Mark Scheme (Results)

November 2020

Pearson Edexcel GCSE

In Business (1BS0)
Paper 1: Investigating small business
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Autumn 2020
Publications Code 1BS0_01_2011_MS
All the material in this publication is copyright
© Pearson Education Ltd 2020
General Marking Guidance

• All candidates must receive the same treatment. Examiners

must mark the first candidate in exactly the same way as they
mark the last.
• Mark schemes should be applied positively. Candidates must be
rewarded for what they have shown they can do rather than
penalised for omissions.
• Examiners should mark according to the mark scheme not
according to their perception of where the grade boundaries may
lie.
• There is no ceiling on achievement. All marks on the mark
scheme should be used appropriately.
• All the marks on the mark scheme are designed to be awarded.
Examiners should always award full marks if deserved, i.e. if the
answer matches the mark scheme. Examiners should also be
prepared to award zero marks if the candidate’s response is not
worthy of credit according to the mark scheme.
• Where some judgement is required, mark schemes will provide
the principles by which marks will be awarded and
exemplification may be limited.
• When examiners are in doubt regarding the application of the
mark scheme to a candidate’s response, the team leader must be
consulted.
• Crossed out work should be marked UNLESS the candidate has
replaced it with an alternative response.
Question Answer Mark
Number
1 (a) The only correct answer is C - Independence (1)
AO1a
A is not correct because it is a risk from business activity

B is not correct because it is a risk from business activity

D is not correct because it is a risk from business activity

Question Answer Mark

Number
1 (b) The only correct answer is B - The proportion of sales in a (1)
market made by one business AO1a

A is not correct because it is a definition of market research data

C is not correct because it is a definition of revenue

D is not correct because it is a definition of a focus group

Question Answer Mark

Number
1 (c) Award 1 mark for identification of a benefit, plus 2 further marks (3)
for explaining this benefit up to a total of 3 marks. AO1a=1
AO1b=2
A unique selling point will give a small business a competitive
advantage (1). This would make customers more likely to buy from
the business rather than from the competition (1). This means the
business will benefit from increased market share (1).

A unique selling point will allow a small business to add value (1).
This means it should be able to operate profitably (1), which
reduces the chance of business failure (1).

Accept any other appropriate response. Answers that list more

than one benefit with no explanation will be awarded a maximum
of 1 mark.
Question Answer Mark
Number
1 (d) Award 1 mark for identification of an advantage, plus 2 further (3)
marks for explaining this advantage up to a total of 3 marks. AO1=1
AO1b=2
Trade credit will allow a small business to buy now and pay later
(1). This means the business has a chance to sell the goods before
it has to pay its supplier (1). This will improve the cash-flow of the
small business (1).

Trade credit is a low-cost source of finance (1). If credit terms are

met then no interest is charged (1). This will reduce the costs of
the small business (1).

Accept any other appropriate response. Answers that list more

than one advantage with no explanation will be awarded a
maximum of 1 mark.
Question Answer Mark
Number
2 (a) The only correct answers are B - Internet and C – Market report (2)
AO1a
A is not correct because it is a method of primary market research

D is not correct because it is a method of primary market research

E is not correct because it is a method of primary market research

Question Answer Mark

Number
2 (b) The only correct answers are C - Packaging and D – Raw (2)
Materials AO1a

A is not correct because it is an example of a fixed cost

B is not correct because it is an example of a fixed cost

E is not correct because it is an example of a fixed cost

Question Answer Additional guidance Mark

Number
2 (c) Substitution into correct formula: Award full marks (2)
for correct AO2
Cash inflows = 200 x £15 numerical answer
= £3 000
without working.
Cash outflows = £500 + £1 000 + £150
= £1 650

Net cash flow = £3 000 – £1 650 (1)

Answer: £1 350 (1)

Question Answer Mark

Number
2 (d) Award 1 mark for identification of a disadvantage, plus 2 further (3)
marks for explaining this disadvantage up to a total of 3 marks. AO1a=1
AO1b=2
There may be disagreements between the partners (1). This means
it will be difficult to make business decisions (1). This will lead to
the business not being able to meet the needs of its customers (1).

A deed of partnership may have to be produced (1). This increases

the administration/legal requirements of the business (1). This will
therefore increase the start-up costs of the business (1).

Accept any other appropriate response. Answers that list more

than one disadvantage with no explanation will be awarded a
maximum of 1 mark.
Question Answer Mark
Number
2 (e) Award 1 mark for identification of a way the marketing mix may (3)
change, plus 2 further marks for explaining this way up to a total AO1a=1
of 3 marks. AO1b=2

A small business may have to make changes to its product (1). This
is because the lifestyle of consumers may require extra features on
a product (1). Therefore, the design of the product may need to
change to meet consumer needs (1).

A small business may have to change its prices (1). Economic

conditions may lead to consumers having less money (1).
Therefore, the consumer will feel they are still getting value for
money (1).

Accept any other appropriate response. Answers that list more

than one way with no explanation will be awarded a maximum of
1 mark.
Question Answer Mark
Number
3 (a) The only correct answer is B – They have unlimited liability (1)
AO1a
A is not correct because a sole trader does not need to have a
business qualification

C is not correct because a sole trader cannot sell shares to raise

finance

D is not correct because some sole traders will employ staff

Question Answer Additional guidance Mark

Number
3 (b) Substitution into correct formula: Award full marks for (2)
correct numerical AO2
(6 000 ÷ 10 000) x 100 (1) answer without
working.
Answer: 60% (1)

Question Answer Mark

Number
3 (c) Award 1 mark for identification of a reason, plus 2 further marks (3)
for explaining this reason up to a total of 3 marks. AO1a=1
AO1b=2
A new business idea may come about because consumers want
something new (1). Existing products may not meet customer
needs (1). This can lead to an entrepreneur spotting a new
business opportunity in the market (1).

A new business idea may come about because of changes in

technology (1). This allows new products to be created (1).
Entrepreneurs will therefore look to create demand for this new
product (1).

Accept any other appropriate response. Answers that list more

than one reason with no explanation will be awarded a maximum
of 1 mark.

Question Answer Mark

Number
3 (d) Award 1 mark for identification of an advantage, plus 2 (3)
further marks for explaining this advantage up to a total of 3 AO1a=1
marks. AO1b=2

Market mapping will allow a small business to spot a gap in the

market (1). This can lead to the business developing a
product/service to help fill this gap (1). As a result, the small
business may capture market share from competition (1).

Market mapping can help a small business analyse its competitors

(1). This may help the business when making business decisions
(1). This may lead to a reduced risk of failure (1).

Accept any other appropriate response. Answers that list

more than one advantage with no explanation will be
awarded a maximum of 1 mark.
Question Indicative content Mark
Number

3 (e) • Increased competition will affect how a small business decides (6)
what price to charge (AO1b). AO1b=3
• Increased competition will affect location decisions AO3a=3
for a small business (AO1b).

• Therefore, a small business may decide to use a competitive

pricing strategy to maintain market share (AO3a).
• Therefore, a small business may decide not to locate in an area
where there is lots of competition as it will find it difficult to
attract customers (AO3a).
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 • Demonstrates elements of knowledge and understanding of
business concepts and issues, with limited business
terminology used (AO1b).
• Attempts to deconstruct business information and/or
issues, finding limited connections between points (AO3a).

Level 2 3–4 • Demonstrates mostly accurate knowledge and understanding

of business concepts and issues, including appropriate use of
business terminology in places (AO1b).
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although there
may be some logical inconsistencies (AO3a).
Level 3 5–6 • Demonstrates accurate knowledge and understanding of
business concepts and issues throughout, including
appropriate use of business terminology (AO1b).
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning (AO3a).
Question Answer Mark
Number
4 (a) Award up to 2 marks for linked points outlining a reason why cash (2)
is important to On Your Bike. Award a maximum of 1 mark if points AO2
are not linked.

Cash will allow On Your Bike to pay its suppliers (1). This may
ensure it can continue to stock a wide range of cycles (1).

On Your Bike could use cash to pay its employees (1). If it can’t pay
the mechanics, the correct pay they may leave for another cycle
shop. (1).

Do not accept a reason that would not be appropriate for On Your

Bike. For example, cash would be important for buying raw
materials.

Question Indicative content Mark

Number
4 (b) • It can increase the number of customers because (6)
reviews on social media platforms can be shared by AO2=3
other tourists when visiting London (AO2). AO3a=3
• It is difficult for the business to respond to negative reviews
of the cycle rental service (AO2).

• As a result, tourists may now consider renting cycles

after reading the reviews whereas previously they did
not know that this service existed (AO3a).
• Therefore, even if a review is incorrect anyone who reads it
may doubt the excellent customer service offered by On
Your Bike (AO3a).

Level Mark Descriptor

No rewardable material.
Level 1 1–2 • Limited application of knowledge and understanding of business
concepts and issues to the business context (AO2).
• Attempts to deconstruct business information and/or issues,
finding limited connections between points (AO3a).

Level 2 3–4 • Sound application of knowledge and understanding of business

concepts and issues to the business context although there may
be some inconsistencies (AO2).
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although there may
be some logical inconsistencies (AO3a).

Level 3 5–6 • Detailed application of knowledge and understanding of

business concepts and issues to the business context
throughout (AO2).
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of reasoning
(AO3a).
Question Answer Additional guidance Mark
Number
5 (a) Substitution into correct formula: Award full marks for (2)
correct numerical AO2
£1 100 000 ÷ 2,000 (1) answer without
working.
Answer: £550 (1)

Question Answer Additional guidance Mark

Number
5 (b) Substitution into correct formula: Award full marks for (2)
correct numerical AO2
£1 100 000 – ((£350 x 2,000)+£150 000) (1) answer without
working.
Answer: £250 000 (1)
Question Indicative content Mark
Number
5 (c) • Reducing costs would allow On Your Bike to make (6)
more profit per cycle if the average price remained at AO2=3
£550 (AO2). AO3a=3
• In order to reduce its costs On Your Bike may have to reduce
the amount it spends in employing mechanics and sending
them on training courses (AO2).

• As a result, On Your Bike would need to sell fewer cycles

in order to cover its fixed costs and therefore break
even (AO3a).
• This may have a negative effect on the excellent
customer service at On Your Bike. This would cause
lower demand and the business not reaching a lower
break-even point (AO3a).

Level Mark Descriptor

0 No rewardable material.
Level 1 1–2 • Limited application of knowledge and understanding of
business concepts and issues to the business context (AO2).
• Attempts to deconstruct business information and/or
issues, finding limited connections between points (AO3a).

Level 2 3–4 • Sound application of knowledge and understanding of business

concepts and issues to the business context although there
may be some inconsistencies (AO2).
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies (AO3a).

Level 3 5–6 • Detailed application of knowledge and understanding

of business concepts and issues to the business
context throughout (AO2).
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of reasoning
(AO3a).
Question Answer Mark
Number
6 (a) Award 1 mark for stating one market segment targeted by On (1)
Your Bike. AO2

Children (or their parents) buying first cycles or scooters (1).

Cycling enthusiasts interested in mountain biking (1).
Tourists looking to rent cycles whilst on holiday (1).

Accept any other appropriate response. Do not accept market

segments that would not be appropriate for On Your Bike. For
example, low income groups as the average price of bikes is
£550.

Question Answer Mark

Number
6 (b) Award up to 2 marks for linked points outlining an impact on On (2)
Your Bike. Award a maximum of 1 mark if points are not linked. AO2

If there is an increase in the value of the pound against other

currencies, then imports will become cheaper (1). This will mean
they may pay less for bikes made in other countries and therefore
reduce costs (1).

If there is an increase in the value of the pound against other

currencies it will make it more expensive for foreign tourists to
visit the UK (1). This will lead to a reduction in demand for On Your
Bike’s rental business (1).

Do not accept an impact that would not be appropriate for On

Your Bike. For example, exports will be more expensive if the
pound strengthens.
Question Indicative content Mark
Number
6 (c) • The market is growing so there will be enough demand (9)
for a second cycle shop (AO2). AO2=3
• E-commerce will allow a wider range of customers to have AO3a=3
access to On Your Bike’s range of cycles and clothing (AO2). AO3b=3

• On Your Bike has already had success with its first shop so
it knows that the business model and strategy works. This
can therefore be easily replicated in a second shop and if
problems occur the business now has experience of being
able to respond to these problems (AO3a).
• Currently the shop can only sell to people that live in
London. E-commerce will allow people from all over the
world to buy products from the business without On Your
Bike having to invest a huge amount of money (AO3a).

• However, investing in a second shop involves high costs.

This investment may therefore be risky because the
increased demand for the bikes may not be sustainable. If
the business takes out a loan to finance the second shop it
will still need to repay the loan and the interest even if
demand falls (AO3b).
• However, On Your Bike’s customers may not be interested
in buying products using e-commerce. They may prefer to
try the bike and physically inspect the product first. Also
the tourist rental business does not require e-commerce
to make a purchase. They need information that can
already be found on website (AO3b).
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 • Limited application of knowledge and understanding of
business concepts and issues to the business context (AO2).
• Attempts to deconstruct business information and/or issues,
finding limited connections between points (AO3a).
• Makes a judgement, providing a simple justification based on
limited evaluation of business information and issues relevant
to the choice made (AO3b).
Level 2 4–6 • Sound application of knowledge and understanding of business
concepts and issues to the business context although there
may be some inconsistencies (AO2).
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although there
may be some logical inconsistencies (AO3a).
• Makes a judgement, providing a justification based on
sound evaluation of business information and issues
relevant to the choice made (AO3b).
Level 3 7–9 • Detailed application of knowledge and understanding
of business concepts and issues to the business
context throughout (AO2).
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning (AO3a).
• Makes a judgement, providing a clear justification based on a
thorough evaluation of business information and issues
relevant to the choice made (AO3b).
Question Answer Mark
Number
7 (a) Award one mark for stating one stakeholder of Loco. (1)
AO2
The owner of Loco, Joe Thwaites (1).
The customers who buy the SUPs (Stand up paddleboards) (1).
Employees who help build and design the SUPs (1).
The team riders who use the SUPs (1).

Accept any other appropriate response. Do not accept a

stakeholder that would not be appropriate for Loco. For
example, managers of the business.

Question Answer Mark

Number
7 (b) 2014 (1)
AO2

Question Answer Mark

Number
7 (c) Award up to 2 marks for linked points outlining one-way Joe (2)
Thwaites could have used a business plan. Award a maximum of AO2
1 mark if points are not linked.

Joe could have used a business plan to set the aims and objectives
for Loco (1). This would have helped to create USPs (unique selling
points) for the SUPs that helped the business be competitive
against larger manufacturers (1).

Joe could have used a business plan to forecast the financial

information for Loco (1). This would have helped to judge if the
costs of travelling to Fuerteventura could be afforded (1).

Do not accept ways that would not be appropriate for Loco. For
example, to obtain finance for the expansion of the business.
Question Indicative content Mark
Number
7 (d) • Digital payment systems make it more convenient (9)
for customers to pay for SUP products from Loco. AO2=3
This should therefore increase the number of AO3a=3
potential customers (AO2). AO3b=3
• Virtual meetings will make it easier for Joe Thwaites to
discuss progress with the creative talent involved in the
design of the SUPs (AO2).

• Loco sells SUPs and surfing equipment throughout

Europe. Digital payment systems will allow
customers to buy the equipment 24/7. It will also
allow payments to be made using different
currencies. This helps to remove restrictions that
would be in place if Loco only accepted traditional
methods of payment (AO3a).
• In order to come up with the new designs of SUPs
Loco had to have meetings with a wide range of
people ranging from manufacturers to team riders.
Virtual meetings will remove the geographical
barrier of having to get all of these people in the
same place (AO3a).

• However, digital payment systems require a lot of

maintenance, so they do not become vulnerable to
fraud. This, together with the costs of installing the
systems, will increase the costs of Loco. Customers
may also be wary of buying expensive surfing
equipment because of possible security issues
(AO3b).
• However, it is difficult to inspect and test the
physical product via a virtual meeting. Loco’s brand
depends upon how well the product performs. This
is something that cannot be done using digital
communications (AO3b).
Level Mark Descriptor
0 No rewardable material.

Level 1 1–3 • Limited application of knowledge and understanding of

business concepts and issues to the business context
(AO2).
• Attempts to deconstruct business information and/or
issues, finding limited connections between points
(AO3a).
• Makes a judgement, providing a simple justification based
on limited evaluation of business information and issues
relevant to the choice made (AO3b).

Level 2 4–6 • Sound application of knowledge and understanding of

business concepts and issues to the business context
although there may be some inconsistencies (AO2).
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies (AO3a).
• Makes a judgement, providing a justification based on
sound evaluation of business information and issues
relevant to the choice made (AO3b).

Level 3 7–9 • Detailed application of knowledge and

understanding of business concepts and issues to
the business context throughout (AO2).
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning (AO3a).
• Makes a judgement, providing a clear justification based on
a thorough evaluation of business information and issues
relevant to the choice made (AO3b).
Question Indicative content Mark
Number
7 (e) (12)
• Loco will be able to compete because its flexibility AO1b=3
will help meet customer needs (AO1b). AO2=3
• The larger manufacturers already have existing market AO3a=3
share and position (AO1b). AO3b=3

• The owner of Loco was able to be innovative in

designing new SUPs after working with professional
SUP riders in Fuerteventura (AO2).
• Stand up paddle boarding is not a mass market sport so
has relatively low numbers of participants (AO2).

• The flexibility of the business may allow it to make

individual changes to its products as requested by its
customers. Larger manufacturers may not be able to
do this as the SUPs are manufactured in larger
batches, or in bulk. This may be important to
professional SUP riders who want bespoke products.
If professional riders select Loco products, then the
brand of the business will grow and become
attractive to other customers (AO3a).
• The size of the market makes it difficult for new
brands to become established. Large manufacturers
benefit from economies of scale and can make it
difficult for new businesses to compete on price.
They will have lower average costs and will benefit
from spending more money on marketing (AO3a).

• However, this will depend on how much the design

process and time spent creating the new boards will
increase the average costs of making the SUPs. This
may therefore lead to higher prices. This may not
affect the professional riders but will make it difficult
for other riders to buy the SUPs. This could therefore
discourage them from buying Loco boards rather than
those of the larger manufacturers (AO3b).
• However, the competitive nature of paddle boarding
means that customers may look to buy the best
equipment. The large manufacturers may find it difficult
to compete with smaller businesses like Loco because Joe
can offer personal help and advice to customers when
buying their equipment. This personal touch may not be
able to be directly given by a large manufacturer (AO3b).
Level Mark Descriptor
0 No rewardable material.

Level 1 1–4 • Demonstrates elements of knowledge and understanding

of business concepts and issues, with limited business
terminology used (AO1b).
• Limited application of knowledge and understanding of
business concepts and issues to the business context (AO2).
• Attempts to deconstruct business information and/or issues,
finding limited connections between points (AO3a).
• Draws a conclusion, supported by generic assertions from
limited evaluation of business information and issues
(AO3b).
Level 2 5–8 • Demonstrates mostly accurate knowledge and
understanding of business concepts and issues, including
appropriate use of business terminology in places (AO1b).
• Sound application of knowledge and understanding of
business concepts and issues to the business context
although there may be some inconsistencies (AO2).
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies (AO3a)
• Draws a conclusion based on sound evaluation of
business information and issues (AO3b).
Level 3 9–12 • Demonstrates accurate knowledge and understanding of
business concepts and issues throughout, including
appropriate use of business terminology (AO1b).
• Detailed application of knowledge and understanding
of business concepts and issues to the business
context throughout (AO2).
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of reasoning
(AO3a).
• Draws a valid and well-reasoned conclusion based on
a thorough evaluation of business information and
issues
(AO3b).
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