EXAMINATIONS COUNCIL OF ESWATINI

Eswatini General Certificate of Secondary Education

BUSINESS STUDIES 6897/02

Paper 2 October/November 2019

Confidential

MARK SCHEME
{6897/02}

MARKS: 100

This document consists of 15 printed pages

© ECOS 2019 6897/02/2019 [Turn over
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GUIDANCE TO LEVELS-BASED MARKING TABLES

1. Column 1 describes levels based on the quality of responses produced by candidates

 A level 1 response is where the candidate has only listed relevant points without providing the
required analysis or explanation. A good level 1 response yields a maximum of 5 marks
 A level 2 response is where a candidate has identified relevant point (s) and went on to provide the
required analysis or explanation. A good level 2 response yields a maximum of 10 marks
 A level 3 response is where a candidate has identified relevant points, analysed them and went on
to evaluate them as per the requirements of the question. A perfect level 3 response can yields 12
marks

2. Column 2 provides guidance to markers on how application marks should be awarded. For example, a level
1 candidate can only get a maximum of 1 mark for application while level 2 and level 3 candidates can
possibly get a maximum of two marks for application. No candidate should be awarded more than 2 marks
for application in a given essay.

3. Column 3 provides guidance to markers on how marks should be awarded on knowledge, analysis and
application skills.

 A level 1 response can only attain a maximum of 4 knowledge marks for four (4) stated points. No
marks should be awarded for analysis and evaluation to a level 1 response. If required application
has been demonstrated in the response, a candidate can attain 1 mark for application. Therefore a
level 1 response is limited to a maximum of 5 marks.
 A level 2 response can only attain a maximum of 8 marks for four (4) analysed points. No marks for
knowledge and evaluation should be awarded to a level 2 response. If required application has
been demonstrated in the response, a candidate can attain an additional 2 marks for application.
Therefore a level 2 response is limited to a maximum of 10 marks.
 A level 3 response can only attain a maximum of 8 marks for four (4) well analysed points plus 2
marks for evaluation. If required application has been demonstrated in the response, a candidate
can attain 2 additional marks for application. Therefore, a level 3 response is limited to a maximum
of 12 marks.

4. Awarding total marks in levels-based marking:

Levels Application Knowledge/analysis/evaluation Totals

3 9-10 marks for demonstrated 12 marks (max.)

analysis and evaluation
2 2 marks maximum for 5-8 marks for demonstrated 10 marks (max.)
reference to case. analysis
1 1 mark for limited 1-4 marks for stating 4 relevant 5 marks (max.)
reference to case points
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Question Answer Marks Guidance

1. (a) Fabgarments Ltd uses a market segmentation 8
strategy to sell its products.

Identify and explain any two criteria for market

segmentation that Fabgarments Ltd could use.

Knowledge (1x2) – award one mark for each relevant

criteria identified
Analysis (2x2) – award two mark for a relevant
explanation of each criteria
Application (1x2) – award one application marks for
each relevant application.

Possible answers might include:

 Socio-economic factors e.g. income level,

education, social class, occupation. Religion
etc.
 Geographic factors e.g. regions, rural or urban
etc.
 Demographic factors e.g. age, gender, marital
status etc.
 Behavioural factors e.g. how often customers
buy certain products

Example:
Fabgarments Ltd might segment the clothing market
using geographical location (1k). The company
operates internationally (1ap) and the customers who
experience hot climatic conditions might prefer lighter
clothing designs (1an) than those who live in hotter
areas. So considering the geographical location could
make the company design relevant clothing designs
for its international customers (1an).

[2k, 2app, 4an]

Possible Application words

Clothing, textile, market segments, wear, designs, the company, material, yard, sewing machine, suits,
dresses etc.

There may be other examples in context which have been included here
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Question Answer Marks Guidance

1. (b) The business depends on specialisation and 12
division of labour in its production process.

Do you think that specialisation and division of

labour would contribute to the success of the
business? Support your answer.

Possible answers could include:

Advantages of Disadvantages of
specialisation specialisation
Workers become Repetition leads to
experts on what they do/ monotony and boredom/
repetition increases demotivation
skills and efficiency
It saves on buying and The absence of one
replacing tools. worker can stop/delay
the whole production
process
Workers become more Loss of flexibility
efficient/ productivity
high
Team work saves time Limits workers’
innovation
Errors are detected An error by one
earlier in production department can affect
whole production

Example:
Specialisation lead to increased skills and efficiency
(L1) since workers do the same tasks over and over
again. This leads to skills mastery and tailors spend
less time on making attires (App/L2). However the
absence of one worker can halt or delay the whole
production leading to the business failing to meet
production targets (L2). Therefore specialisation
would lead to the success of the business because it
saves on costs of tools as workers only get needed
tools for their tasks (L3).
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LEVEL APPLICATION KNOWLEDGE/ANALYSIS/EVALUATION

3 9-10 Marks
Level 2 + well justified argument on whether specialisation could help
the company improve its performance or not.

2 2 Marks 5-8 Marks

use of the case/ or Advantages and Disadvantages of specialisation well explained or
related to the case compared in relation to the case

1 1 Mark 1-4 marks

use of the case/ or List of advantages and / or disadvantages of specialisation. Limited
related to the case application.

Question Answer Marks Guidance

2. (a) The company is planning to attract local and 8 .
COMESA customers by using penetration pricing
and competitive pricing respectively.
Explain any two pricing strategies suitable in the
two identified markets other than competitive and
penetrative strategies.

Knowledge [1x2] - award 1 mark for each relevant

pricing strategy
Application [1x2] - award 1 mark for each relevant
applied explanation
Analysis [2x2] – award 2mark for each relevant
explained pricing strategy.

Possible answers could include:

 Cost-plus pricing
 Psychological pricing
 Price skimming
 Promotional pricing
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Example:
Price skimming (1k): the business could set the high
prices for the suits and dresses (1app) in the
COMESA market for a while then reduce the price
(1an). This would help the business recover
development cost and attract customers since they
would think that the clothing is of high quality (1an)

[2k, 2app, 4an]

Possible application words:

Clothing, textile, market segments, wear, designs, the company, material, yard, sewing machine, suits,
dresses etc.

There may be other examples in context which have been included here

Question Answer Marks Guidance

2. (b) Fabgarments Ltd continues to use batch 12
production methods even though it has become a
multinational company.

Do you think that changing from batch production

to flow production will benefit the company?
Justify your answer.

Possible answers might include:

Disadvantages of
Advantages of batch
batch production
production
Production line is It has longer lead time
flexible

Offers variety of Warehouse is needed to

products/ customer store stocks of raw
choice material

Promotes job Poor quality products

satisfaction/ workers do may be produced since
varied work. its more labour intensive

Suitable for products Average cost of

with less variety production high
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Advantages of flow Disadvantages of flow

production production

Leads to economies of Production line inflexible

scale
Produces more goods in Expensive to set up
a short period of time production equipment

Cut on salary cost since Maintenance cost high

highly capital intensive

Requires less skilled If machinery breaks

labour down production stops

Example:
The production line in batch production is flexible (L1)
making it easier for the business to offer a variety of
suits (app) that may lead to a wider market (L2).
However warehousing maybe needed to store raw
materials hence increased costs for the business
(L2). On the other hand flow production leads to
economies of scale since fabric (app) is bought in
large scale. The maintenance cost of machinery in
flow production is high (L2). Therefore I think the
company should change to flow production since
more goods are produced in a short period of time
making it possible to meet demand (L3)

Level Application Analysis

Level 3 9 – 10 Marks: Level 2 + Good judgement/ Recommendation on

whether batch production/ flow production would benefit the
company

Level 2 2 Marks: Any 2 points 5 - 8 Marks: Analysed reasons on how adopting batch production/
well applied to the case flow production would benefit the company.

Level 1 1 Mark: Limited 1 – 4 Marks: List of advantages and/ disadvantages of batch

application production/ flow production
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Question Answer Marks Guidance

3. (a) The company is struggling to pay its workers on 8
time and so the workers have raised this matter
as a grievance against the employer.

Identify and explain any two forms of industrial

action the workers can take to show their
dissatisfaction about the late pay.

Knowledge [1x2] - award 1 mark for each form of

industrial action
Application [1x2] - award 1 mark for each relevant
applied explanation
Analysis [2x2] – award 2mark for each relevant
explanation of form of industrial action

Possible answers may include:

 Picketing
 All out strike/mass stay away/general strike
 Overtime ban
 Selective strike
 Work to rule
 Go slow strike
 Wild cat strike

Example:
Overtime ban (k) workers can stop working overtime
to put pressure on the employer to deal with their
grievances promptly (an). This industrial action could
lead to the business being unable to meet orders for
suits (ap) which could damage the reputation of the
company (an).
[2k, 2app, 4an]

Possible application words:

Textile workers; demonstration; chanting; placards; bargaining; negotiation

There may be other examples in context which have been included here
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Question Answer Marks Guidance

3. (b) At some point the company considered seeking 12
financial assistance from government rather than
taking a bank loan to finance its operations.

Advice the company on which source of finance

is more suitable. Support your answer.
Possible answers might include:

Advantages of Disadvantages of
government government
assistance assistance
Does not need to be Conditions attached to
repaid the finance
No collateral needed Funding is restricted to
lower limits / less
amount may be received
Fewer formalities Depends on the
required when applying availability of funds / it
may not be available
No interest charges May take long to receive
incurred funds
Govt may offer technical Too much paper work
support/ training and beaurocracy.

Advantages of a bank Disadvantages of a

loan bank loan
Funds are always Repaid with interest
available
Easy to arrange Collateral is needed
Apply for the amount Company may lose
needed assets for failure to pay

Example:
Government assistance does not require the provision
of collateral (L1) which the company may not have
(L2) while a bank loan attracts high interest rates
which may increase costs and reduce business profits
(L2). However government assistance has conditions
attached which may not be favorable for the clothing
(app) business (L2). A bank loan is paid over a long
period which allows the business to have time to pay
back without pressure (L2). I therefore think a bank
loan would be more beneficial since the business may
apply and get the exact amount needed which may
not be the case with government assistance (L3).
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LEVEL APPLICATION KNOWLEDGE/ANALYSIS/EVALUATION

3 9-10 Marks
Level 2 + well justified argument on whether government
assistance and/or loan could help the company improve its
performance or not.

2 2 Marks 5-8 Marks

use of the case/ or Advantages and Disadvantages of government assistance and/or
related to the case loan well explained or compared in relation to the case

1 1 Mark 1-4 marks

use of the case/ or List of advantages and / or disadvantages of government
related to the case assistance and/or loan. Limited application.

Question Answer Marks Guidance

4 (a) Fabgarments Ltd has identified COMESA as a new 8
market destination for its products. COMESA is
one of the largest regional trading blocs in Africa.

Identify and explain any two benefits to Swaziland

of being a member of COMESA.

Knowledge [1x2] - award 1 mark for each relevant

benefit
Application [1x2] - award 1 mark for each relevant
applied explanation
Analysis [2x2] – award 2mark for relevant
explanation of each benefit

Possible answers might include:

 Common visa/ common currency
 No tariffs to member countries
 Free movement of labour / access to experts
 Free movement of capital
 Wider market
 Favourable balance of payment
 Promotion of peace in the region
 Favourable balance of payment
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Example:

Free movement of labour (k) being a member of the

COMESA will enable businesses to acquire skilled
labour from other countries (an) which may lead to
improved productivity of the clothing (app) that may
improve the country’s GDP (an).

[2k, 2app, 4an]

Possible Application words

Free flow of goods, tariffs, duty-free, international trade, exports, imports, BOP.

There may be other examples in context which have been included here

Question Answer Marks Guidance

4. (b) Calculate the relevant profitability ratios for 12
Fabgarments in the COMESA and Lesotho
markets using information on appendix 2.

COMESA

Profitability ratio 1
Gross profit Margin = GP X100
Sales

= 3000 000 X 100

4100 000 1

= 73%

Profitability ratio 2
Net profit Margin = NP X100
Sales

= 1 300 000 X 100

4100 000 1
= 32%
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LESOTHO
Profitability ratio 1
Gross profit Margin = GP X100
Sales
=11 300 000 X 100
14500 000 1

= 78%

Profitability ratio 2
Net profit Margin = NP X100
Sales
= 9000 000 X 100
14500 000 1

= 62%

Do you think the company should open its branch in Lesotho? Support your answer.

COMMENTS

 Gross profit margin for Lesotho is higher (78%) compared to COMESA (73%)
 Net profit margin for Lesotho is higher (62%) compared to COMESA (32%)
 Therefore it will be more profitable to invest in Lesotho than in the COMESA based on the
profitability ratio above which shows a higher GPM and NPM for Lesotho as compared to
COMESA.

LEVEL APPLICATION KNOWLEDGE/ANALYSIS/EVALUATION

3 9-10 Marks
Level 2 + well justified argument on whether the business
should open a new branch in Lesotho

2 5-8 Marks
Correct calculations of profitability ratios and well explained

1 1-4 marks
List of advantages and / or disadvantages of technology or
labour intensive methods. Limited application. No calculations
shown.
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Question Answer Marks Guidance

5. (a) Fabgarments Ltd is in negotiations on a merger 8
with the business that supplies it with fabric.

Identify and explain any two benefits to

Fabgarments Ltd of the planned merger.

Knowledge (1x2) – award one mark for each relevant

benefit of a merger.
Analysis (2x2) – award one mark for a relevant
explanation of a benefit each of a merger.
Application (1x2) – award one application marks for
each relevant application.

Possible answers might include:

 Constant supply of raw material is guaranteed

 To enjoy the profits made by the other
business subsidiary.
 Other competitors may be prevented from
getting raw materials from the same source
 Control over the quality of raw materials

Example:
Constant supply of suit’ (app) raw material is
guaranteed (k), as the supplier of fabric has direct
interest in the production of the clothes (an). This will
enable the business to keep on offering suits even
when there is a shortage of fabric (an).

[2k, 2app, 4an]

Possible Application words

Integration; profits; growth in size; increased; yard/ material; inputs, lining, shoulder pads, zip, buttons

There may be other examples in context which have been included here
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Question Answer Marks Guidance

5. (b) The company is planning to invest in other 12
countries that have access to the American
market.

Do you think multinational firms always benefit

the host country? Support your answer.
Possible answers might include:

Advantages of Disadvantages of
multinational firms multinational firms

Employment of a large Repatriation of profits to

number of people country of origin

New investment on The job they create in the

infrastructure host country is often
unskilled job / no
transference of skills/ low
wages

Larger tax payments They may force local

businesses to close
down/ unfair competition

Increase of exports They often use scarce or

and foreign currency non- renewable resource
/ pollution problems

Supply local Negative influence on

businesses with govt policies that may
clothes only favor them

Access to bigger
international markets

Increase GDP
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Example:

Multinational firms create employment opportunities

(L1) in the host country since fashion designers (app)
are hired to work in the business. The unemployment
rate in the country goes down and the people’s
standard of living improves (L2). However
multinational firms usually send profits to their country
of origin and that money does not benefit the host
country (L2). Therefore I think multinational firms do
not benefit host countries since the jobs they create in
the host country are usually unskilled jobs since they
bring their own management leading to locals
remaining unskilled and low income earners.(L3)

LEVEL APPLICATION KNOWLEDGE/ANALYSIS/EVALUATION

3 9-10 Marks
Level 2 + well justified argument on whether multinational benefit
host countries.

2 2 Marks 5-8 Marks

use of the case/ or Advantages and Disadvantages of multinationals well explained in
related to the case relation to the case

1 1 Mark 1-4 marks

use of the case/ or List of advantages and disadvantages of multinationals. Limited
related to the case application.
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