- Mark Scheme /

Question Answer Marks AO Element Notes Guidance

1 Define ‘unincorporated business’. 2 Max 1 for features of an

unincorporated business
e.g. business ends if an
Award 2 marks for a full definition. owner leaves.
Award 1 mark for a partial
definition.
A business that does not have a
separate legal identity [2]
Partial definition e.g. owner is/are
responsible for business
debts/unlimited liability [1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

2 Outline how having limited

4
Note 1: Candidates can
liability might benefit DNG’s

detail or outline
separate
shareholders.
Award up to 2 marks for relevant
points (max 2).
Note 2: Answers must

refer to the owners /

Award up to 2 marks for each
shareholders and not the
relevant reference to this
business
business itself.
(max 2).
To
• Shareholders risk is limited
to
stem as application, the
the amount invested [k] in
this
reference must be
electricity business [app]
appropriate (i.e. make
sense) in relation to the
point being made.
• Protects personal assets [k]
in
case the business decision
to
contribute to sustainable
The following words are
development does not work
likely to be appropriate
[app]
for this question:
• Encourages • Electricity
(potential/existing)
 shareholders to invest [k]
• (Stop using) coal
Other appropriate responses • 16 million
should (customers)
also be credited.
Shareholders risk is limited (to the
amount invested) [k] in the
• 6500
(employees)
electricity company [app] • Pressure groups
protecting their personal assets [k]
in case the decision to stop using • Opportunity cost
coal does not work [app]
Other appropriate
examples in context can
still be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

3 Explain two possible advantages 6 Note: To use words from

to Beena of buying a franchise. the stem as application,
the reference must be
appropriate (i.e. make
Award 1 mark for identification of
sense) in relation to the
each relevant advantage (max 2).
point being made.
Award 1 mark for each relevant
The following words are
reference to this business (max
likely to be appropriate
2).
for this question:
Award 1 mark for each relevant
• Hairdressing or
explanation (max 2).
related words such
Points might include: as haircut or
shampoo
• Established brand /
well-known brand [k] • Start-up / new
therefore no need to spend on business
advertising [an] • Recession
• Reduces risk of failure [k]
• $800
especially after a recession
[app] • Market research
• Training / advice offered by • (Market) segment
franchisor [k] which saves
costs [an] which is important
for a start-up business [app] • Working capital
Note: [k] Points may
• Attracts customers [k] helping
sometimes be awarded
to ensure / increase revenue
[an]
[an] for her hairdressing
business [app]
• Easier to obtain finance / bank
more willing to lend [k] which
may be necessary with savings
of $800 [app]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

• Franchisor pays for

advertising [k]
• Stock control and accounting
systems often provided by
franchisor [k] which can help
make business more efficient
[an] and improve her working
capital [app]
• All supplies are obtained from
a central source / the
franchisor [k] which can help
ensure quality [an]
• Fewer decisions to be made
(than an independent business)
[k]
Other appropriate responses should
also be credited.

4 Define 'limited company'. 2 Features of a limited

company - max 1
Award 2 marks for a full definition.
mark.
Award 1 mark for a partial
definition.
A business which has a separate
legal identity/status to its owners
[2]
Partial definition e.g. a business that
can sell shares [1]
OR
Benefit from limited liability [1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

5 Do you think a partnership is the 6 This is a general

question
best form of business organisation so there are no marks
for
for a new business? Justify your application.
answer.
Candidates can discuss
Award up to 2 marks for other forms of business
identification of relevant points. organisation, but
evaluation must focus on
Award up to 2 marks for relevant
whether a partnership is
development of points.
the best form.
Award up to 2 marks for justified
decision as to whether a partnership
is the best form of business
organisation for a new business.

Points might include:

Partnership:
• Share workload/responsibility
[k] which could allow time for
each partner to focus on
different business activities
[an]
• More ideas/skills [k] which
could help make the business
more competitive [an]
• Can share any potential
loss/risks [k]
• Unlimited liability [k]
personal possessions at risk if
unable to pay business debts
[an]
• Risk of disagreements / slow
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

decision making [k] so less

responsive to changes in
customer demand [an]
• Must share any profits made
[k]
Other options might include:
Sole traders [k]
• Its simple/very little
paperwork required to set up
[an]
• Require limited start-up
capital [an]
• Make all the decisions / has
total control of business [an]

• Keep all the profit [an]

• Limited access to finance
[an]
Private limited company [k]
• Benefit from limited
liability
• More paperwork/legal
requirement to set up/operate
[an]
Other appropriate responses should
also be credited.
Justification might include:
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

A partnership allows owners to

share workload [k] which could
allow time for each partner to
specialise on certain activities to
improve the business [an]. The
main problem is unlimited
liability
[k] which means they could lose
personal possessions if unable to
pay business debts [an]. However,
partnership is a better choice than
starting up as a sole trader. While
there is still unlimited liability, it
is
possible to share some of the risk
with others if you can work
together, then extra skills can help
reduce potential problems [eval]
which could increase the chances
of success [eval].
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

6 Identify two financial statements 2 Only award the first two

a public limited company is responses given.
legally required to publish each
Do not award cash-flow
year.
forecast.
Award 1 mark for each financial
statement.
Two from:
• Income statement (Profit and
loss)
• Statement of financial position
(Balance sheet)
• Cash-flow statement/statement
of cash flows
• Statement of changes in
equity
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

7 2
Define ‘public limited company’.

Award 2 marks for a full

definition.
Award 1 mark for a partial
definition.
Businesses owned by shareholders,
but they can sell shares to the public
and their shares are tradeable on the
stock exchange [2]
OR
Often a large company, owned by
shareholders who have limited
liability. The company can sell its
shares to the general public [2]
OR
A company that sells its shares to
the general public through a stock
exchange (because the company can
sell shares to anyone, it can raise
massive amounts of money) [2]
OR
A business whose shares can be
freely bought and sold to the
general public [2]
Partial definition e.g. a business that
can sell shares [1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

8 Outline two advantages of TJM 4 To use words from the

being a private limited company. stem as application, the
reference must be
appropriate (i.e. make
Award 1 mark for each relevant
sense) in relation to the
advantage [max 2].
point being made.
Award 1 mark for each relevant
The following words are
reference to this business [max
likely to be appropriate
2].
for this question:
Points might include: • 450 (shops)
• Limited liability (for owners)
• 20 new or 470
[k] of the 450 shops [app]
shops
• Control over who can buy
• Food/retailer
shares [k] for this retailer
[app] • $500 million
(revenue)
• Can sell shares (to raise
capital) [k] for the 20 • 400 employees
shops/expansion [app]
• $200 million
• Separate legal (profit)
identity/incorporated [k]
Other appropriate
• Continuity [k] examples in context can
still be credited.
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

9 Do you think a public limited 6 This is a general question

company is a better form of so there are no marks for
business organisation for a application.
growing business than a private
Some points could be
limited company? Justify your
awarded as either an
answer.
advantage/disadvantage
Award up to 2 marks for of each option, but do not
identification of relevant points. award the same point
twice as this is repetition.
Award up to 2 marks for relevant
development of points.
Do not award the
Award up to 2 marks for a justified
following points if
decision as to whether a public candidate identifies
limited company is a better form of comparisons to private
business organisation for a growing limited companies as
business than a private limited
they apply to both forms
company.
of organisation:
Points might include: • Shareholder may expect
Public limited company: dividends to be paid •
Divorce of ownership
• Access to very large amounts of
and control • Have
capital [k] which does not need to
limited liability • Have
be repaid [an] • Shares available on shareholders •
the stock exchange / can sell shares Incorporated/separate
to public [k] • Cannot control who legal identity • Must
buys the shares / no restriction on issue financial data /
who can buy shares [k] which accounts available to
increases the risk of a takeover [an]
public
• More legal requirements / controls
to follow / must hold an annual
general meeting [k] which increases
costs / time-consuming [an] •
Selling shares to the public is
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

expensive [k]
Private limited company:
• Can only sell shares to
friends/family [k] which could limit
amount of finance able to raise
[an]
• Able to control who buys the
shares [k] which can help reduce
risk of takeover [an]
Other appropriate responses should
also be credited.
Justification might include:
A public limited company has
better access to capital [k]
which
can help finance expansion
[an].
Whereas a private limited
company
can control who buys the
shares [k]
which can reduce the risk of
being
taken over [an]. Becoming a
public
limited company is better
because
as the business is growing
having
access to more funds is likely
to be
very important otherwise it
could
delay its plans [eval], whereas
a
private limited company is
restricted to a smaller group of
people so may not be able to
raise
sufficient funds [eval].
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

10 Do you think issuing new shares 6 This is a general

is a better way for a limited question so there are no
marks
company to finance expansion for application.
than using a bank loan?
Justify your answer. Candidates can discuss
other options, but
Award upto2marksforidentificationofrelevantpoints.evaluationmustfocusonwhether
new shares is better than
a bank loan to finance
Award upto2marksforrelevantdevelopmentofpoints.
expansion.
Award2marksforajustifieddecisionastowhetherissuing
new shares is
a better way for a limited
company to finance
expansion than using a bank
loan.

Points might include:

Issue new shares:
• Permanent source
of capital [k] so no need to repay [an]
• Access to greater amounts
ofcapital[k]asnorestrictiononnumber
of shares [an]
• Nointerestopay[k]sofixedcostsdonotincrease[an]socanavoid
increasing debt [an]
• Possiblelossofcontrol/riskoftakeover[k]makingitdifficulto
manage or take decisions
[an]
• Cost/timetoarrange[k]sonotabletofocusonotherissues[an]
Shareholders might expect dividends [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

11 Identify two features of a public 2 Only award the first two

limited company. responses given.
Award 1 mark for each feature
identified.
Points might include: • Limited
liability • Can sell shares to the
general public / shares quoted
on
stock exchange • Must publish
its
accounts / more regulations •
Separate legal identity / business
survives death of owners •
Minimum of two owners • Must
hold an Annual General
Meeting
(AGM)

12 Identifytwofeatures of a sole trader. 2

Donotcreditinprivatesectorasthi
sappliesto
Award 1 mark per feature. many forms of business
organisation.
Points might include:
• Keeps all the profit
• Unlimited liability
• Unincorporated/noseparatelegalidentity
• Takes all decisions / own boss
• Hastotalownershipofbusiness/ownedbyoneperson
• Few legal requirements
Otherappropriateresponsesshouldalsobecredited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

13 Explain two possible 6 Note: To use words from

disadvantages to Samuel of the stem as application,
operating as a sole trader the reference must be
business. appropriate (i.e. make
sense) in relation to the
Award 1 mark for identification of
point being made.
each relevant disadvantage (max 2).
The following words are
likely to be appropriate
Award 1 mark for each relevant
for this question:
reference made to this business
(max 2). • Plumbing or related
words such as bathrooms
Award 1 mark for each relevant
• Used all his savings /
explanation (max 2).
$500 • New business •
Points might include: Quality service • Pricing
method • Economic
• Unlimited liability [k] so could
growth • Added value
lose his house as well as the $500
[app] as his personal assets can be Other appropriate
used to repay business debts [an] • examples in context can
Limited sources of finance [k] for still be credited.
his plumbing business [app] which
could create cash flow problems /
difficult to fund expansion [an] •
Few / only has own skills [k] so
may not be able to do all jobs on
time / properly [an] so difficult to
offer a good quality service [app] •
Has all the responsibility / make
decisions on own [k] • Business
does not have a separate legal
identity [k] so he would be
personally liable for the debts of the
business [an] • Has to work long
hours / difficult to take holidays [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

• No one to share risks/losses with

[k]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

14 Outline one advantage and one 4 Note: To use words from

disadvantage to Nadia ‘ s business the stem asapplication,
of selling franchises to expand . the reference must
beappropriate (i.e. make
sense) in relation tothe
Award 1 mark for each relevant point being made.
advantage/disadvantage.
The following words are
Award 1 mark for each relevant likely to beappropriate
reference to this business. for this question:
Points might include: • Hairdressing/shop
• Receives a fee to use her
brand name / franchisee has to • Maintain quality (is
buy a licence/ franchisee has important)
to pay start-up costs [k] of her
hairdressing business[app] • $100 000 (profit)
• Expansion is much faster [k]
• 5 (shops)
so will not take as long to
• 20 (employees)
open the next 5shops [app]
• 4 years ago (No
• Nadia will receive a share of
experience of)
franchisees profits/royalties business plans
[k] helping increase her $100
Inflation
000 profit [app]
Other appropriate
• Franchisees will have local
examples in context
knowledge [k] which is
canstill be credited.
helpful as business only
started 4 years ago [app] Do not award answers
which focus onwhether
• Management of outlet is
she should expand or
responsibility of franchisee
benefits ofgrowth in
 [k]
general e.g. more well
• All products sold must be
known,increase sales.
obtained from franchisor
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

[k]
Disadvantages:
• Poor management of one
franchise could damage whole
business reputation [k] as
maintaining quality is
important [app]
• The franchisee keeps
some/most of the profits from
the outlet [k]
• Has to offer franchisees help
and advice / training [k] which
may take time as when she
started she had no experience
[app]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

15 Explain two possible advantages 6 Note: To use words from

to DCN of setting up a joint the stem asapplication,
venture with the other business. the reference must
beappropriate (i.e. make
sense) in relation tothe
Award 1 mark for identification of
point being made.
each relevant advantage (max 2).
The following words are
Award 1 mark for each relevant
likely to beappropriate
reference made to this business
for this question:
(max 2).
• Chemical
Award 1 mark for each relevant
explanation (max 2). • Glass making
Points might include: • Packaging
• Increase capital / share costs • Different leadership
[k] when making the styles
packaging [app]which can
help reduce borrowing [an] • 8000 employees
Other appropriate
• Access to new knowledge /
examples in context
expertise [k] as may learn
canstill be credited.
things from their different
leadership styles [app] which
could lead to greater
productivity /efficiency /
higher output [an]
• Access new markets [k] as no
longer just selling chemicals
[app] leading to higher
revenue [an]
• Share risk [k]
• Share resources / share
distribution networks / wider
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

range of contact[k]
• Avoid/reduce competition [k]
increasing market share [an]

• May be a legal requirement (in

some countries) / avoid
government restrictions [k]
• Increase production capacity
[k] so able to meet potential
demand [an]
Other appropriate responses should
also be credited.

16 Define 2 For 2 marks

‘partnership’. need idea of
two or more
Award 2 marks
people and
for a full
ownership.
definition.
Do not accept features
Award 1 mark
e.g. unlimited liability.
for a partial
definition.
Two [or more] people who agree to
jointly own a business together [2]

OR An unincorporated business that

has more than one owner [2]
Partial definition e.g. 2 or more
people create / start a business
[1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

17 Explain two 6 Note: To use

advantages to words from
Pamela of the stem as
operating as a application,
sole the reference
trader. must be
appropriate (i.e.
Award 1 mark
make
for
sense) in
identification of
relation to the
each relevant
point being
advantage (max
made.
2).
The following words are
Award 1 mark
likely to be appropriate
for each
for this question:
relevant
reference to this
business (max
2).
• 30 years • Photography
Award 1 mark for each relevant
/ posters / calendars /
explanation (max 2). (fashion) magazines /
Points might include: pictures / camera • Niche
market • Cost-plus
• Keeps all the profit [k] from pricing • 2 employees •
photography business [app] so has High-quality (service) •
an incentive to (continue to) work Successful business
hard [an] • Has complete control / Other appropriate
makes all the decisions / does not examples in context can
need to consult with anyone [k] still be credited.
such as the 2 employees [app] so
able to take decisions more quickly Do not award
points
[an] • Own boss [k] • Freedom to about start-up as
business
choose her own holidays / schedule has been operating
for 30
/ work time [k] so can choose time years e.g. quick/easy
to
off when the business is less busy set up [0], requires
little
so does not miss out on sales [an] • capital [0], few legal
Able to keep (financial) information requirements [tv]
private / do not need to produce annual accounts [k] so competitors cannot use information to take away her
customers / market share [an] which can help her stay successful [app] • Has close contact with
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

customers / able to offer a more

personal service [k] as it’s a
niche
market [app] which can help
encourage customer loyalty [an]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

18 Define ‘limited liability’. 2 Do not award ‘owners

have a separate legal
Award two marks for a full
identity to the business’
definition.
as this does not explain
Award one mark for a partial the term.
definition. For 2 marks must have
The liability of shareholders / the idea of owners and
owners in a company is limited to the money invested.
only the amount they invested [2]

OR The shareholders in a limited

liability company which fails only
risk losing the amount they have
invested in the company (and not
any of their personal wealth) [2]
OR Its owners are not liable
(responsible) for a company’s debts
– this means that owners can lose
what they have invested (but not
their personal possessions). [2]
Partial definition e.g. Shareholder
only loses what they have put in [1]

OR Owners won’t lose their

personal assets if the business fails
[1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

19 Define ‘sole trader’. 2 Do not accept features

such as unlimited liability
Award 2 marks for a full definition.
as this is NAQ.
Award 1 mark for a partial
definition.
Ownership of business in the hands
of one individual/person [2]
Unincorporated business owned by
one person [2]
Partial definition e.g. Run/operated
by one person [1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

20 Explain one advantage and

one 6
Note: To use words from
disadvantage to Lola and Raul
of
the stem as application,
being in a business
partnership.
the reference must be

appropriate (i.e. make

sense) in relation to the
Award 1 mark for identification
of
point being made.
each relevant advantage and
disadvantage (max 1 for each).
The following words are
likely to be appropriate
Award 1 mark for each relevant
for this question:
reference made to this business
(max 2).
• Hand-printed (items) or
examples
Award 1 mark for each relevant
bags/posters • Tourists •
explanation (max 2).
Shop/ store
Points might include:
Introduce machinery
Advantage: Other appropriate
examples in context can
• More ideas [k] about what type still be credited.
of
hand printed items to offer [app]
can help increase revenue/sales
[an]
• Access to more capital (than
sole
trader) [k] to pay for setting up
 a
website [app] improving chance
of
expanding [an] • More
skills/expertise/can specialise [k]
Raul does the finance and sales
[app] allowing time for Lola to
focus on her job [an] • Share
loss/risk [k] so do not have to
carry
all the financial burden [an] •
Share
workload [k]
Disadvantage:
• Disagreements [k] such as how to
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

increase output [app] which could

lead to lower productivity [an] •
Unlimited liability/each
responsible
for debts of other [k] so their
personal belongings are at risk as
well [an] as the shop [app] • Have
to share profits [k] • Slower
decision-making [k]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

21 Outline two 4 Note: To use

advantages to words from
DSY the stem as
of being a application,
private limited the reference
company. must be
appropriate (i.e.
Award 1 mark
make
for each
relevant sense) in
advantage. relation to the
point being
made.
Award 1 mark
The following words are
for each
likely to be appropriate
relevant
for this question:
reference to this
business.
Points might
include:
Advantage: • (electric) cars • Lot of
competition • $2bn •
• Access to more capital (than Market is growing
unlimited company)/can raise rapidly • Different market
capital by selling shares [k] to start • Washing machines/
making cars [app] • Control over cleaning equipment
who buys shares/less risk of
takeover (than public limited Other appropriate
company) [k] which may be examples in context can
important as there is a lot of still be credited.
competition [app] • Continuity of
existence [k] • Separate legal
identity [k] • (Its shareholders
benefit from) limited
liability/incorporated [k]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

22 State two types of business 2

organisation.
Award 1 mark for each type of
business organisation.
Points might include:
• sole trader • private limited
company • public limited company
• franchise • social enterprise •
charity • public corporation •
partnership
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

23 Outline two disadvantages of 4

BMT being a business
partnership.
Award 1 mark for each relevant
disadvantage.
Award 1 mark for each relevant
reference to this business.
Points might include:
• Unlimited liability/ each
responsible for debts of other [k]
so
if business cannot pay its debts
there is risk to the personal assets
of each brother [app] • Fewer
sources of finance (than limited
company) [k] restricting plans to
expand the watch business [app] •
Possible disagreements/slower
decision making [k] such as
whether to import parts [app] •
Have to share profits [k]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

24 Explain one advantage and one 6 Analysis must explain

disadvantage to Gomez of being how it represents an
a sole trader. advantage/disadvantage.
Award one mark for identification
of each relevant Do not award quick/easy
advantage/disadvantage (max two). to set up as this is an
established business.
Award one mark for each relevant Application marks may
reference made to this business be awarded for
(max two). appropriate use of the
following:
Award one mark for each relevant
explanation (max two) • (Old) van
Points might include: • Borrowed from father
Advantage:
• Painting / decorating
• Keeps all the profit [k] so if
successful will make more • Customers are offices /
money/will encourage him to do shops
better [an] from painting business
[app] • Customers given 3
months credit
• Own boss/has complete control
• Pay suppliers within 1
[k] so can make decisions more
month
quickly [an]
• Correct use of data from
• Does not have to give information
the table
about his business to anyone
else/secrecy in business matters [k]

• Has freedom to choose own

holidays/hours of work/prices to
charge [k] such as whether to offer
customers 3 months credit [app]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

• Has close contact with customers

[k] so able to respond quickly to
changes in demand [an]
Disadvantage:
• Unlimited liability [k] so if
business is not able to pay the
suppliers within 1 month [app]
could lose his personal possessions
[an]
• Limited sources of
finance/difficult to raise funds [k]
to buy new assets [an] such as the
van [app] • May have limited
range
of skills [k] as only a small
business
[app]
• No continuity/if ill who will take
control [k]
• Has to work long hours/difficult
to take holidays [k] otherwise may
lose out on potential sales/revenue
[an]
• No one to share the risks/losses
with [k]
• Not able to benefit from
economies of scale [k]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

25 Do you think 6 Do not award

selling answers
franchises is which refer to
a better way advantages
for a retail and/or
business disadvantages
to expand to
than opening franchisees.
more of
its own shops? Do not award
more sales
Justify your
as this would
answer.
apply to
Award up to both options.
two marks for
identification of
relevant points.
Award up to For both evaluation
two marks for marks justification must
relevant clearly relate to a retail
development of business.
points.
Award two
marks for
justified
decision as to
whether selling
franchises is a
better way for a
retail
business to
expand than
opening
more of its own
shops.

Points might include:

Selling franchises:
• Franchisee pays fee to franchisor
to use the brand name [k] so
franchisor does not have to raise as
much capital [an]
• Can expand more quickly (than if
franchisor had to finance all new
outlets) [k]
• Franchisees are responsible for
day-to-day management [k] so
franchisor has time to focus on
more strategic objectives [an]
• Franchisee should have local
knowledge [k] which could help
increase sales/revenue [an]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

• Franchisor receives a percentage

of revenue/profits [k]
• Franchisor shares risks with
franchisee [k]
• Brand/customer awareness
increases [k]
• All products sold must be
obtained from the franchisor [k]
• Wrong decision or poor
management by one franchisee can
damage reputation for whole
business [k] reducing sales/revenue
[an]
• Franchisor may have to provide
training and support [k] which will
increase franchisors costs [an]
More of its own shops:
• Have total control over the
operations [k]
• Keep all the profits [k]
• Need to raise all the capital [k]
Justification might include:
• Franchisees will pay towards the
start-up costs [k] which will help
reduce the amount the business
has
to raise [an]. However, the
franchisor may lose control [k]
which may damage their
reputation
[an]. It might be better to sell
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

franchises, as it will reduce the

costs especially if it wants to open
a large number of shops quickly
[eval]. This can improve its chances
of being able to expand as much as
the retail business wants [eval].
Other appropriate responses should
also be credited.

26 What is meant by ‘public 2 Do not award answers

corporation’? that refer to public
companies
Clear understanding [2]: A business
that is owned and controlled by the
government/state
Some understanding [1]: E.g. run
by government/state
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

27 What is meant by ‘franchise’? 2 For both marks must

have idea of payment and
Clear understanding [2]: A business
using the name/products
based upon the use of the brand
of existing business
names, promotional logos and
trading methods of an existing Do not award
successful business. The franchisee examples
buys the licence to operate this
business from the franchisor.
A business system where
entrepreneurs buy the right to use
the name, logo and product of an
existing business.
Some understanding [1]: Using the
name or logo of another business
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

28 I dentify and explain one 6 Application marks may

advantage and one disadvantage be awarded for
to FGH of becoming a public appropriate use of the
limited company following:
Knowledge [2 × 1] – award 1 mark • book retailer
for each relevant advantage /
disadvantage • 6500 shops
• 20 countries
Application [2 × 1] – award 1 mark
for each relevant reference made to • $300m
this business
• on the job training
Analysis [2 × 1] – award 1 mark for
each relevant explanation • $800m
• take over one its
Relevant points might include:
competitors
Advantages
Do not award limited
• Better access to capital [k] i.e. liability or separate legal
raising share capital from existing identity as already has
and new investors [an] to pay for this as a private limited
the takeover [app] company
• Can give a company a more
prestigious profile OR status [k] so
more likely to be offered credit OR
better interest rates as seen as lower
risk [an] to raise capital to open
more bookshops [app]
• Shares tradeable on the stock
exchange [k]
Disadvantages:
• Cannot control who buys the
shares [k] so easier to be taken
over
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

[an] by other book retailers [app]

• Shareholder may expect dividends
to be paid [k]
• Accounts published [k] allowing
competitors to be able to see all
their results [an] so the business
FGH wants to take over might
reject its offer [app]
• Legal formalities need to be
followed [k]
• Divorce of ownership and control
[k]

29(a) What is meant by ‘franchise’? 2 Do not award examples

as this does not explain
Clear understanding [2] – e.g. an
the term
agreement that allows one business
to trade under the name of another
business to sell the other company’s
products or services
Some understanding [1]: e.g. trade
under the name of another
business
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

30 Identify and explain two possible 4 Application marks may

advantages to IBH of being a be awarded for
private limited company. appropriate use of the
following:
Award 1 mark for each advantage
identified • family (owned) • want
to expand • shoes or
Award 1 mark for each explanation
related words such as
in context
leather, children, women
Points might include: • competitive market •
needs finance • directors
• can control who buys shares [k]
so can keep control in this
competitive market [app] • easier Do not award private
to raise finance / able to sell shares limited company as
[k] as they want to expand [app] • application, as this is
seen as more creditworthy to stated in the question.
suppliers [k] so could be more
willing to supply leather [app]•
limited liability [k] this keeps
personal assets of family safe [app]
• incorporation / separate legal
identity [k] • no need to publish
accounts [k] • continuity [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

31 I dentify and explain two 4 Application marks may

disadvantages to PShirts of being be awarded for
a private limited company. appropriate use of the
following:
Knowledge [2 × 1] – award 1 mark
for each relevant disadvantage (max • shirts • men and women
2) • priced lower than
competitors • sales have
Application (2 × 1) – award 1 mark
fallen • legal controls •
for each relevant explanation in
relevant use of financial
context.
data in table • selling in
Relevant points may include: other countries

• Can only sell shares to friends and

family [k] so may not raise
sufficient funds to expand into other
countries [app] • Shareholders may
expect dividends (k) from selling
shirts [app] • Have to publish
(some) financial accounts [k] •
Legal formalities to set up and run
[k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

32 Identify and explain one 6 Application marks may

advantage and one disadvantage be awarded for
of ZumGo being a business appropriate use of the
partnership. following:
Knowledge [2 × 1] – award 1 mark • Correct use of cash flow
for an advantage and a disadvantage numbers
identified [max 1] • $6000 (advertising)
Application [2 × 1] – award 1 mark • $28 000
for relevant reference to this • bus tours
business • extra buses OR looking
Analysis [2 × 1] – award 1 mark for to expand
each relevant explanation • leasing
Relevant points might include: • two successful years
Advantage: • all retained profit
• More ideas [k] about what type of • business plan or cash
tours to offer [app] can help flow forecast
increase business sales [an] • brothers
• Access to more capital (than sole
trader) [k] can help solve cash flow
problems [app] improving chance
of survival [an]
• Share workload OR decision
making [k] so making business
more efficient [an]
• More skills OR expertise OR can
specialise [k], Richie does the
finance [app] allowing time for
Justin to focus on his job [an]
• Share loss OR risk [k] so do not
have to carry all the financial
burden [an] especially if buy new
bus [app]
Disadvantage:
• Disagreements [k] about
expansion [app] leading to lost sales
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

OR low productivity [an]

• Unlimited liability OR each
responsible for debts of other [k] so
if cannot repay the $28 000 [app]
their personal belongings are at risk
as well [an]
• Have to share profits [k] with each
brother [app]
• Slower decision-making [k] on
whether to lease [app] so lose
competitive advantage [an]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

33 Identify and explain one 4 Application marks may

advantage and one disadvantage be awarded for
of CHONS being a public limited appropriate use of the
company. following: coal or
mining
related words, correct use
Knowledge [2 × 1] award one mark
of data from table, no
for each advantage and
government support,
disadvantage
export, shareholders,
Application [2 × 1] award one mark suppliers, expansion
for each relevant reference to this plans.
business
Advantages:
• Able to sell shares on stock
market [k] so no limit to potential
number of shareholders [app]
• Access to more sources of finance
[k] so do not have to ask for support
from Government [app]
• Limited liability [k]
• Separate legal identity [k] of
mining business and owners [app]

• Better status OR seen as lower

risk [k] so suppliers more willing
to offer credit [app]
Disadvantages:
• Have to disclose accounts [k] so
less able to keep expansion plans
secret [app]
• Many legal
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

requirements/regulations [k]
• Selling shares expensive [k]
• Risk of loss of control [k] for the
original shareholders [app]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

34 Do you think Manisha should 6 Application marks may

have a business partner? Justify be awarded for
your answer. appropriate use of the
following: correct use of
Knowledge [1]: award 1 mark for
numbers e.g. 500%,
identification of relevant point(s)
celebration cakes or
related words such as
Application [1]: award 1 mark for ingredients, shop or
a relevant reference to this business bakery, economic
boom,3
employees, increase in
demand, sole trader,
Analysis [2]: award up to 2 marks
work every day,
for relevant development of point(s)
profitable (at last),
interest rates increased,
friend (as business
Evaluation [2]:award up to 2 marks
for a justified decision made as to partner), started her
business 5 years ago,
whether Manisha should have a
business partner product quality is
important.
Points might include: • Share
workload OR responsibility [k] so
does not have to work everyday
[app] which could reduce her own
stress OR allow her more free time
[an] • More ideas OR skills [k] from
her friend [app] which could make
the business more competitive [an]
• Extra source of finance [k] which
is important as interest rates high
[app] so less need to borrow money
[an] • Still has unlimited liability
status OR liability for debts [k] as
being a sole trader [app] but
possible losses can be shared [an]
• Loss of some control [k] over type
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

of cakes made [app] • Risk of

disagreements OR slow decision
making [k] so less responsive to
changes in customer demand [an] •
Have to share profits made [k]

35 Identify and explain two ways in 4 Application marks may

which legal controls on marketing be awarded for
might affect C&P. appropriate use of the
following:
Knowledge [2×1]: award 1 mark
for each way identified Jewellery and related
words such as necklaces
Application [2×1]: award 1 mark
and bracelets, Metals,
for each explanation in context
Correct use of data from
Points might include: table 2, Pay for materials
when ordered, Phoebe
• Cannot make false claims about
works from home, Cory
what the product will do OR must
manages the accounts
avoid misleading adverts OR and shop, Business
Advertising claims might have to
partnership.
change to ensure compliance [k] •
Contents OR product must be
described accurately [k] so would
need to be handmade • Products
must be safe to use OR must offer
to repair or replace faulty goods [k]
e.g. if bracelet broken [app] • May
have to change how products made
[k] • Mistakes could lead to fines
OR damage reputation [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

36 Identify and explain one 6 Application marks may

advantage and one disadvantage be awarded for
to Cory and Phoebe of being in a appropriate use of the
business partnership. following:
Knowledge [2 × 1]: award one mark Jewellery and related
for a relevant advantage and words such as necklaces
disadvantage identified and bracelets, Metals,
Correct use of data from
Application [2 × 1]: award 1 mark
the table, Pay for
for each relevant reference made to
materials when ordered,
this business
Phoebe works from
Analysis [2 × 1]: award 1 mark for home, Cory manages the
each relevant explanation accounts and shop,
Business partnership.
Points might include:
Advantage:
• More ideas [k] which could make
business more competitive [an] •
More capital (than sole trader) [k]
which may help solve cash flow
problems [app] so less need to
borrow money [an] • Share
responsibilities OR workload OR
Specialisation OR more skills [k]
so have time to focus on what they
are good at [an] as Corey focuses
on finance [app] • Share risk OR
losses [k]
Disadvantage:
• Different objectives [k] such as
Phoebe wants to keep current
supplier [app] leading to
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

disagreements [an] • Have

unlimited liability [k] Phoebe
could
lose her home [app] as personal
belongings at risk if business fails
[an] • Have to share profits [k] so
each person makes less than if it’s
a sole trader [an] • Do not have
separate legal identify [k] • Slow
decision making OR risk of
disagreements [k] as takes times to
resolve differences [an]

37 What is meant by a joint venture? 2 Do not accept answers

which describe a
takeover or merger.
Clear understanding [2]: when two
or more businesses agree to start a
(new) project together so share risks
OR capital OR profits OR
resources.
Some understanding [1]: two
business agree to work together (on
a project).
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

38 Identify and explain two 4 Application marks may

advantages to WSS of selling its be awarded for
franchise appropriate use of the
following:
Knowledge [2 × 1] : award 1 mark
for each advantage identified References to food such
as soup, hot drinks,
Application [2 × 1] : award 1 mark
curries and cakes, ethical,
for each explanation in context
logo, 10, extend product
Points might include: • Cheaper range, promotion, 30,
way to expand [k] the 10 shops.
franchisees pay some costs [app] •
Each franchisee pays money [k] so
may be able to open more shops in
future [app] • Can expand more
quickly [k] • Widen brand
awareness [k] as logo is seen in
more places [app] • Franchisees
responsible for day to day
management [k] WSS has time to
focus on extending its product
range [app] • Retain control of the
image [k] so it can ensure the
business remains ethical [app]]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

39 Identify and explain two 4 Application marks may

advantages to BGN of being a be awarded for
private limited company. appropriate use of the
following: furniture or
Knowledge [2 × 1] – award 1 mark
similar references such as
for each advantage identified
tables, 10 shops, different
Application [2 × 1] – award 1 mark cities, (increase in)
for each explanation in context customer complaints,
decisions over
Points might include: recruitment and / or
inventory, started as a
• Limited liability [k] compared to
when it was a partnership [app] • partnership, expanded
quickly
Easier to raise money / capital [k]
as business is expanding quickly
[app] • More credibility with
suppliers [k] could get better terms
when buying furniture [app] •
Continuity [k] • No need to publish
(detailed) accounts [k] of its 10
shops [app] • Separate legal
identity/ incorporated [k] • Control
over who can buy shares/ less risk
of takeover [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

40 Id entify and explain two 4

advantages to Moeen and Ali of
forming a private limited
company.
Knowledge [2 × 1] – award 1 mark
for each relevant advantage
Application [2 × 1] – award 1 mark
for each explanation in context
Relevant points might include: •
Access to more capital [k] which
could help increase their
budget/so
can afford to create luxury
image
[app] • Benefit from limited
liability
[k] if new business fails [app] •
Continuity of existence [k] if
anything happens to one of them
will not have to close hotel [app]
•
Separate legal identity [k] •
Control
over who buys shares [k]

[Total: 160]