Mark Scheme (Results)

Summer 2019

Pearson Edexcel International Advanced

Subsidiary In Business (WBS12)
Unit 2 Managing business activities
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Summer 2019
Publications Code WBS12_01_1906_MS
All the material in this publication is copyright
© Pearson Education Ltd 2019
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) Knowledge 2
Up to 2 marks for defining the term ‘venture capital’, e.g.
A method/ source of finance to fund a business (1) where the
risk is greater for the investor (1)

NB: Reward any other suitable alternative. Do not award marks

for examples (2)

Question
Answer Mark
Number
1(b) Knowledge 1, Application 2, Analysis 1

Quantitative skills assessed:

QS2: calculate, use and understand percentages and
percentage changes

Knowledge
1 mark for identifying the formula for gross profit margin:
• Gross profit / Revenue x 100 (1)

Application
Up to 2 marks for selecting the correct data from Extract B:
• 15 000 000 (1) / 36 000 000 (1) x 100

Analysis
1 mark for calculating the gross profit margin:
• = 41.67% to two decimal places (1)

NB: If no working is shown, award marks as follows:

• If the answer given is 41.67% award 4 marks
• If the answer given is 41.7% award 3 marks
• If the answer given is 41.67 award 3 marks
• If the answer given is 41.7 award 2 marks
(4)
Question
Answer Mark
Number
1(c) Knowledge 2, Application 2, Analysis 2
Knowledge
Up to 2 marks for defining, e.g.
• A document designed to provide information about a
new business (1) to persuade financial backers to invest
(1)
OR
For stating up to two advantages, e.g.
• To gain finance (1)
• To show how the business will be run (1)

Application
Up to 2 marks for answers contextualised to Zwift, e.g.
• Zwift first launched the program with an investment of
$3m (1)
• Zwift has 300,000 riders from over 150 countries (1)

Analysis
Up to 2 marks for reasons/causes/consequences for Zwift, e.g.
• As a result of producing a business plan, Zwift may have
been able to obtain enough finance to allow them to
launch the program (1)
• Potential problems could have been found and resolved
by producing a business plan, helping the business to
be successful (1) (6)
Question
Indicative content
Number
1(d) Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with
the general marking guidance. The indicative content below exemplifies some
of the points that candidates may make but this does not imply that any of
these must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• Zwift is a private limited company, meaning it has limited liability

• Limited liability means the owners of the business are only liable for
the money they have invested in the business
• This means Jon Mayfield and Eric Min were able to take more risks
without the worry they may lose their personal possessions if the
venture failed
• Zwift may have grown to have more than 300,000 customers in over
150 countries because the owners were more prepared to take the
risks
• However, setting up Zwift so it has limited liability would have taken
longer and been more complicated than if Jon and Eric operated as a
partnership
• With less concern over running up huge debts, if problems occur in
the future, Zwift may not be able to repay their creditors and could
go into liquidation
Level Mark Descriptor
0 No rewardable material.
1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
2 3–5 Accurate knowledge and understanding.
Applied accurately to the business and its context.
Chains of reasoning are presented, showing cause(s) and/or
effect(s) but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced and
unlikely to show the significance of competing arguments.
3 6–8 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative
and/or qualitative information, and shows an awareness of
competing arguments/factors.
Question
Indicative content
Number
1(e) Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with
the general marking guidance. The indicative content below exemplifies some
of the points that candidates may make but this does not imply that any of
these must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• A competitor is a business in the same market that offers a similar

product or service
• Zwift doesn’t currently have any direct competitors
• A new competitor would mean Zwift would need to ensure its
program was competitive in terms of price and quality
• It may mean it would be less likely to raise its price of $10 per month
to its riders as the new competitor may charge less
• The new competitor may have new maps, roads and landscapes to
attract the customers and so Zwift may have to increase the
availability of its game, or change it to make it more competitive
• However, Zwift has had several years to build up a strong customer
base of more than 300,000 riders meaning it is well known in the
market
• It would be difficult for a competitor to build up enough custom to
attract riders already subscribing to Zwift, as they have the
opportunity to ride with cyclists in over 150 countries
Level Mark Descriptor
0 No rewardable material.
1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
2 3–4 Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented, but may be assertions or
incomplete.
A generic or superficial assessment is presented.
3 5–7 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative
and/or qualitative information, though unlikely to show the
significance of competing arguments.
4 8–10 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised,
using quantitative and/or qualitative information and shows an
awareness of competing arguments/factors, leading to a supported
judgement.
Question
Answer Mark
Number
2(a) Knowledge 2
Up to 2 marks for defining the term ‘consumer trends’, e.g.
Habits or behaviour (1) of those involved in the use of goods and
services (1)

NB: Reward any other suitable alternative. Do not award marks

for examples (2)

Question
Answer Mark
Number
2(b) Knowledge 1, Application 2, Analysis 1

Quantitative skills assessed:

QS5: calculate, cost, revenue, profit and break-even

Knowledge
1 mark for identifying the formula for gross profit:
• Revenue – direct costs (1)

Application
Up to 2 marks for selecting the correct data from Extract D:
• 22 386 800 000 (1) - 9 038 200 000 (1)

Analysis
1 mark for calculating the gross profit:
• = $13 348 600 000 (1)

NB: If no working is shown, award marks as follows:

• If the answer given is $13 348 600 000 award 4 marks
• If the answer given is 13 348 600 000 award 3 marks
(4)
Question
Answer Mark
Number
2(c) Knowledge 2, Application 2, Analysis 2
Knowledge
Up to 2 marks for defining quality management, e.g.

• The process of a business maintaining a desired level of

excellence in a product/service (1) by paying attention
to each stage of the process (1)

OR

For giving two reasons, e.g.

• Customers may spend more if they feel more likely to
receive good service/product (1)
• It may earn Starbucks a good reputation (1)

Application
Up to 2 marks for answers contextualised to Starbucks, e.g.
• Starbucks is focused on maintaining great tasting coffee
(1)
• Starbucks is the 2nd largest coffee chain in the UK behind
Costa (1)

Analysis
Up to 2 marks for reasons/causes/consequences for providing
quality control, e.g.
• The customers will be more confident they will be
served quality coffee and so provide repeat custom (1)
• Starbucks may gain a positive reputation and increase
market share, challenging Costa (1) (6)
Question
Indicative content
Number
2(d) Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with
the general marking guidance. The indicative content below exemplifies some
of the points that candidates may make but this does not imply that any of
these must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• Budgeting provides a target for costs or revenue that a business or

department must aim to reach over a given period of time
• It would allow each Starbucks coffee house to control its spending so
it can aim to keep costs down when buying coffee from suppliers
• It would help managers of each Starbucks coffee house to measure
performance and compare revenue to see how well they were
performing, for example month by month, or with Starbucks in other
towns
• This may help managers to meet business objectives such as profit
maximisation or sales maximisation (increasing revenue from
$22 386 800 000)
• However, there is no guarantee these objectives will be met and
Starbucks may have wasted time (which they are likely to be short of
during busy periods) and money in preparing the budgets
• It may depend whether the budgets are prepared in conjunction
with one another. If sales revenue from selling the coffee exceeds
expectation it may be that costs have to be higher to cater for this
extra demand
• There may be other influences which can lead to profit
maximisation, such as increased demand due to a successful
marketing campaign or environmentalists choosing Starbucks due to
its stance on coffee cups
Level Mark Descriptor
0 No rewardable material.
1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
2 3–5 Accurate knowledge and understanding.
Applied accurately to the business and its context.
Chains of reasoning are presented, showing cause(s) and/or
effect(s) but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced, and
unlikely to show the significance of competing arguments.
3 6–8 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative
and/or qualitative information and shows an awareness of
competing arguments/factors.
Question
Indicative content
Number
2(e) Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with
the general marking guidance. The indicative content below exemplifies some
of the points that candidates may make but this does not imply that any of
these must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• Legislation is the making of laws for people to follow

• The proposed legislation is to add 25p to the price of disposable
coffee cups, therefore making it more expensive for people to buy
coffee in coffee houses
• This could reduce demand for coffee, especially as 25p would add
10% to the average cost of the coffee (£2.50)
• Starbucks would need to implement the legislation which could be
time consuming and costly to set up, as well as lead to a loss in
revenue and profit
• Separating revenue for Starbucks and that for the environmental
charities will also take time, which may adversely affect the efficiency
of Starbuck’s operation
• However, the additional charge would apply to all coffee houses and
so, if the demand is still there, it will not make much difference to
Starbucks’ revenue
• Starbucks already offers incentives for people to be more
environmentally friendly, with discounted prices and options to buy
reusable cups. Customers using their own cups are likely to reduce
costs for Starbucks
• As Starbucks was used to run the test scheme, it may be more
favourable towards the idea
• The similar idea of 5p additional charge on a plastic bag received a
favourable response and so consumers of coffee may also respond
favourably to this and still buy coffee at Starbucks
Level Mark Descriptor
0 No rewardable material.
1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
2 3–4 Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented but may be assertions or
incomplete.
A generic or superficial assessment is presented.
3 5–7 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative
and/or qualitative information, though unlikely to show the
significance of competing arguments.
4 8–10 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised,
using quantitative and/or qualitative information, and shows an
awareness of competing arguments/factors, leading to a supported
judgement.
Question
Indicative content
Number
3 Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with
the general marking guidance. The indicative content below exemplifies
some of the points that candidates may make but this does not imply that
any of these must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• The exchange rate is the price of one currency in terms of another
• Depreciation of the pound sterling (£) means it can buy less of
another currency than previously; it has gone down in value
• The pound sterling (£) depreciated to €1.19 and then €1.14 following
the EU referendum in 2016 (from €1.40)
• This meant that overseas customers could buy more pounds (£) with
their own currencies, therefore making British goods cheaper to
overseas buyers
• When the currency is weaker, it can be easier to offer competitive
prices to overseas customers who might not be able to buy the
same goods or services, produced domestically, any cheaper
• A survey has shown demand for British products increased for many
small to medium-sized businesses between 2016 and 2017. This
coincides with the timing of the EU referendum and subsequent
depreciation of the pound (£)
• If British products are cheaper to overseas buyers, they are likely to
increase demand for them, thus potentially being the reason for the
increase between 2016 and 2017
• However the nature of the specific product on offer is also a factor.
A product or service not commonly found in the target country’s
market, a unique or high quality product is more likely to attract
custom regardless of price
• Positive perceptions of the quality of British products, a reputation
for good customer service, and the familiarity of many British
‘brands’ such as the BBC, music artists and the Royal Family were all
quoted as reasons British exports sell, to give examples of the above
• We do not know if the British firms kept the prices constant
following the depreciation of the pound (£). If they imported raw
materials they may have increased prices to cover higher costs.
• The survey was only conducted on small to medium-sized
businesses and does not take into account of large businesses. This
possibly means there has not been an increase overall in demand
for British products during the period
• Other factors such as high inflation in the target country or rising
costs of production could have contributed to overseas customers
increasing demand for British products
• Overall it is likely a combination of the pound (£) depreciating and
factors such as improved quality and the reputation of British
brands led to the increase in demand for the British products shown
Level Mark Descriptor
0 No rewardable material.
1 1–4 Isolated elements of knowledge and understanding.
Weak or no relevant application of business examples.
An argument may be attempted, but will be generic and fail to
connect causes and/or consequences.
2 5–8 Elements of knowledge and understanding, which are applied to
the business example.
Arguments and chains of reasoning are presented but connections
between causes and/or consequences are incomplete. Attempts to
address the question.
A comparison or judgement may be attempted but it will not
successfully show an awareness of the key features of business
behaviour or business situation.
3 9–14 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Uses developed chains of reasoning, so that causes and/or
consequences are complete, showing an understanding of the
question.
Arguments are well developed.
Quantitative and/or qualitative information is introduced in an
attempt to support judgements, a partial awareness of the validity
and/or significance of competing arguments and may lead to a
conclusion.
4 15–20 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Uses well-developed and logical, coherent chains of reasoning,
showing a range of cause and/or effect(s).
Arguments are fully developed.
Quantitative and/or qualitative information is/are used well to
support judgements. A full awareness of the validity and
significance of competing arguments/factors, leading to balanced
comparisons, judgements and an effective conclusion that
proposes a solution and/or recommendations.
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