Business Paper 1 May 2023 with MS

Start date: -
Answer all questions.
The total marks for this paper is 50 marks. The marks for each question are shown as the
max points - use this as a guide as to how much time to spend on each question.
Answer all the questions based on the Pre-Seen Case Study. This case study is available
here as an external tool (look for one of the crossed pencil and ruler icon on the top left of your
screen). A hard copy of this will also be provided to you in the exam hall.
Show your workings in all questions that require calculations.
You may use the accompanying formula sheet. This formula sheet is available here as an
external tool (look for one of the crossed pencil and ruler icon on the top left of your screen). A
hard copy of this will also be provided to you in the exam hall.
Calculators are permitted. If you don't have your own calculator, there is also a calculator that
you can access here on DigiExam (look for one of the crossed pencil and ruler icon on the top
left of your screen).

ROBO-DELIVERYBOT
The ROBO-DELIVERYBOT company introduced a delivery app and a self-driving
delivery robot 3 years ago as a trial / test market in several cities in the UK. The robots
were specifically designed for urban spaces.
The app lets customers place orders at local grocery stores and fast food eateries. The
goods ordered are then placed in the robot self-driving mini delivery vehicles, which then
use the foot and cycle path networks around the trial cities. The customer is able to
track the order through the app. When the order arrives to the customer, the customer
has to insert a one-time passcode that opens the locked robot delivery vehicle, allowing
the customer to receive their ordered goods. The mini robot delivery vehicle then
returns back to the store / fast food outlet to pick up and deliver the next order. The
success of the trial is still under evaluation but in the US, ROBO-DELIVERYBOT
company have managed to introduce the delivery system in 25 colleges and universities
with over 1,000 mini delivery robots. The colleges and universities benefit from a
campus traffic free environment. The app has proved popular with students who are
willing to pay $2 per delivery for the convenience.
The cost of each robot is $2,000 and the mini robot delivery vehicles can run on their
batteries for 24 hours on a single charge. The marginal cost of each delivery is very
small and each mini robot delivery vehicle has a short pay back period. The
budgeted fixed costs for the next 6 month accounting period are $5,000.
Customers pay $2 per delivery and the average deliveries are forecast at 5,500 for the
6 month period. The only variable costs are $0.75 per delivery.
A marketing consultant has suggested the following demand levels if
ROBODELIVERYBOT were to change its delivery charge.

DELIVERY SELLING PRICE DEMAND LEVELS

$1.50 10,000

$1.75 7,500

$2.25 4,500

$2.50 4,000

The mini robot delivery vehicles are unique but their indirect competition is fierce in
terms of traditional delivery models like Deliveroo and Uber eats.
ROBO-DELIVERYBOT company are in the process of getting approval from the
Government to operate outside of their trial / test market.
 ROBO-DELIVERYBOT is also investigating industrial applications for their products in
the B2B market. The industrial robots can be loaded with internal mail, parts, samples
and other goods and used to ship items around industrial sites. Apart from standard use
of the robots, it can also work with B2B partners to custom make robots for their
business.
Other technologically advanced methods of delivery include drone deliveries, which
have been successfully implemented in some of the large distribution companies who
predict that by 2025, drone deliveries will make up 10% of the total delivery market.
There has been some opposition to the urban use robots from child safety groups and
cyclists who claim as the delivery app becomes more popular, the cycle paths and
footways / pavements will become a hazard.
FORMULAS

Contribution: Sales price per unit - Variable Cost per unit

Break-Even units: Fixed costs

Contribution per unit

Question 1
Max points: 1

Define stakeholders

Stakeholders are individuals associated with, who interact with or who are interested in a
business such as employees, managers, shareholders, suppliers, banks, etc.
AO1

Question 2
Max points: 2

Identify the Unique Selling Proposition (USP) of the mini robot delivery service.

innovative, efficient and eco-friendly

AO1

Question 3
Max points: 2

Identify 2 drawbacks of a sole trader / partnership as a type of business organisation.

Any 2 of the following

1. unlimited liability

2. limited access to capital

3. lack of specialists

AO1
Question 4
Max points: 4

Explain how Carroll's corporate social responsibility pyramid could be applied to the Robot delivery
company.

There are 4 levels to Carroll's CSR pyramid showing that the robot delivery service should
meet economic, legal, ethical and philanthropic expectations to be socially responsible
AO1 & AO2

Question 5
Max points: 6

Analyse an appropriate marketing mix strategy for the urban delivery robot service to appeal to an 18
- 30 demographic.

Marketing mix
Product: USP - innovative & unique, fast delivery, introduction phase of PLC,
Price: premium price for convenience of door to door service, price skimming strategy
whilst company has first mover advantage
Promotion: social media to appeal to target market, on line promotion and introductory
special offers to encourage trial
Place: limited to trial city
orders placed on line
Level Mark Descriptor
0 0 A completely inaccurate response.
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.
3 5-6 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).

Question 6
Max points: 10

Analyse 2 different methods of lean production to improve quality for the robot manufacturing division.
Any 2 of the following:-
just-in-time manufacturing
Quality circles
TQM
Kaizen
Cell production
Advantages of each to be applied to the robot delivery production unit.
Level Mark Descriptor
0 0 A completely inaccurate response
1 1 – 3 Response shows imprecise knowledge and understanding of relevant terms,
concepts, theories and models. There is very little knowledge of relevant
theory.
2 4 – 5 Response shows elements of knowledge and understanding of relevant
concepts & theories. Ideas are applied and related to the economic problem(s)
in context, although does not focus on the broad elements of the question.
Contains a narrow response or a two-stage chain of reasoning only.
3 6-7 Response shows accurate knowledge and understanding of relevant concepts
and theories.
Relevant ideas are applied and related directly to the broad elements of the
question with evidence integrated into the answer.Where appropriate,
examples and diagrams are included and applied. The analysis is clear and
logical, although it may lack balance.
4 8 - 10 Response shows precise knowledge and understanding of relevant concepts,
theories and models. Relevant ideas are effectively applied and directly linked to
the broad elements of the question. Where appropriate, examples and diagrams
are included and applied effectively. The analysis is relevant and focused
with evidence fully and reliably integrated. The response shows logical and
coherent chains of reasoning.

Question 7
Max points: 10

Analyse the financial viability of the robot delivery service by calculating the following:-

1. the break-even point

2. the margin of safety

3. the impact on the margin of safety if deliveries:-

a. fell to 4,500

b. increased to 7,500

4. if a target profit of $6,000 is required for the next accounting period, how many deliveries
wouldneed to be made?

5. using the data from the case study, work out the impact on profit of each of the proposed
differentdelivery prices.

6. from the information in question 5, what is your recommendation regarding the best
deliveryselling price?
1.break even = 4,000 units (SP 2 - VC 0.75 = Contribution of 1.25) B/E = 5,000 / 1.25 = 4,000
deliveries (1 mark)
2. MOS = 1,500 (5,500 - 4,000)
(1 mark)
3. Sales fall 4,500 MOS = 4,500 - 4,000 = 500
(1 mark)
Sales increase to 7,500 MOS 7,500 - 4,000 = 3,500
(1 mark)
4. Target profit 6,000 6,000/1.25 = 4,800 + 4,000 = 8,800
(1 mark)
5. Impact of marketing strategies
1.50 = 1.50 - 0.75= 0.75 x 10,000 (demand) - FC (5,000) = 2,500
(1 mark)
1.75 = 1.75 - 0.75= 1 x 7,500 (demand) - FC (5,000) = 2,500
(1 mark)
2.25 = 2.25 - 0.75 = 1.5 x 4.500 (demand) - FC (5,000) = 1,750
(1 mark)
2.50 = 2.50 - 0.75 = 1.75 x 4,000 (demand) - FC (5,000) = 2,000
(1 mark)
6. 1.50 or 1.75 are the best options.
(1 mark)

AO1, AO2, AO3

Level Mark Descriptor
0 0 A completely inaccurate response
1 1 – 3 Response shows imprecise knowledge and understanding of relevant terms,
concepts, theories and models. There is very little knowledge of relevant
theory.
2 4 – 5 Response shows elements of knowledge and understanding of relevant
concepts & theories. Ideas are applied and related to the economic problem(s)
in context, although does not focus on the broad elements of the question.
Contains a narrow response or a two-stage chain of reasoning only.
3 6-7 Response shows accurate knowledge and understanding of relevant concepts
and theories.
Relevant ideas are applied and related directly to the broad elements of the
question with evidence integrated into the answer.Where appropriate,
examples and diagrams are included and applied. The analysis is clear and
logical, although it may lack balance.
4 8 - 10 Response shows precise knowledge and understanding of relevant concepts,
theories and models. Relevant ideas are effectively applied and directly linked to
the broad elements of the question. Where appropriate, examples and diagrams
are included and applied effectively. The analysis is relevant and focused
with evidence fully and reliably integrated. The response shows logical and
coherent chains of reasoning.

Question 8
Max points: 15

The human resource implications of the new technology are in favour of the employer. Using one of
the motivation theories, evaluate this statement in relation to the impacts of new technology on
employee motivation in relation to the robot delivery service.
Positive impacts for employer:-
Reduced costs & 24 / 7 operational possibilities, increased efficiency.
Innovative product, unique - 1st move advantage
Negative impacts for employer:-
Acceptance by older demographics
Ability to roll out to other areas
Fear of me-too products copying technology
Damage and maintenance costs
Employee resistance
Positive aspects for employees
Removes boring aspects of job
Possibility of up-skilling to deal with high tech robots
Application of motivation theory Taylor / Maslow / Herzberg
Link to financial / non-financial incentives
Negative aspects for employees
Job losses
Limited opportunity for promotion / advancement
Arguments appear to support employer advantage but accept any well argued opinion in
favour or against.

Level Mark Descriptor

0 0 A completely inaccurate response
1 1 – 3 Response shows imprecise knowledge and understanding of relevant terms,
concepts, theories
and models.
2 4 – 5 Response shows elements of knowledge and understanding of relevant
concepts and theories. Relevant ideas are applied and related to the
problem(s) in context, although does not focus on the broad elements of the
question. Contains a narrow response or a two-stage chain of reasoning
only.
3 6 - 7 Response shows accurate knowledge and understanding of relevant concepts
and theories.Relevant ideas are applied and related directly to
the broad elements of the question with evidence integrated into the answer.
The analysis is clear and logical, although it may lack balance.
4 8-9 Response shows precise knowledge and understanding of relevant concepts,
theories and models. Relevant ideas are effectively applied and directly linked to
the broad elements of the question. The analysis is relevant and focused with
evidence fully and reliably integrated.
The response shows logical and coherent chains of reasoning.
Evaluation
Level Mark Descriptor
0 0 No evaluative comment
1 1 – 2 Response shows a generic evaluative comment without supporting evidence
to context.
Response shows no evidence of logical chain of reasoning.
2 3 – 4 Response shows evidence of evaluation of alternative approaches/methods
which is unbalanced leading to unsubstantiated judgments. Evaluative comment
provided, but with partially developed chain of reasoning.
3 5–6 Response shows evidence of evaluation supported by relevant reasoning and
appropriate reference to context. Evaluation is balanced and considers the
broad elements of the question, leading to a substantiated judgement.