AS BUSINESS ASSIGNMENT 01 MARK SCHEME
AS Business Assignment One
MARK SCHEME
Guidance for Tutors
The mark scheme has been set out in grids to identify where marks can be awarded. Questions range from 2 to 20 marks and will be based on up to four
levels of marking.
These are:
• Level 1 – AO1: Knowledge and understanding
Demonstrate knowledge and understanding of business concepts, terms and theories.
• Level 2 – AO2: Application
Apply knowledge and understanding of business concepts, terms and theories to problems and issues in a variety of familiar and unfamiliar business
situations and contexts.
• Level 3 – AO3: Analysis
Analyse business problems, issues and situations by:
o Using appropriate methods and techniques to make sense of qualitative and quantitative business information;
o Searching for causes, impact and consequences;
o Distinguishing between factual evidence and opinion or value judgement;
o Drawing valid inferences and making valid generalisations.
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AS BUSINESS ASSIGNMENT 01 MARK SCHEME
• Level 4 – AO4: Evaluation
Evaluate evidence in order to make reasoned judgements, present substantiated conclusions and, where appropriate, make recommendations for action
and implementation.
Tutors need to ensure that students are fully describing the knowledge they have acquired and are applying this in order to show understanding. This
means that the specific point being discussed is considered along with the business scenario set.
Analysis, where required, must be shown. This means that the student should identify any issues that can affect the business’ performance and then state
why these issues may have happened and what their effect will be on the business using business theory where appropriate.
Evaluation should then be used to identify a decision that the student feels the business should make, backed up with a sound justification and again, using
business theory where appropriate.
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AS BUSINESS ASSIGNMENT 01 MARK SCHEME
1.
a. Explain, with an example, the term ‘opportunity cost’. (2 marks)
Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (1 mark)
Exemplar Mark Rationale
‘Opportunity cost’ = the benefit of the next most desired option which is given up. For 2 Definition and example.
example, if a business spends all of its retained profits building a new production line, it
cannot also spend this money on a marketing campaign.
1 Definition or example.
0 No creditable content.
b. Explain how the primary, secondary and tertiary sectors link together. (3 marks)
Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks)
Exemplar Mark Rationale
The primary sector are all of those industries involved in the growing or extraction of raw 3 Definition of all sectors showing clear link.
materials from land.
The secondary sector are all those industries involved in taking the raw materials from the
primary sector and converting them into something else or taking products made by
other industries in the secondary sector and combining them with other products to make
something new.
The tertiary sector are all those industries that sell the products made in the secondary
sector or provide services to people and businesses.
A link can be shown by considering the chain of production of a product.
For example, wheat is grown by a farmer (primary) which is sold to a flour mill
(secondary), the flour made is sold to a baker (secondary) and the bread is then sold to a
supermarket (tertiary) and then sold to a consumer.
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AS BUSINESS ASSIGNMENT 01 MARK SCHEME
2 Definition of all sectors no link shown.
1 Up to two sectors defined.
0 No creditable content.
2.
a. Explain the difference between a ‘need’ and a ‘want’. (2 marks)
Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (1 mark)
Exemplar Mark Rationale
A need is something that it is essential to meet for a person. Without the need being met, 2 Definition of both and explanation of difference.
the person would die.
A want is something that is not essential for a person to have. The person desires the
‘want’ and may seek to get it.
Although some wants (such as a pizza) may satisfy a need (food) we can see that
satisfying needs is essential for people, whereas satisfying wants is not essential.
1 Definition of both.
0 No creditable content.
b. Explain what a public sector enterprise is, giving an example. Why is profit not a major objective of a public sector enterprise? (3 marks)
Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks)
Exemplar Mark Rationale
A public sector enterprise (public corporation) is a business that is owned entirely by the 3 Definition, example and explanation why profit is not
government of a country. a major objective.
Examples in the UK could be the BBC and the NHS.
Governments prefer public sector enterprises to break even or make a small profit
(technically called a surplus for an organisation that is not a business) as this means that
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AS BUSINESS ASSIGNMENT 01 MARK SCHEME
the government does not have to spend money to keep the public sector enterprise
running as this money would have to be raised through taxation.
Usually the major objective of a public sector enterprise is what the government set it up
to do. So, the BBC was set up to provide entertainment, news and information via radio,
TV and the internet.
2 Two of definition, example and explanation why
profit is not a major objective.
1 One of definition, example and explanation why
profit is not a major objective.
0 No creditable content.
3. Explain the two terms ‘unlimited liability’ and ‘limited liability’. Explain why unlimited liability is particularly bad for entrepreneurs who set up a
partnership. (5 marks)
Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks); AO3 Analysis (2 marks)
Exemplar Mark Rationale
Unlimited liability – this means that if a business is unable to pay its debts from its own 4-5 Detailed definition of both terms and explanation
funds, then the people owed money can use the legal system to force the owners of the why unlimited liability is particularly bad for a
business to instead pay the debts using their own money. If they do not have any partnership.
available money, then they can be forced to sell anything they own of value to repay the
debt. Unlimited liability can be seen as ‘never ending responsibility’.
Limited liability – this means that if a business is unable to pay its debts from its own
funds, then the owners of the business cannot be forced to pay anything towards these
debts. The owners have already paid in everything that they need to – the money they
used to buy their shares – and cannot be forced to pay any more. If a business is being
sued for non-payments of its debts, it is likely that the owners will not be able to sell their
shares for any money as they will become worthless as the business is likely to close.
They would therefore lose this money. There is one rare circumstance where an owner
may have to contribute more money. This is when a business does not have fully paid-up
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share capital. This means that the shareholders have not yet paid for all of the shares that
they own. In this instance, they can be forced to pay the rest, and this can contribute to
paying off the debt.
Partners in a partnership have ‘joint and several’ liability. This means that each partner is
responsible for 100% of the debts of the business, not just a proportion.
In a partnership, all partners (due to unlimited liability) are at risk for all of the debts of
the business (not just their proportionate share). For example, in a partnership of two,
where they own half of the business each and the business has debts to the bank of
$100,000, each partner has unlimited liability for $100,000 (not just $50,000 each). This
gives the bank the right to chase either partner or both. If it is possible, the bank will seek
$50,000 from each partner. However, if one partner has $100,000 cash and the other has
a house valued at $100,000, then the bank will just take $100,000 off the partner with
cash as this is much easier for the bank than having to wait for a house to be sold. So,
although in theory, the partners share the unlimited liability which makes it seem like
there is less risk for each partner, it actually might not turn out that way.
2-3 Detailed definition of both terms or explanation why
unlimited liability is particularly bad for a
partnership.
1 Definition of one term.
0 No creditable content.
4.
a. Define the two terms ‘public sector’ and ‘private sector’. (2 marks)
Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (1 mark)
Exemplar Mark Rationale
Private sector = all businesses that are owned by private individuals, groups of private 2 Definition of both.
individuals or owned wholly or partly by other private businesses.
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Public sector = all organisations (that might or might not operate in a similar way to
businesses) that are not owned by private individuals, groups of private individuals or
owned wholly or partly by other private businesses but are instead owned/controlled by
the government of a country on behalf of and for the benefit of the people of that
country.
1 Definition of one.
0 No creditable content.
b. Identify, with examples, the factors of production. (3 marks)
Skills required: AO1 Knowledge and understanding (1 mark); AO2 Application (2 marks)
Exemplar Mark Rationale
Land – land itself plus anything grown on land (e.g. trees) or extracted from it (e.g. oil). 3 All four factors with examples of each.
Labour – any physical or nonphysical work undertaken by a workforce (e.g. workers in a
car factory).
Capital – money and the capital goods bought by businesses that it buys to keep and use
(rather than to sell) such as machinery (e.g. a production line in a car factory.)
Enterprise – the skill/trait/characteristics of some people leading them to come up with
an idea to combine this skill/trait/characteristic with the other three factors of production
to produce a product that can be sold at a profit (e.g. James Dyson inventing and creating
the bagless vacuum cleaner).
Land 2 All four factors without examples or three factors
Labour with examples.
Capital
Enterprise
1 Minimum of two factors defined with or without
examples.
0 No creditable content.
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5.
a. Analyse how well 45 Coffee Vinyl Records are meeting the objectives of a social enterprise (also known as the triple bottom line). (8 marks)
Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (4 marks)
Arguments in favour:
• Projected added value of £8,750 per month.
• Providing a social environment for music lovers and local bands to meet.
• Buying ethically and environmentally sourced cakes/muffins/pastries.
• Desire to reinvest profits back into supporting music.
• ‘Asset lock’ giving 70% of profits back into supporting music.
Arguments against:
• After all costs have been deducted from the £8,750 added value, will there be sufficient profits to support local bands?
• If Anna’s current 20,000 followers start to travel into Manchester to visit 45 Coffee Vinyl Records, then this will increase their carbon footprint.
• There is no evidence that the coffee is ethically sourced, for example, through Fair Trade.
• The manufacture of vinyl records creates much pollution.
• Most of the polyvinyl chloride (PVC) used to make vinyl records is manufactured in Thailand – creating a large carbon footprint to transport it to
vinyl record factories in western countries.
Exemplar Mark Level Rationale
Analyses at least two arguments in favour and two arguments against the idea that 45 7-8 4 Good analysis of how well 45 Coffee Vinyl
Coffee Vinyl Records are meeting the objectives of a social enterprise (also known as the Records are meeting the objectives of a
triple bottom line) fully in the context of Anna and James, 45 Coffee Vinyl Records, their social enterprise.
products, their market and their exact circumstances as described in the case study.
Analyses one or two arguments in favour and one or two arguments against the idea that 5-6 3 Some analysis of how well 45 Coffee Vinyl
45 Coffee Vinyl Records are meeting the objectives of a social enterprise (also known as Records are meeting the objectives of a
the triple bottom line) in the context of Anna and James. social enterprise.
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State one or two arguments in favour and one or two arguments against the idea that 45 3-4 2 Some application of how well 45 Coffee
Coffee Vinyl Records are meeting the objectives of a social enterprise (also known as the Vinyl Records are meeting the objectives of
triple bottom line) in the context of Anna and James. a social enterprise.
Demonstrate knowledge of social enterprises and/or the triple bottom line. 1-2 1 Knowledge and understanding social
enterprise.
0 0 No creditable content.
b. Analyse the characteristics of both Anna and James that may indicate that they are likely to become successful entrepreneurs. Make a judgement,
based on your analysis, whether Anna or James, in the future is more likely to fill the role in their business of ‘intrapreneur’. (12 marks)
Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (2 marks); AO4 Evaluation (6 marks)
Characteristics that make Anna likely to be successful:
• Anna passed her A levels – showing determination.
• Anna attained her degree – showing determination.
• Anna had already considered a business opportunity (vinyl records).
• Anna realised there was a gap in the market.
• Anna was prepared to visit York for market research.
• Anna had worked hard to reach 20,000 subscribers and had linked all of her different social media accounts together.
• Anna undertook market research amongst her subscribers.
• Anna was able to assess that she and James needed more business advice.
• Anna was prepared to risk her £5,000 savings.
Characteristics that make James likely to be successful:
• James became one of Starbucks’ hardest working baristas – showing determination.
• James realised there was a gap in the market.
• James was prepared to visit York for market research.
• James was able to assess that he and Anna needed more business advice.
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• James was prepared to risk his £5,000 savings.
Likely argument in favour of Anna:
• When James was faced with failure (not passing his A levels) he did not seek to try again.
• Although it can be argued that James demonstrates some of the attributes of being an entrepreneur currently, on balance, Anna demonstrates
more attributes of being an entrepreneur currently, so is more likely to fulfil the role of intrapreneur within the business in the future than
James.
Exemplar Mark Level Rationale
Analyses at least two reasons why Anna does/does not demonstrate the attributes of 9-12 4 Effective evaluation of whether Anna and
becoming an entrepreneur and two reasons why James does/does not demonstrate the James demonstrate the attributes of
attributes of becoming an entrepreneur fully in the context of Anna and James, 45 Coffee becoming a successful entrepreneur and
Vinyl Records, their products, their market and their exact circumstances as described in make a decision in favour of Anna or James
the case study. being an intrapreneur in the future.
Comes to a conclusion that is fully justified, fully in the context of Anna and James, 45
Coffee Vinyl Records, their products, their market and their exact circumstances as
described in the case study.
Analyses at least two reasons why Anna does/does not demonstrate the attributes of 7-8 3 Limited evaluation and good analysis of
becoming an entrepreneur and two reasons why James does/does not demonstrate the whether Anna and James demonstrate the
attributes of becoming an entrepreneur fully in the context of Anna and James, 45 Coffee attributes of becoming a successful
Vinyl Records, their products, their market and their exact circumstances as described in entrepreneur and make a limited decision
the case study. in favour of Anna or James being an
Comes to a conclusion that is assertive rather than backed up by analysis. intrapreneur in the future.
Analyses at least two reasons why Anna does/does not demonstrate the attributes of 2-6 2 Application and analysis of whether Anna
becoming an entrepreneur and two reasons why James does/does not demonstrate the and James demonstrate the attributes of
attributes of becoming an entrepreneur in the context of 45 Coffee Vinyl Records. becoming a successful entrepreneur.
States at least two reasons why Anna does/does not demonstrate the attributes of 1-3 1 Knowledge and understanding of whether
becoming an entrepreneur and two reasons why James does/does not demonstrate the Anna and James demonstrate the
attributes of becoming an entrepreneur.
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attributes of becoming a successful
entrepreneur.
0 0 No creditable content.
6.
a. Anna and James have estimated that they will have 2,500 customers per month who will, on average, purchase one hot drink and one item to eat
(cake, muffin or pastry). They additionally estimate that 10% of these customers will purchase a vinyl record. Calculate the total estimated added
value per month.
Analyse why this value is not their profit for the month. (8 marks)
Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (4 marks)
Correct calculation:
• Selling price of a hot drink = £2.00; unit cost of a hot drink = £0.40.
• Added value of a hot drink = £2.00 - £0.40 = £1.60.
• Selling price of a cake/muffin/pastry = £2.00; unit cost of a cake/muffin/pastry = £1.00.
• Added value of a cake/muffin/pastry = £2.00 - £1.00 = £1.00.
• If each customer buys one drink and one cake/muffin/pastry, then total added value per customer is £1.60 + £1.00 = £2.60.
• If there are 2500 customers, total added value for sales of drinks and cake/muffin/pastry is 2,500 x £2.60 = £6,500.
• Selling price of vinyl record = £15.00; unit cost of a vinyl record = £6.00.
• Added value of a vinyl record = £15.00 - £6.00 = £9.00.
• 10% of customers buy a vinyl record, so 10% of 2,500 is 250.
• Added value from vinyl record sales is 250 x £9.00 = £2,250.
• Total added value is £6,500 + £2250 = £8750.
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Why this is not profit:
• Added value does not account for other costs of the business.
• We are told that Anna and James have to pay £550 per month for rent and £446.08 for a bank loan and that they must buy Public Liability
Insurance.
• We can assume that there will be other costs such as gas, electricity, water, telephone, internet, business rates and wages for Anna and James.
• All of these (and any other) costs must be deducted from added value before profit could be calculated.
Exemplar Mark Level Rationale
All calculations are correct. 7-8 4 Good analysis of why.
Good analysis of why added value is not profit.
Correct calculation of all three. 5-6 3 Three correct calculations.
Correct calculation of added value for drinks and cake/muffin/pastry fully in the context
of 45 Coffee Vinyl Records, selecting the correct method, data and expressing the answer
in the correct units.
Correct calculation of added value for vinyl records fully in the context of 45 Coffee Vinyl
Records, selecting the correct method, data and expressing the answer in the correct
units.
Correct calculation of total added value fully in the context of 45 Coffee Vinyl Records,
selecting the correct method, data and expressing the answer in the correct units.
Correct calculation of two out of three. 3-4 2 Two correct calculations.
Correct calculation of added value for drinks and cake/muffin/pastry fully in the context
of 45 Coffee Vinyl Records, selecting the correct method, data and expressing the answer
in the correct units.
Correct calculation of added value for vinyl records fully in the context of 45 Coffee Vinyl
Records, selecting the correct method, data and expressing the answer in the correct
units.
Correct calculation of total added value fully in the context of 45 Coffee Vinyl Records,
selecting the correct method, data and expressing the answer in the correct units.
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Correct calculation of one of three. 1-2 1 One correct calculation.
Correct calculation of added value for drinks and cake/muffin/pastry fully in the context
of 45 Coffee Vinyl Records, selecting the correct method, data and expressing the answer
in the correct units.
Correct calculation of added value for vinyl records fully in the context of 45 Coffee Vinyl
Records, selecting the correct method, data and expressing the answer in the correct
units.
Correct calculation of total added value fully in the context of 45 Coffee Vinyl Records,
selecting the correct method, data and expressing the answer in the correct units.
0 0 No creditable content.
b. Evaluate whether Anna and James made the correct decision to set up as a private limited community interest company (CIC) rather than as a
partnership. (12 marks)
Skills required: AO1 Knowledge and understanding (2 marks); AO2 Application (2 marks); AO3 Analysis (2 marks); AO4 Evaluation (6 marks)
Arguments in favour of Ltd CIC:
• Has limited liability protecting Anna and James, meaning that their personal assets are protected.
• Is likely to appeal to their demographic (their target market) as it supports live music meaning they are more likely to gain loyal customers.
• Customers are far more likely to be fully engaged with the business (music fans following Anna’s vlog) so marketing should be easier and
cheaper as most marketing can be done for a very low cost via Anna’s social media following.
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Arguments against:
• The asset lock restricts what money can be spent on, meaning that Anna and James are not free to spend the money on changes to the business
that do not comply with the business aims and the rules of the asset lock.
• Asset lock may deter banks from lending money to the CIC, so future expansion may be difficult. The bank may see the asset lock as restricting
the amount of money that can be used to repay a bank loan or restricting assets from being used as collateral to guarantee a bank loan.
• All decision-making has to meet the triple bottom line and the stated aims of the business, even if this increases costs. This can increase the unit
costs, reducing profits which means that less will be available to support live music and less will be available as Anna and James’ share of the
profits.
Arguments in favour of partnership:
• Easier to set up. Anna and James will not need to complete the Asset Lock document, the Articles of Association nor the Memorandum of
Association. This will save them time and money.
• No financial information has to be revealed to Companies House each year that can be seen by competitors. A summary of the accounts of a
private limited company can be bought for a small fee by anyone who wishes to see them. This is not the case for a partnership.
• No asset lock so Anna and James can keep all of the profits. This means that they are free to decide how much they allocate to supporting live
music. So, if they had a reason to need more than 15% of the profits, they could simply allocate themselves more.
Arguments against:
• Unlimited liability.
• Joint and several unlimited liability. Both Anna and James can be held responsible for repaying 100% of the debts of the business (not 50%
each). The bank/business seeking repayment can choose which of Anna or James they pursue for repayment.
• Taxed personally (potentially at 40% higher tax bracket) rather than paying corporation tax at 19% (current UK rate 2020). This means that
there will be less money available to support live music and less money in profit for Anna and James.
• Lack of marketing benefits that being a CIC gives as target customers believe in social aims, meaning they may have far fewer customers.
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Exemplar Mark Level Rationale
Analyses at least two advantages and at least two disadvantages of whether Anna and 9-12 4 Effective evaluation of why the correct
James made the correct decision to set up as a ‘private limited community interest decision to set up as a ‘private limited
company (CIC)’ rather than as a ‘partnership’ fully in the context of Anna and James, 45 community interest company (CIC)’ rather
Coffee Vinyl Records, their products, their market and their exact circumstances as than as a ‘partnership’.
described in the case study.
Comes to a conclusion that is fully justified, fully in the context of Anna and James, 45
Coffee Vinyl Records, their products, their market and their exact circumstances as
described in the case study.
Analyses at least two advantages and at least two disadvantages of whether Anna and 7-8 3 Limited evaluation and good analysis of
James made the correct decision to set up as a ‘private limited community interest why the correct decision to set up as a
company (CIC)’ rather than as a ‘partnership’ fully in the context of Anna and James, 45 ‘private limited community interest
Coffee Vinyl Records, their products, their market and their exact circumstances as company (CIC)’ rather than as a
described in the case study. ‘partnership’.
Comes to a conclusion that is assertive rather than backed up by analysis.
Analyses at least two advantages and at least two disadvantages of whether Anna and 2-6 2 Application and analysis of why the correct
James made the correct decision to set up as a ‘private limited community interest decision to set up as a ‘private limited
company (CIC)’ rather than as a ‘partnership’ in the context of 45 Coffee Vinyl Records. community interest company (CIC)’ rather
than as a ‘partnership’.
Defines/explains ‘private limited community interest company (CIC)’ and/or ‘partnership’. 1-3 1 Knowledge and understanding of ‘private
limited community interest company (CIC)’
and/or ‘partnership’.
0 0 No creditable content.
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The questions in this assignment have been written to reflect the spread of marks assigned to each
of the assessment objectives for Papers 1 and 2 combined, as set out in the table below. The
allocation of marks per question follows the format in the exam board’s mark schemes. The
difference in the percentage allocation of each assessment objective is a consequence of merging
the mark allocations of Papers 1 and 2 into one assignment.
Component AO1 AO2 AO3 AO4
% % % %
AS Papers 1 and 2
30 30 20 20
combined
Distribution of marks in this assignment:
Question Marks AO1 AO2 AO3 AO4
1(a) 2 1 1
1(b) 3 1 2
2(a) 2 1 1
2(b) 3 1 2
3 5 1 2 2
4(a) 2 1 1
4(b) 3 1 2
5(a) 8 2 2 4
5(b) 12 2 2 2 6
6(a) 8 2 2 4
6(b) 12 2 2 2 6
TOTALS 60 40 12 16 12
25% 32% 23% 20%
TOTAL FOR ASSIGNMENT 60 MARKS
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