for future
performances leading to ET being less successful.
 Maintaining customer loyalty is most important as
without this it will mean the theatre will need to keep
attracting new customers and this is expensive to
research suitable plays and shows that they will want
to see. Marketing costs will therefore be lower if
regular customers keep coming back to watch the
shows.

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Question Answer Marks

4(a) Explain two leadership styles that Zane and Zaara could use when 8
managing ET’s employees.

One mark for each leadership style (max 2).

Award a maximum of 3 additional marks for each leadership style – one of

which must be applied to this context.

Relevant answers might include:

Autocratic
 The manager expects to be in charge and have all orders followed
 Manager keeps themselves separate from the employees
 Manager makes all the decisions and keeps information to themselves
 Communication is one-way/employees having no opportunity to
comment or take part in any decisions about business
 Decision-making is quick

Democratic
 Gets employees involved in decision-making about the business
 Information about future plans for the business shared with employees and
discussed before owners make the final decision
 Communication is both downward and upward allowing the experience of
employees to be considered by the owners – leading to possibly better
decisions being made
 Motivating for employees as they feel more involved in the business –
less likely to leave/reduced labour turnover

Laissez-faire
 Main objectives of the new business are shared with employees but
then they are left to organise their own work and take decisions without any
interference
 Communication can be difficult as the leader has little involvement in the
decisions being made
 Employees can be motivated as they are valued and trusted to take the
decisions
 Employees can be creative with fresh ideas about how to operate the
business

For example: They could use a democratic leadership style (1) where
communication is both downward and upward allowing the experience of
employees to be considered by the owners (1) leading to possibly better
decisions being made (1) about how to operate the theatre (app).

Application could include: theatre; performances; 100 seats; pay fair

wages; tourists; low-income area; 24 part-time employees; provides
education for children under 5; costumes produced in the local area;
refreshments from suppliers that do not pollute the environment.

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Question Answer Marks

4(b) Consider the following three ethical issues for the theatre. Which ethical 12
issue is likely to have the biggest effect on ET? Justify your answer.

• Paying fair wages to employees

• Only buying costumes produced in the local community
• Purchasing all refreshments from suppliers that do not pollute the
environment

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of two or more issues.

3 9–12
Well-justified conclusion.

Candidates discussing all three issues in detail, in

context and with a well-justified conclusion including
why the alternative issues are rejected should be
rewarded with the top marks in the band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of at least one issue.

2 5–8
Judgement with some justification / some evaluation of
choices made.

Candidates discussing two or more issues in detail and

applying them to the case should be rewarded with the
top marks in the band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss issues with little/no explanation.

1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining all three issues in context should

be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

4(b) Relevant points might include:

 This will provide local people with a
higher income than they might have had
– leads to higher standard of living in
the local area – more likely to sell more
theatre seats – increasing revenue for
the theatre
 Higher wage rates might lead to higher
motivation – improved quality of
Paying fair wages to performances at the theatre
employees  Lower labour turnover – the 24 part-time
employees may be less likely to leave
and work for another theatre –
improved employee loyalty – lower
recruitment costs
 Wage costs are likely to be higher which
may lead to higher prices for theatre
seats – may lead to lower demand –
reducing revenue

 Will attract local people to watch the

theatre performances – increase
revenue from ticket sales
 May receive good publicity – many local
people may encourage family and
friends to support the theatre –
Only buying
increasing revenue
costumes produced
 Provides work for local people –
in the local
important as it is based in a low-
community
income area – raising the standard of
living for people in the local area
 Local people may not have the skills
necessary – limiting the quality of
costumes used and possibly the overall
performance

 May be more expensive than buying from

less ethical suppliers – possibly lowering
the profit margin for each performance
Purchasing
 Reduces the range of refreshments
refreshments from
available – may reduce revenue as
suppliers that do not
choice may be less popular
pollute the
environment  Pressure groups will be less likely to
protest outside the theatre – which
might deter tourists from visiting the
theatre

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Question Answer Marks

4(b)
Justification may include:
 Paying fair wages is likely to have the
biggest effect on ET as this may
increase costs which may lead to higher
prices for the 100 seats so customers
may go to their competitors instead and
reduce revenue. Costumes from the
local community may be of lower quality
but if the performance is good then
people will still buy tickets and revenue
will not be affected. Refreshments only
have a small impact on the theatre as
they are a small proportion of the
overall costs and revenue. So higher
costs and lower revenue due to paying
fair wages is likely to have the biggest
Conclusion
effect on ET.
 Costumes produced locally provides
work for the local community, so ET is
more likely to sell all 100 seats for
each performance as local people
have the income to buy the tickets.
Higher revenue from sales will lead to
the biggest effect on ET.
 Refreshments purchased from ethical
suppliers will lead to a good reputation
for the theatre and hence attract
customers concerned with the
environment so revenue will be higher
as more tickets are sold for each
performance leading to higher profits
for ET.

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Cambridge IGCSE™

BUSINESS STUDIES 0450/23

Paper 2 Case Study May/June 2023
MARK SCHEME
Maximum Mark: 80

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 19 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

 the specific content of the mark scheme or the generic level descriptors for the question
 the specific skills defined in the mark scheme or in the generic level descriptors for the question
 the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

 marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
 marks are awarded when candidates clearly demonstrate what they know and can do
 marks are not deducted for errors
 marks are not deducted for omissions
 answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.

GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.

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Social Science-Specific Marking Principles

(for point-based marking)

1 Components using point-based marking:

 Point marking is often used to reward knowledge, understanding and application of skills.
We give credit where the candidate’s answer shows relevant knowledge, understanding
and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly
convey the same meaning (unless the mark scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they
are correct
c DO credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required.
(Check for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already
credited unless the language itself is being tested. This applies equally to ‘mirror
statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

 Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
 Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
 Content in the answer column in brackets is for examiner information/context to clarify the
marking but is not required to earn the mark (except Accounting syllabuses where they
indicate negative numbers).

3 Calculation questions:
 The mark scheme will show the steps in the most likely correct method(s), the mark for
each step, the correct answer(s) and the mark for each answer
 If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
 Where the candidate uses a valid method which is not covered by the mark scheme,
award equivalent marks for reaching equivalent stages.
 Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ applies: full marks will be given if a correct and complete method is
used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

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4 Annotation:
 For point marking, ticks can be used to indicate correct answers and crosses can be used
to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks
have no defined meaning for levels of response marking.
 For levels of response marking, the level awarded should be annotated on the script.
 Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who marked that paper.

0450/7115/0086 Business Studies – Paper 2 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable (used in

part (a) questions).

Cross Cross Indicates a point which is inaccurate/irrelevant and not

rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to
reward a response.

TV Too vague Used when parts of the answer are considered to be too
vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not
question answering the question asked.

APP Application Indicates appropriate reference to the information in the

context.

OFR Own figure rule If a mistake is made in a calculation, and the incorrect
figure that results from the mistake is used for subsequent
calculations.

SEEN Noted but no credit Indicates that content has been recognised but not
given rewarded.

L1 Level 1 Used in part (b) questions to indicate where a response

includes limited knowledge and understanding.

L2 Level 2 Used in part (b) questions to indicate where a response

has a more detailed discussion and contains some
evidence of justification.

L3 Level 3 Used in part (b) questions to indicate where a response

includes a well-justified recommendation.

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Question Answer Marks

1(a) Explain four reasons why a business might become a multinational 8

company.

Award one mark for each relevant reason (max 4).

Award a maximum of one additional mark for each explanation of the

reason.

 Produce nearer to the market – reduce transport costs of finished

products
 Avoid barriers to trade – quotas and tariffs will not apply if the business is
not moving goods between countries
 Increase market share – by expanding into different markets a business
can access larger target market
 Government incentives in the country where they are setting up –
receive grants/subsidies which would potentially reduce the costs of
production for a business
 Produce in a country with lower labour/production costs
 Remain competitive if competitor companies are expanding abroad

For example: The cost of production could be reduced if the business needs
to import materials (1). By operating in a different country where the raw
materials are available, variable costs can be reduced (1).

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Question Answer Marks

1(b) Consider the advantages and disadvantages of the following three 12

methods of promotion RR could use in the new markets. Which would
be the most suitable method for RR to use? Justify your answer.

 Television
 Billboards
 Sponsorship of a sports team

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.

Detailed discussion of two or more methods.

Well-justified recommendation.

Candidates discussing the three methods in detail, in

context and with a well-justified recommendation,
including why the alternative methods were rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.

Detailed discussion of at least one method.

Judgement with some justification / some evaluation

of choices made.

Candidates discussing two or more methods in detail

and applying them to the case should be rewarded
with the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.

Limited ability to discuss the methods with little/no

explanation.

Simple judgement with limited justification / limited

evaluation of choices made.

Candidates outlining the three methods in context

should be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

1(b) Relevant points might include:

Advantages Disadvantages

 The advert will be  Can be more

seen by a large expensive than other
audience – 80% of forms of promotion –
population in the so this could make the
new market watch profit margins fall
television  Many consumers now
 A wider range of (rug) download films/music
Television
patterns can be seen and may not watch
 RR can choose the many television
most appropriate time programmes –
for the advert to be reducing the access to
broadcast so that it is target markets
seen by the target
audience
 They are lower cost  Can be easily missed
than the other two as people pass by –
options and are there especially if on a main
for quite a time – RR road as cars will be
could show many rugs passing quickly
on one image  No detailed
Billboards
 If they are in a busy information can be
place, then many added, customers may
people might pass not see the website
them and be attracted address as they drive
to buy RR’s machine past
manufactured rugs
 It can raise awareness  Actions of the
by linking the brand to sponsored person
a famous sporting could damage RR's
person reputation for
Sponsorship of a  Helps to target the excellent customer
sports team intended market - by service – reducing
targeting events in the sales
new markets  Takes time to find a
suitable team to
sponsor the rugs

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Question Answer Marks

1(b) Justification may include:

 Television is best because it can have a large
reach. RR can also use colour and show many
images of their rugs. It is expensive, but RR made
$8m profit in 2022 so it can afford the expense. A
billboard might not be seen by many people as only
45% drive cars and so not many people would
see them on the roads or pass by them. It might be
very difficult to find a suitable team to sponsor
rugs.
Recommendation
 Billboards would be best because they are large
and can be placed alongside busy roads in the
new markets to allow many people to see them.
Billboards can show a picture of the rugs and the
website address so there does not need to be
lots of writing in different languages. One billboard
design could be used in all the new markets.
 Sponsorship of a sports team would be best as it
can reinforce the brand image of high-quality rugs
by having a suitable team to promote the product.

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Question Answer Marks

2(a) Explain two problems RR might experience as it expands 8

Award one mark for each relevant problem (max 2).

Award a maximum of three additional marks for each explanation – one of

which must be applied to this context.

 Difficult to control – which may result in more mistakes being made

during production – increasing waste
 Poor motivation / lack of commitment – as employees feel alienated this
could reduce productivity
 Weak coordination – it may be more difficult for decisions to be made
between departments to ensure each runs smoothly
 Poor communication – instructions do not get to the right person / get
distorted – so orders may not be completed on time
 Liquidity may reduce – cost of expansion might lead to short-term cash
flow difficulties – RR will need to buy more raw materials to increase
production
 Shortage of finance for investment – RR may have to invest in new
machines to increase production capacity

For example: One problem may be reduced liquidity (1). RR will need to buy
more raw materials such as wool to meet increased demand (app). This will
increase cash outflows (1) so net cash flow will reduce until the products are
sold, and revenue is received. (1)

Application could include: private limited company; rugs ; wool; new markets
in other countries; new technology; machine made rugs; 30 employees;
standard patterns; ecommerce; developing new website; operating for 5
years; excellent customer service.

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Question Answer Marks

2(b) Consider three methods RR could use to communicate the expansion 12

plans to its employees. Which method should RR choose? Justify your
answer.

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.

Detailed discussion of two or more methods.

Well-justified recommendation.

Candidates discussing the three methods in detail, in

context and with a well-justified recommendation,
including why the alternative methods were rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.

Detailed discussion of at least one method.

Judgement with some justification / some evaluation

of choices made.

Candidates discussing two or more methods in detail

and applying them to the case should be rewarded
with the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.

Limited ability to discuss the methods with little/no

explanation.

Simple judgement with limited justification / limited

evaluation of choices made.

Candidates outlining the three methods in context

should be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

2(b) Relevant points might include:

Advantages Disadvantages

 One-to-one  Can be expensive to

communication phone each
 Allows feedback to employee
ensure each of the  Mobile may be
30 employees switched off / not
understand the heard over the
Telephone /
message noise of the
Mobile
 Message can be machines
passed on quickly  May take time to
 Sender knows the reach the employees
message has been / takes more than
received one attempt to call
them

 Provides a  Can be slow to reach

permanent record production
Letter which can be employees – delay
referred back to could have further
negative impacts

 Seen by many  RR won’t know if all

employees in the the employees have
factory read the notice
Notices /  Comparatively cheap  No personal contact
noticeboard to produce the – no opportunity for
notices employees to ask
questions / one way
communication

 Cheap/fast way to  Do not know if the

communicate with all message has been
employees read – unless attach
 Can be sent to all a read receipt
Email employees at the  There may be poor
same time internet connection /
fail to send message
to production
employees

 Fast to send  Message will fail to

 Send to many send if no network
people at one time coverage
Text (SMS)
 Employee may not
message
have a mobile phone
– will not receive the
message

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Question Answer Marks

2(b)
 Two-way  If an employee is
communication – absent, then they
allows for instant may not get the
feedback message
Face-to-face
 Employees can ask  Can be difficult to
meeting
questions about the arrange for all the
expansion plans to employees to meet
sell rugs in other at same time/place
countries

 Cheap/fast to send  Do not know if all

message production
 Can send to employees have
Social media e.g.
everyone in the group read the message
Facebook group,
at the same time  Not all employees
WhatsApp group
will be on the app
and so may not
receive the message

Justification may include:

 Face-to-face meeting is best because this allows
the 45 employees to ask questions unlike
sending a message on email which is a one-way
method of communication. It allows them to have
personal contact with the Managing Director,
which helps to improve the relationship between
them and the management of RR. Other
methods such as a notice board are very
impersonal and may make them feel like the
Recommendation management of RR don’t really care.
 Email may be a good method of communicating
the expansion plans as RR’s HR manager can
include a diagram of the new structure. The
employees would have more detail about
expansion into new markets in other
countries.
 A text message sent to the employees would
ensure they are told of the future direction of the
rug manufacturing business quickly in a short
message which would be easy to read.

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Question Answer Marks

3(a) Explain one responsibility of each of the following in RR: 8

Award one mark for each relevant responsibility (max 4).

Award one additional mark for each explanation applied in this context.

Directors : Deciding the direction/strategy of the business – expanding into

new markets in other countries

Managers: Planning the resources needed for production – ensuring there is

sufficient wool to manufacture the products

Supervisors: Ensuring that the employees do their job correctly – this would
ensure that they maintain their reputation for excellent customer service

Production employees: To carry out their tasks effectively – to help ensure they
produce rugs with the correct standard patterns

For example: Managers will be responsible for planning the resources

needed in production (1) to ensure there is sufficient wool to manufacture the
rugs (app).

Application could include: private limited business; rugs; wool; new

markets in other countries / expansion into new markets; new technology
required; 30 employees; standard patterns; ecommerce; developing new
website; operating for 5 years; excellent customer service.

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Question Answer Marks

3(b) Consider the advantages and disadvantages of the following two 12

methods RR could use to increase the productivity of its employees.
Which method should RR choose? Justify your answer.

 Introducing new technology

 Increasing training

Level Description Marks

3 Sound application of knowledge and understanding 9–12

of relevant business concepts using appropriate
terminology.

Detailed discussion of both methods.

Well-justified recommendation.

Candidates discussing both methods in detail, in

context and with a well-justified recommendation,
including why the alternative method was rejected,
should be rewarded with the top marks in the band.

2 Sound application of knowledge and understanding 5–8

of relevant business concepts using appropriate
terminology.

Detailed discussion of at least one method.

Judgement with some justification / some evaluation

of choices made.

Candidates discussing at least one method in

detail and applying it to the case should be rewarded
with the top marks in the band.

1 Limited application of knowledge and understanding 1–4

of relevant business concepts.

Limited ability to discuss the methods with little/no

explanation.

Simple judgement with limited justification / limited

evaluation of choices made.

Candidates outlining both methods in context should

be rewarded with the top marks in the band.

0 No creditable response. 0

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Question Answer Marks

3(b) Relevant points might include:

Advantages Disadvantages

Introducing new  Fewer employees  May lead to

technology may be needed – redundancies –
lowering the wage increased short-term
cost costs due to
 Rugs can be redundancy
produced more payments
quickly/accurately –  Technology needs to
this will enable RR to be
increase output maintained/updated
 Changes in rug or may need to be
patterns can be replaced if RR want
implemented more to keep producing
quickly – the new patterns - this
business can could increase costs
respond to changes  High initial cost for
in consumer the investment
preferences more  Employees who have
quickly – remaining been trained to use
competitive the new technology
may ask for a pay
rise – increasing
labour costs

Increase training  Improved motivation  Employees may

– employees feel leave once trained
more valued as the and work for a
business is investing competitor company
in them – will adapt – the business does
to change more not gain a benefit /
quickly return on their
 Increase skills of the investment in training
30 production  There may be a
employees so short-term reduction
mistakes are in output whilst the
reduced – reducing employees are being
the cost of raw trained - RR may find
materials as there is it difficult to meet
less wastage any increase in
 Employees will demand
become more
flexible – as RR
expands into the
new markets in
other countries
and produces a
wider range of
patterns

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Question Answer Marks

3(b)
Justification may include:
 Introducing new technology is the best way to
increase the productivity of employees as it
increases the level of output in the same amount
of time. This means that RR can meet an
increase in sales more quickly and can produce
the most popular standard designs in larger
quantities. Training existing employees would
not increase productivity as much as they are
likely to be less accurate than the new
Recommendation
technology so RR may lose their reputation for
excellent customer service.
 Increased training is the best way to increase
the productivity of employees because they
would learn more skills and become more
flexible. This would enable RR to produce a
wider range of patterns of rugs to meet the
varied demand in the new markets in other
countries which may be different to the demand
in the existing markets.

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Question Answer Marks

4(a) Explain one opportunity and one threat to RR of using ecommerce. 8

Award one mark for a relevant opportunity/threat (max 2).

Award a maximum of three additional marks for each explanation – one of

which must be applied to this context.

Opportunities Threats

 Increase in demand for  Sales volume may fall – as

the product – due to an customers can more easily
increase in convenience compare competitor
for the customers products/prices so may switch to
 If the website is attractive an alternative producer
and easy to use  It can be expensive to hire a
customers may purchase website designer – good website
more products than they design is needed to ensure it
originally intended attracts consumers and is easy to
 Prices can be changed navigate
easily – reflecting the  Transport costs may be high –
level of demand – individual orders will be shipped to
leading to higher separate addresses and not to a
revenue central shop/location for
 Website can be used to distribution
promote products  No face-to-face contact with
worldwide – may be customers – this is potentially a
cheaper than other forms lost opportunity for market
of marketing research
 Inventory costs could be higher
as more stocks may need to be
kept in a warehouse to ensure
customer orders can be met in
the new markets

For example: Customers can more easily compare competitor prices (1) so
may switch to an alternative manufacturer of rugs (app) leading to sales
volumes falling (1) which may result in a lower market share (1).

Application could include: private limited business; rugs; wool; new

markets in other countries / expansion into new markets; new technology
required; 30 employees; standard patterns; ecommerce; developing new
website; operating for 5 years; excellent customer service.

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Question Answer Marks

4(b) Using Appendix 3 and other information, consider whether RR’s

Managing Director should be concerned about the financial
performance of the business. Justify your answer using suitable
calculations.

Level Description Marks

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of why the MD should/should not be

concerned about the financial performance.
3 9–12
Well-justified recommendation.

Candidates discussing why the MD should/should not

be concerned about the financial performance,
supported by appropriate calculations, in context and with
a well-justified recommendation should be rewarded with
the top marks in the band.

Sound application of knowledge and understanding of

relevant business concepts using appropriate
terminology.

Detailed discussion of one reason / one appropriate

calculation to support why the MD should/should not be
concerned about the financial performance.
2 5–8
Judgement with some justification / some evaluation of
choices made.

Candidates discussing two or more reasons / two

appropriate calculations, in detail and applying them to
the case should be rewarded with the top marks in the
band.

Limited application of knowledge and understanding of

relevant business concepts.

Limited ability to discuss financial performance with

little/no explanation.
1 1–4
Simple judgement with limited justification / limited
evaluation of choices made.

Candidates outlining three financial performance

indicators in context should be rewarded with the top
marks in the band.

0 No creditable response. 0

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Question Answer Marks

4(b) Level 1 responses

 Revenue has increased by $7m from $25m to $32m
 Cost of sales has increased by $6m
 Expenses decreased by $2m
 More wool and other raw materials were needed to increase output to
meet increased demand

Level 2 responses/calculations

2021 2022

Gross Profit $15m $16m

GPM 60% 50%

Profit $5m $8m

Profit margin 20% 25%

 GPM has decreased – suggests that the cost of goods have increased by
a larger proportion than the increase in revenue from selling rugs – the
business is making a lower gross profit per $1 of revenue
 Profit margin has increased – the business is making more profit per $1
of revenue
 The GPM has decreased whilst the profit margin has increased - this would
mean that the cost of sales has increased but that expenses are more
controlled

Conclusion Justification may include:

 The Managing Director should not be concerned as
both the profit and the profit margin from
manufacturing rugs have increased. This could
mean that the expenses have been better controlled.
The extra profit could provide more funds for
reinvestment or higher dividends paid to
shareholders. Although the GPM has fallen the gross
profit has increased by $1m, and revenue has
increased by $7m.
 The Managing Director should be concerned as the
GPM has fallen, which might indicate that the cost of
wool is not being controlled.

© UCLES 2023 Page 19 of 19

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/11

*7093880573*

Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].

This document has 12 pages. Any blank pages are indicated.

06_0450_11_2023_1.14
© UCLES 2023 [Turn over
 2

1 WLT manufactures carpets. It exports 40% of its products. Globalisation has created opportunities
and threats for WLT. Its method of production allows WLT to use specialisation. All of its 60
employees understand that quality assurance is important. WLT’s directors are considering the
best way to increase efficiency.

(a) Define ‘specialisation’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two methods of production.

Method 1: ..........................................................................................................................

...........................................................................................................................................

Method 2: ..........................................................................................................................

........................................................................................................................................... [2]

(c) Outline two advantages to WLT of using quality assurance.

Advantage 1: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Advantage 2: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

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 3

(d) Explain one opportunity and one threat of globalisation for WLT.

Opportunity: ......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Threat: ..............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think improving labour skills is the best way for a manufacturing business to increase
efficiency? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 4

2 LMA is a family-owned restaurant. The business was started 20 years ago and has remained small.
LMA is a partnership. The partners are considering whether LMA should become a private limited
company. The Finance Manager is analysing LMA’s cash-flow forecast. An extract is shown in
Table 2.1.

Table 2.1
Extract from LMA’s cash-flow forecast 2023 ($000)

July August September

Cash inflow 420 300 330

Cash outflow 410 320 360

Net cash flow X (20) (30)

Opening balance 60 70 50

Closing balance 70 50 Y

(a) Identify two reasons why a business might have cash-flow problems.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(b) Calculate X and Y.

X: ......................................................................................................................................

Y: ...................................................................................................................................... [2]

(c) Identify four examples of a cash inflow.

Example 1: ........................................................................................................................

...........................................................................................................................................

Example 2: ........................................................................................................................

...........................................................................................................................................

Example 3: ........................................................................................................................

...........................................................................................................................................

Example 4: ........................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_11_2023_1.14

 5

(d) Explain one advantage and one disadvantage to LMA of becoming a private limited company.

Advantage: .......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage: ...................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two reasons why a business might remain small. Which reason is likely to be most
important? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_11_2023_1.14 [Turn over

 6

3 DZD is a large parcel delivery business. Many of its employees work part-time. DZD’s directors are
planning to expand the business and have to decide on a suitable source of finance for 20 new
vehicles. DZD will also recruit 60 new employees. The Human Resources Director is preparing a
job description for the new employees. She is considering using Maslow’s hierarchy of needs to
increase the motivation of DZD’s employees.

(a) Define ‘job description’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two levels from Maslow’s hierarchy of needs.

1: .......................................................................................................................................

...........................................................................................................................................

2: .......................................................................................................................................

........................................................................................................................................... [2]

(c) Outline two factors DZD should consider when deciding which applicants to recruit.

Factor 1: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Factor 2: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_11_2023_1.14

 7

(d) Explain two sources of finance DZD might use for the new vehicles.

Source of finance 1: ..........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Source of finance 2: ..........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think a service business should only employ part-time workers? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_11_2023_1.14 [Turn over

 8

4 NLR manufactures a range of branded skincare products including hand cream. Packaging of the
products is important. Like many businesses, NLR makes use of market segmentation. The Marketing
Director knows the stage of the product life cycle can influence NLR’s pricing decisions. He is
analysing market research data. This shows 85% of consumers expect businesses to respond to
environmental pressures.

(a) Identify two factors that might affect the accuracy of market research.

Factor 1: ...........................................................................................................................

...........................................................................................................................................

Factor 2: ...........................................................................................................................

........................................................................................................................................... [2]

(b) Identify two benefits to a business of using market segmentation.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

........................................................................................................................................... [2]

(c) Outline two ways NLR might respond to environmental pressures.

Way 1: ...............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_11_2023_1.14

 9

(d) Explain how NLR’s pricing decisions might be affected at two different stages of the product
life cycle.

1: .......................................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

2: .......................................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think promoting the brand image is the most important role of packaging? Justify your
answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 10

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© UCLES 2023 06_0450_11_2023_1.14

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© UCLES 2023 06_0450_11_2023_1.14

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BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_11_2023_1.14

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/12

*6006910796*

Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].

This document has 12 pages. Any blank pages are indicated.

06_0450_12_2023_1.15
© UCLES 2023 [Turn over
 2

1 FBW manufactures watches using job production. It employs 5 full-time production employees.
Each worker is offered regular training. Last year FBW sold 600 watches. The Managing Director
plans to use break-even analysis to help decide whether to increase the price of its products. FBW’s
current break-even chart is shown in Fig. 1.1.

Break-even chart for FBW’s watches

120 000

100 000
total revenue

total costs
80 000
costs and
revenue $
60 000

40 000

20 000 fixed costs

0
0 100 200 300 400 500 600 700 800
number of watches
Fig. 1.1

(a) Identify two reasons why a business might offer training to its employees.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(b) Calculate the following values using Fig. 1.1:

Break-even output: ...........................................................................................................

Break-even revenue: ........................................................................................................ [2]

© UCLES 2023 06_0450_12_2023_1.15

 3

(c) Outline two possible effects on FBW’s break-even chart if the prices of its products are
increased.

Effect 1: .............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Effect 2: .............................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

(d) Explain two benefits to FBW of having full-time employees.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 4

(e) Do you think job production is the best method of production for a small business to use?
Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15

 5

2 Gloria is a sole trader. Her business provides house-cleaning services. Gloria uses telephone calls
to communicate with her 4 employees. She wants to expand the business by offering a repair
service. Gloria plans to carry out some market research. She has been told producing a business
plan can help to reduce risk. Gloria would also like to reduce her workload and is considering taking
on a business partner.

(a) Identify two ways a business plan can help a business to reduce risk.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(b) Identify two possible reasons why a business might want to expand.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(c) Outline one advantage and one disadvantage to Gloria of using telephone calls as a method
of communication with her employees.

Advantage: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage: ...................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 6

(d) Explain two factors Gloria should consider when deciding whether to take on a business
partner.

Factor 1: ...........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Factor 2: ...........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two methods of primary market research a business could use to find out the demand
for a new product or service. Which would be the best method to use? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15

 7

3 VVA is a business based in country X. It manufactures school backpacks (bags). VVA uses retailers
as its channel of distribution. The Managing Director knows there are many factors that can affect
demand including the stage of the business cycle and how competitive the market is. VVA imports
45% of its raw materials. The Managing Director is worried that the introduction of import tariffs
and import quotas, as well as an appreciation in country X’s exchange rate, will affect VVA.

(a) Define ‘import tariff’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two reasons why some markets can become more competitive.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

........................................................................................................................................... [2]

(c) State the four stages of the business cycle.

1: .......................................................................................................................................

...........................................................................................................................................

2: .......................................................................................................................................

...........................................................................................................................................

3: .......................................................................................................................................

...........................................................................................................................................

4: .......................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 8

(d) Explain one possible effect of the following changes on VVA when importing raw materials:

Introduction of import quotas in country X: .......................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Appreciation of country X’s exchange rate: ......................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think retailers are the best channel of distribution for a manufacturing business to use?
Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_12_2023_1.15

 9

4 CPF is a clothing retailer. It is a private limited company. It has 4 shops and 30 employees. The
Finance Director is concerned about the amount of current assets because working capital is
important. The amount of retained profit is also low. CPF’s directors are planning to expand the
business by opening a new shop. A suitable source of long-term finance will need to be identified.
The plan to expand will affect many of CPF’s stakeholder groups.

(a) Define ‘retained profit’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Define ‘current assets’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(c) Outline two possible reasons why working capital is important for CPF.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_12_2023_1.15 [Turn over

 10

(d) Explain one way each of the following stakeholder groups might be affected by CPF’s plans
to expand its business.

Employees: .......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Suppliers: ..........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think it is better for a private limited company to use debt (e.g. a loan) or equity (issuing
more shares) as a source of long-term finance? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 11

BLANK PAGE

© UCLES 2023 06_0450_12_2023_1.15

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BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_12_2023_1.15

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/13

*6251666735*

Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].

This document has 12 pages. Any blank pages are indicated.

06_0450_13_2023_1.10
© UCLES 2023 [Turn over
 2

1 TDG is a bicycle retailer. It has 3 employees. TDG needs to maintain customer loyalty as the
business sells in a mass market. Simon, the manager, knows managing cash flow is important. He
is analysing TDG’s cash-flow forecast. An extract is shown in Table 1.1. Simon is considering ways
for TDG to overcome its short-term cash-flow problem in September.

Table 1.1
Extract from TDG’s cash-flow forecast 2023 ($000)

July August September

Cash inflow X 50 40

Cash outflow 50 50 Y

Net cash flow 10 0 (40)

Opening balance 20 30 30

Closing balance 30 30 (10)

(a) Define ‘mass market’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Calculate X and Y.

X: ......................................................................................................................................

Y: ...................................................................................................................................... [2]

(c) Outline two reasons why managing cash flow might be important for TDG.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 3

(d) Explain two ways TDG could overcome its short-term cash-flow problem in September.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two methods a retailer could use to maintain customer loyalty. Which would be the
best method to use? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_13_2023_1.10 [Turn over

 4

2 KCL manufactures paper which is used in the production of newspapers and books. KCL holds a
high level of inventory and buys all its raw materials, including wood, from local suppliers. Quality
control is important. The Operations Director is considering ways to increase efficiency in the factory.
Pressure groups are trying to influence KCL’s decisions to ensure that the business does not create
more external costs than external benefits.

(a) Define ‘quality control’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two ways a pressure group might try to influence business decisions.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(c) State four benefits to a business of increasing efficiency.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

...........................................................................................................................................

Benefit 3: ..........................................................................................................................

...........................................................................................................................................

Benefit 4: ..........................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 5

(d) Explain one external cost and one external benefit that may be created by KCL’s business.

External cost: ....................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

External benefit: ................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Explain two factors a manufacturing business should consider when deciding how much
inventory to hold. Which factor is likely to be the most important? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_13_2023_1.10 [Turn over

 6

3 PCY provides insurance services for businesses such as farms and factories. Being ethical is
important to PCY. The business has 4 offices and 500 employees. Managers use different leadership
styles. The Managing Director is planning to change how PCY is organised and managed. He said:
‘I want to reduce communication barriers within the business. Delegation will be encouraged. The
span of control could change.’

(a) Define ‘span of control’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two leadership styles.

Leadership style 1: ...........................................................................................................

...........................................................................................................................................

Leadership style 2: ...........................................................................................................

........................................................................................................................................... [2]

(c) Outline two benefits to PCY of encouraging its managers to use delegation.

Benefit 1: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Benefit 2: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 7

(d) Explain two possible reasons why being ethical is important to PCY.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think lack of feedback is the main barrier to effective communication in a business?
Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2023 06_0450_13_2023_1.10 [Turn over

 8

4 Meena wants to leave her job as a teacher to become a successful entrepreneur. Her business
will produce handmade jewellery. Meena knows that there is government support for business
start-ups. She plans to use market research to help identify a market segment for her jewellery.
Meena’s brother has offered to become her business partner but she cannot decide whether it
would be better to operate as a sole trader.

(a) Identify two ways a government might support business start-ups.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(b) Identify two ways a market can be segmented.

Way 1: ...............................................................................................................................

...........................................................................................................................................

Way 2: ...............................................................................................................................

........................................................................................................................................... [2]

(c) Outline two characteristics Meena will need to become a successful entrepreneur.

Characteristic 1: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 2: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2023 06_0450_13_2023_1.10

 9

(d) Explain one advantage and one disadvantage to Meena of operating as a sole trader rather
than being in a partnership.

Advantage: .......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage: ...................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think accessing government sources, such as statistics, is the best method of market
research for a start-up business to use? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

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 10

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© UCLES 2023 06_0450_13_2023_1.10

 11

BLANK PAGE

© UCLES 2023 06_0450_13_2023_1.10

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_13_2023_1.10

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/21

*9557593015*

Paper 2 Case Study May/June 2023

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

06_0450_21_2023_1.15
© UCLES 2023 [Turn over
 2

1 (a) Explain four barriers to communication for a business.

Barrier 1: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Barrier 2: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Barrier 3: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Barrier 4: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 3

(b) Consider the following two ways VP can purchase its inventory. Which way should it use?
Justify your answer.

• Head Office purchases the inventory for all the restaurants.

• Restaurant Managers purchase their own inventory from local suppliers.

Head Office purchases the inventory for all the restaurants: ...........................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Restaurant Managers purchase their own inventory from local suppliers: .......................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_21_2023_1.15 [Turn over

 4

2 (a) Explain two advantages and two disadvantages of VP’s Restaurant Managers delegating
tasks to their Assistant Managers.

Advantage 1: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Advantage 2: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage 1: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage 2: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 5

(b) Using Appendix 2 and other information, consider the two countries VP could choose to locate
its new restaurants. Which country should VP choose? Justify your answer.

Country A: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Country B: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_21_2023_1.15 [Turn over

 6

3 (a) Explain two possible reasons why VP wants to expand.

Reason 1: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 7

(b) Consider the benefits and limitations of the following two ways VP can enter a new market in
another country. Which way should VP choose? Justify your answer.

• Joint venture
• Franchising

Joint venture: ....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Franchising: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_21_2023_1.15 [Turn over

 8

4 (a) Explain, using an example, one reason why VP might need:

• short-term finance
• long-term finance.

Short-term finance: ...........................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Long-term finance: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_21_2023_1.15

 9

(b) Using Appendix 3 and other information, consider how the following three changes in country
Z may affect VP. Which change is likely to have the greatest effect on VP's profits? Justify
your answer.
• Increase in interest rates.
• Depreciation of country Z’s exchange rate.
• New legal controls which require all restaurants to list the ingredients in their meals.

Increase in interest rates: .................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Depreciation of country Z’s exchange rate: ......................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

New legal controls which require all restaurants to list the ingredients in their meals: .....

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

© UCLES 2023 06_0450_21_2023_1.15

 10

BLANK PAGE

© UCLES 2023 06_0450_21_2023_1.15

 11

BLANK PAGE

© UCLES 2023 06_0450_21_2023_1.15

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_21_2023_1.15

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/22

*2035001524*

Paper 2 Case Study May/June 2023

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

06_0450_22_2023_1.14
© UCLES 2023 [Turn over
 2

1 (a) Explain four characteristics needed for an entrepreneur to be successful.

Characteristic 1: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 2: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 3: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Characteristic 4: ................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_22_2023_1.14

 3

(b) Consider the advantages and disadvantages of starting up ET as either an unincorporated

business or as a limited company. Which should Zane and Zaara choose? Justify your answer.

Unincorporated business: .................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Limited company: .............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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 4

2 (a) Explain one business objective for ET and one other objective that a social enterprise like
Daycare might have.

Business objective for ET: ................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Objective for a social enterprise like Daycare: .................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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(b) Using Appendix 2 and other information, consider the two options for the first performance at
the theatre. Which is the best option for Zaara to choose? Justify your answer using suitable
calculations.

Option 1: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Option 2: ...........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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...........................................................................................................................................

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...........................................................................................................................................

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 6

3 (a) Explain four reasons why it is important that Zane prepares a cash-flow forecast before starting
ET.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 3: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 4: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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(b) Consider the following three roles of marketing for ET. Which role will be the most important
for ET to be successful? Justify your answer.

• Identifying customer needs

• Satisfying customer needs
• Maintaining customer loyalty

Identifying customer needs: ..............................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Satisfying customer needs: ..............................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Maintaining customer loyalty: ...........................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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 8

4 (a) Explain two leadership styles that Zane and Zaara could use when managing ET’s employees.

Leadership style 1: ...........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Leadership style 2: ...........................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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 9

(b) Consider the following three ethical issues for the theatre. Which ethical issue is likely to have
the biggest effect on ET? Justify your answer.

• Paying fair wages to employees

• Only buying costumes produced in the local community
• Purchasing all refreshments from suppliers that do not pollute the environment

Paying fair wages to employees: ......................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Only buying costumes produced in the local community: ................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Purchasing all refreshments from suppliers that do not pollute the environment: ............

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_22_2023_1.14

 ™
Cambridge IGCSE

BUSINESS STUDIES 0450/23

*3747335787*

Paper 2 Case Study May/June 2023

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

06_0450_23_2023_1.13
© UCLES 2023 [Turn over
 2

1 (a) Explain four reasons why a business might become a multinational company.

Reason 1: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 2: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 3: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Reason 4: .........................................................................................................................

...........................................................................................................................................

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 3

(b) Consider the advantages and disadvantages of the following three methods of promotion RR
could use in the new markets. Which would be the most suitable method for RR to use? Justify
your answer.

• Television
• Billboards
• Sponsorship of a sports team

Television: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Billboards: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Sponsorship of a sports team: ..........................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

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2 (a) Explain two problems RR might experience as it expands.

Problem 1: ........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Problem 2: ........................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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...........................................................................................................................................

........................................................................................................................................... [8]

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 5

(b) Consider three methods RR could use to communicate the expansion plans to its employees.
Which method should RR choose? Justify your answer.

Method 1: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Method 2: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Method 3: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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........................................................................................................................................... [12]

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 6

3 (a) Explain one responsibility of each of the following in RR:

Directors: ..........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Managers: .........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Supervisors: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Production employees: .....................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

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 7

(b) Consider the advantages and disadvantages of the following two methods RR could use to
increase the productivity of its employees. Which method should RR choose? Justify your
answer.

• Introducing new technology

• Increasing training

Introducing new technology: .............................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Increasing training: ...........................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Recommendation: ............................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

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 8

4 (a) Explain one opportunity and one threat to RR of using ecommerce.

Opportunity: ......................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Threat: ..............................................................................................................................

...........................................................................................................................................

Explanation: ......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]

© UCLES 2023 06_0450_23_2023_1.13

 9

(b) Using Appendix 3 and other information, consider whether RR’s Managing Director should be
concerned about the financial performance of the business. Justify your answer using suitable
calculations.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [12]

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 10

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© UCLES 2023 06_0450_23_2023_1.13

 11

BLANK PAGE

© UCLES 2023 06_0450_23_2023_1.13

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 06_0450_23_2023_1.13