Business Management Paper 2 SL Markscheme
Business Management Paper 2 SL Markscheme
Markscheme
November 2017
Business management
Standard level
Paper 2
25 pages
–2– N17/3/BUSMT/SP2/ENG/TZ0/XX/M
The markbands and assessment criteria on pages 3–5 should be used where indicated in
the markscheme.
0 The work does not reach a standard described by the descriptors below.
Criterion B: Application
This criterion addresses the extent to which the candidate is able to apply the given concepts
and the relevant business management content (theories, techniques or tools, depending on
the requirements of the question) to his or her chosen real-world organization(s). The real-
world organization(s) must not be the organization featured in the prescribed case
study for paper 1.
Criterion D: Structure
This criterion assesses the extent to which the candidate organizes his or her ideas with
clarity, and presents a structured piece of writing comprised of:
an introduction
a body
a conclusion
fit-for-purpose paragraphs.
Section A
1. (a) Describe one reason why brand loyalty would be important to PP. [2]
Brand loyalty would be important to PP given that they operate in a local market
with a number of competitors and that the prices they charge are higher. Given
this fact, it would be critical for PP to have brand loyalty or their sales could fall
(although not on the stimulus, sharp-eyed candidates may spot that PP’s pies are
price inelastic given the additional information for 2018).
Award [1] mark for conveying some understanding that PP has considerable competition or
that it charges higher prices than most of its competitors. If a candidate conveys an
understanding of both of those ideas, award [2] marks.
A candidate can achieve one or two marks by making other accurate assertions about brand
loyalty, provided they are relevant and logically reasonable (for example, brand loyalty
assures some continuity of revenue or stable revenue). Award up to a maximum of [2].
(b) Construct a profit and loss account for PP for the year ending 30 April 2017
based on the figures in Table 1 (show all your working). [4]
Profit and loss account for PP for year ended 30 April 2017:
$
Sales (8000 × $4) 32 000
Cost of goods sold (8000 × 1.75) 14 000
Gross profit 18 000
Expenses
Candidates do not have to list all types of expenses (electricity, rent, promotion)
under expenses, as the IBO format does not specify different items. Therefore,
working of electricity and rent per year are not expected.
(c) Construct a forecasted profit and loss account for PP for the year ending
30 April 2018 based on the figures in Table 2 (show all your working). [4]
Profit and loss account for PP for year ended 30 April 2018:
$
New sales quantity = 8000 × 1.2 9600
New price ($4 – 30 %) = $4 – 1.2 = $2.8
Expenses
N.B. Do not double penalize candidates if they use the same incorrect format
from part (b).
Candidates do not have to list all types of expenses (electricity, rent, promotion)
under expenses, as the IBO format does not specify different items. Therefore,
working of electricity and rent per year are not expected.
Supporting working is expected with the calculation of total revenue/costs
/interest/tax are given.
Please note:
Employees are remunerated based on the duration of time that they work.
Award [1] for a vague description. Award [2] for a clear description similar to the
answer above.
(b) Calculate the break-even quantity for Moverse (show all your working). [2]
Fixed costs
Break-even level of output =
Selling price – variable cost per unit
60 000
145 – 45
Award [1] for correct working and [1] for the correct answer. Award up to a
maximum of [2]. Do not penalize candidates who omit the word “unit” from
their answer.
– 10 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
(c) Construct a fully labelled break-even chart, to scale, for Moverse if 800
employees enroll on Moverse’s training programmes. [4]
Award a maximum of [2] if the chart is not neat, not drawn with a straight edge, or
is not to scale. If a candidate “free hands” their break-even chart, the
maximum they can receive is [2]. For two marks, the break-even chart
should be largely correct – axes correctly labelled. Total revenue and Total
cost lines identified and largely correct. For example, Total revenue line
should start at (0,0) and total cost line should start where the Fixed cost
line intersects the y axis.
(d) Calculate the profit or loss if 800 employees enroll on Moverse’s training
programmes (show all your working). [2]
OR
Award [1] for correct working (any method is acceptable as long as working is
shown) and [1] for the correct answer. Award up to a maximum of [2].
– 12 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
Section B
3. (a) Define the term diseconomy of scale. [2]
Award [1] for a basic definition that conveys partial knowledge and understanding
of the idea that a business can develop inefficiencies as it grows in size.
Award [2] for a full, clear description that conveys knowledge and understanding
similar to the answer above. To receive [2], candidates must express the idea of
an increase in per unit cost as a business increases in size. In some instances, a
candidate does not have literally to say “per unit”. For example, if a candidate
says “average cost” and the response is otherwise sufficiently strong so that a
reader can know from context that the candidate intends per unit or average unit
cost, award [2].
(b) Using the table, construct a product position map/perception map for all four
companies. [4]
Award [1] for the overall layout of the map with both axes correctly labelled
(price: high or low; quality: high or low).
Award [2] for a correctly labelled position map with two of the companies properly
placed.
Award [3] for a correctly labelled position map with three of the companies
properly placed.
– 13 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
Award [4] for a correctly labelled position map with all four companies properly
placed.
If a candidate correct produces a position map, correctly labels the axes, places
DE correctly on the x axis (if the position map is oriented as above), and has
companies A, B, and C correctly placed in terms of price but slightly off-center in
terms of quality, award [3] provided that A, B, and C are vertically aligned (or
horizontally aligned if the map is oriented the other way).
In this case, the candidate has made one conceptual error – where to place
medium quality – and repeated it two more times. Do not double and triple
penalize. In effect, the candidate has drawn a correct position map and placed
three companies correctly, assuming a “conceptual OFR”.
(c) (i) Draw and label a product life cycle curve. [2]
N.B. If a candidate has at least four stages correctly drawn and identified
and labeled correctly the x axis but labels the y axis “market share”,
award [2].
DE’s sales appears to have been at a maturity. Then, after the hackers,
sales began to decline industry-wide. By developing an innovation that
prevented the hackers from affecting the security of their product, DE was
able to extend the life of its product. Sales not only returned to prior levels
but actually began to increase.
(d) With reference to DE, discuss the merits of small organizations compared to
large organizations. [10]
In the case of DE, the above advantages would in general apply. However, the
circumstances can be further nuanced based upon the stimulus. Traditionally,
the company was small and had a focus on quality, arguably its unique selling
point. As the company grew, many insiders worried that DE would lose its focus
on quality. Now, if it is to have cachet, it will have to rebrand itself and base its
USP more on the security that its product offers.
A balanced response is one that provides at least two arguments for and two
arguments against the option.
For one relevant issue that is one-sided, award up to [3]. For more than one
relevant issue that is one-sided, award up to a maximum of [4].
– 15 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
4. (a) State any two stages of the working capital cycle. [2]
Candidates are not expected to label the stages exactly as above. These
responses may be brief and still get marks. Candidates need merely state the
stages with no further description or elaboration.
Award [1] for each stage of the working capital cycle stated up to a maximum
of [2].
(i) the payback period for the €44 million investment in new equipment based
on the forecasted increase in net cash flow (show all your working). [2]
= 5.5 years
Award [1] for working and [1] for the correct answer, up to a maximum of [2].
(ii) the average rate of return (ARR) based on an annual increase in net cash flow of
€6000 and assuming an asset life of the new equipment of eight years (show all
your working). [2]
Award [1] for working and [1] for the correct answer, up to a maximum of [2].
– 17 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
(c) With reference to GT, explain one advantage and one disadvantage of
debt factoring. [4]
Mark as 2 + 2.
Mark as 2 + 2.
Award [1] for each correct advantage / disadvantage identified or described and
[1] for a relevant explanation with application to GT. Award up to a maximum
of [2].
[2] cannot be awarded per advantage / disadvantage if the response lacks either
explanation and / or application.
For example:
For an identification or a description of an advantage / disadvantage with or
without application [1].
For explanation of an advantage / disadvantage with no application [1].
For explanation of an advantage / disadvantage and application [2].
– 18 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
(d) Examine Elaine’s proposals to cut back on “GT’s commitment to its employees
and CSR practices”. [10]
The main thrust of this question is for candidates to consider the difficult financial
situation that GT has gotten itself into and how the company may try to resolve
the issue. The CFO’s idea to cut back on GT’s commitments to employees and
to CSR rests on the notion that commitments to employees and CSR are costly
and that saving those expenses could help pay for the commitment and generate
profits to support much needed working capital. However, the stimulus makes
clear that commitments to employees and CSR are core values of the company
and possibly the very basis for the success of the company. To eliminate them or
weaken them may cause other (costly) issues for the business.
A balanced response is one that provides at least two arguments for and two
arguments against the proposal.
For one relevant issue that is one-sided, award up to [3]. For more than one
relevant issue that is one-sided, award up to a maximum of [4].
Maximum
Employees CSR Practices Judgments/conclusion
Mark award
One or the other in an unbalance way or
3 treating both as together in an N/A
unbalanced way.
4 Unbalanced Unbalanced N/A
Treating both together in a balanced way.
5 One balanced and one unbalanced N/A
No judgments/conclusions
OR
6 Both balanced
judgements are simple and
unsupported
Judgments/conclusions
based upon analysis and
7–8 Balanced
explanation in the body of
the response
Judgments/conclusions
based upon analysis and
9–10 Balanced
explanation in the body of
the response
If a candidate does treats the two issues as one, maximum award [4].
– 20 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
Ethical objectives are the goals of a business based on a set of values or moral
beliefs. They should cover all the actions of an organization and guide its
decision-making process and strategies. Ethical objectives at GC: using
environmentally friendly products to reduce pollution; paying fair wages.
N.B. no application required. Do not credit examples alone. The candidate must
provide a definition.
Award [1] for a basic definition that conveys partial knowledge and understanding
(Ethical objectives are the goals of a business based on a set of values or moral
beliefs).
Award [2] for a full definition that conveys knowledge and understanding similar to
the answer above, especially the idea that ethical objectives are more expansive
than doing some ethically upstanding act (giving to a charity, paying for employees’
attendance at night school, etc.)
(b) Explain one advantage and one disadvantage for GC of recruiting gardeners
externally. [4]
Mark as 2 + 2.
[2] cannot be awarded per advantage / disadvantage if the response lacks either
explanation and / or application.
– 21 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
For example:
For an identification or a description of an advantage / disadvantage with or
without application [1].
For explanation of an advantage / disadvantage with no application [1].
For explanation of an advantage / disadvantage and application [2].
(c) Explain one advantage and one disadvantage for GC of using off-the-job training
for the cleaners who would like to become gardeners. [4]
Advantages include:
An external provider is likely to have more expertise and knowhow in
gardening than GC.
It could help motivate cleaners who may see training to become a gardener as
a form of promotion due to the higher wage paid.
Disadvantages include:
Assuming that the training will take place during work time, there will be some
disruption to productivity in addition to the cost incurred for the training itself.
It is difficult for GC to monitor what the trainees have learnt. Will there be an
examination at the end of the course?
Mark as 2 + 2.
[2] cannot be awarded per advantage / disadvantage if the response lacks either
explanation and / or application.
For example:
For an identification or a description of an advantage / disadvantage with or
without application [1].
For explanation of an advantage / disadvantage with no application [1].
For explanation of an advantage / disadvantage and application [2].
– 22 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
(d) With reference to two motivation theories, examine the motivation of cleaners
at GC. [10]
GC wants to recruit professional gardeners and pay them higher wages. This
decision is causing resentment among current cleaners at GC.
Candidates may refer to the following motivation theories: the works of Taylor,
Maslow, Herzberg, Adams, Pink.
Candidates are expected to use two theories in order to examine the motivation
of cleaners. Candidates are tested on their ability to apply theories with constant
use of, and reference to, the information from the stimulus.
Accept any relevant theory that is applied to the information given in the
stimulus material.
Theorists and theories should be applied not just mentioned. If a candidate does
not apply the theories, maximum award [2].
For one relevant issue that is one-sided, award up to [3]. For more than one
relevant issue that is one-sided, award up to a maximum of [4].
Maximum
Theory #1 Theory #2 Judgments/conclusion
Mark award
3 One theory, one consideration N/A
One theory, two considerations
4 Or N/A
Two theories, one consideration each
One theory, two considerations and Second
5 N/A
theory, one consideration
No judgments/conclusions
OR
6 Two theories, two considerations each
judgements are simple and
unsupported
Judgments/conclusions
based upon analysis and
7–8 Balanced
explanation in the body of the
response
Judgments/conclusions
based upon analysis and
9–10 Balanced
explanation in the body of the
response
– 24 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
Section C
Marks should be allocated using the assessment criteria on pages 6 to 7 with further guidance below.
N.B. examiners should include a breakdown of each mark awarded per criterion and a brief note
explaining the mark awarded at the end of each candidate’s response.
The main aim of paper 2 (SL or HL) section C is to assess candidates’ understanding of the six major
concepts (change, culture, ethics, globalization, innovation, strategy) within a business
context. Candidates are to demonstrate their understanding through an organization of their choice.
The expectation of the use of an organization is to allow assessment of the depth of candidates’
understanding through their ability to apply the concepts and their knowledge.
Assessment of candidates’ knowledge of the organization itself is not an aim of the assessment. If a
candidate makes minor factual errors and these minor errors have no genuine bearing on whether the
candidate understands the concepts, examiners should not penalize. For example, a minor error of
historical fact (the year when a company was founded, for example, or the year in which a change was
implemented) that has no genuine bearing on candidates’ understanding of the concepts does not
warrant penalty.
8. With reference to an organization of your choice, discuss the ways in which ethics and
change can influence human resource management. [20]
It is expected that the candidate explains the chosen theoretical direction / content of their response.
Section C
Additional guidance in relation to the assessment criteria
For each criterion, the aim is to find the descriptor that conveys most accurately the level attained by the
candidate, using the best-fit model. It is not necessary for every single aspect of a level descriptor to be
met for that mark to be awarded.
The highest level descriptors do not imply faultless performance and should be achievable by a
candidate.
A candidate who attains a high level of achievement for one criterion will not necessarily reach high
levels of achievement for the other criteria and vice versa.
– 25 – N17/3/BUSMT/SP2/ENG/TZ0/XX/M
Where the question asks for impacts of two concepts on content, examiners must allow for
unbalanced treatment of the two concepts throughout a candidate’s response. One concept may be
more significant than the other.
In section C, the question rubric explicitly states that “organizations featured in sections A and B and in
the paper 1 case study may not be used as a basis” to candidate’s answers to questions 6, 7
and 8. When this happens please award marks as follows:
Criterion A: award a maximum of [1]. The business management content cannot be relevant if the
organization is fictitious.
Criterion B: 0 marks – there is no connection to a “real-world organization”.
Criterion C: award a maximum of [1]. The arguments cannot be relevant if the organization is
fictitious.
Criterion D: mark as normal.
Criterion E: award up to a maximum of [1]. The individual and/or group perspective(s) cannot be
relevant if the organization is fictitious.
Criterion B
For [2]: “…connection is not developed” should be treated the same as superficial.
Criterion C
Questions 6 to 8 require consideration of the impact of one concept on a second concept – therefore
accept 2 + 2 arguments for a balanced response.
Justification is through logic or data.
For [2] there is no balance as there are no counter arguments at all, or the arguments are all one-
sided then this would be unjustified.
For [3] there is some balanced arguments – some of which are justified.
Criterion D
Introductions need to be concise and related to the question.
The candidate’s response does not to have explicit headings for each structural element.
A body is the area in which the substance of arguments occur. It is usually located between the
introduction and the conclusion.
Fit-for-purpose paragraph means that ideas are presented in a clear academic way.
For example, one idea per paragraph.
Criterion E
One example of an “individual” could be an individual consumer or an individual manager. However
this could not be considered with a “group” of consumers or a management team.
For [4], a balanced response: need to look at the perspectives of both individual and group(s). The
chosen individual, group needs to be applicable and relevant to the question with specific explanation.
Candidates need to go beyond stating the stakeholder.
Candidates need not explicitly say “stakeholder”.