Cambridge IGCSE™: Business Studies 0450/13 October/November 2021

Cambridge IGCSE™
BUSINESS STUDIES 0450/13

Paper 1 Short Answer and Data Response October/November 2021
MARK SCHEME
Maximum Mark: 80
Published
This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.
Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.
Cambridge International will not enter into discussions about these mark schemes.
Cambridge International is publishing the mark schemes for the October/November 2021 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.
This document consists of 24 printed pages.
© UCLES 2021 [Turn over

0450/13 Cambridge IGCSE – Mark Scheme October/November 2021
PUBLISHED
Generic Marking Principles
These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.
GENERIC MARKING PRINCIPLE 1:
Marks must be awarded in line with:
• the specific content of the mark scheme or the generic level descriptors for the question
• the specific skills defined in the mark scheme or in the generic level descriptors for the question
• the standard of response required by a candidate as exemplified by the standardisation scripts.
Marks awarded are always whole marks (not half marks, or other fractions).
Marks must be awarded positively:
• marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond the
scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
• marks are awarded when candidates clearly demonstrate what they know and can do
• marks are not deducted for errors
• marks are not deducted for omissions
• answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.
Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.
© UCLES 2021 Page 2 of 24

PUBLISHED
Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).
Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)
1 Components using point-based marking:

• Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.
From this it follows that we:
a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)
2 Presentation of mark scheme:

• Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
• Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
• Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
• The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
• If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
• Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
• Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.
4 Annotation:
• For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
• For levels of response marking, the level awarded should be annotated on the script.
• Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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Question Answer Marks Notes
1(a) Define ‘private limited company’ 2
Award 2 marks for a full definition. Award 1 mark for a partial definition.
A business owned by shareholders, but they cannot sell shares to the

public. [2]
OR A business owned by shareholders, but they can only sell shares to

friends or family. [2]
OR Often a small to medium-sized business owned by shareholders who

have limited liability. The company cannot sell its shares to the general
public. [2]
Partial definition e.g. have limited liability [1] OR can sell shares [1]
1(b) Define ‘average cost’. 2
Total cost of production divided by total output [2]
OR The cost of producing a single unit of output [2]
Partial definition e.g. cost per unit [1]

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1(c) Outline two ways VDN could be ethical when producing its products. 4 Note: To use words from the stem as
application, the reference must be
Award 1 mark for each relevant way. appropriate (i.e. make sense) in relation
to the point being made.
Award 1 mark for each relevant reference to this business.
The following words are likely to be
Points might include: appropriate for this question:
• Pay fair wages [k] to its 380 employees [app] • Factory
• Source environmentally friendly products / buy local / recycle / reduce • Office equipment or examples such
waste [k] in its factory [app] as pens/paperclips
• Not use child labour / not buy from producers using child labour [k] • Import all its raw materials
when importing materials [app] • 380 employees
• Pay suppliers a fair price [k] for pens/paper clips [app] • Kaizen
• Pay suppliers on time [k] • Average cost
Other appropriate responses should also be credited. Other appropriate examples in context
can still be credited.
Do not award answers which outline

legal factors such as pay minimum wage.

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1(d) Explain one advantage and one disadvantage to VDN of introducing 6 Note: To use words from the stem as
Kaizen. application, the reference must be
appropriate (i.e. make sense) in relation
Award 1 mark for identification of each relevant advantage/disadvantage to the point being made.
(max 2).
The following words are likely to be
Award 1 mark for each relevant reference made to this business (max 2). appropriate for this question:
• Factory
Award 1 mark for each relevant explanation (max 2). • Office equipment or examples such
as pens/ paperclips
Points might include: • 380 employees
• Reduce average costs
Advantages: • Ethical (objective)
• Increase productivity [k] which helps lower average costs [app] and
could improve its profit margin [an] Other appropriate examples in context
• Work in progress is reduced [k] reducing inventory costs [an] can still be credited.
• Can reduce amount of space needed for production [k] decreasing rent
costs [an]
• Improved layout / combining of jobs [k] in the factory [app] can release
some employees to do other jobs [an]
• Help motivate employees (as involved in change) [k] leading to less
absenteeism / higher productivity [an] of its 380 employees [app]
Disadvantages:
• Only designed to produce small changes / no radical changes [k] so will
not gain any significant increase in output [an] of office equipment [app]
• Over time it is difficult to identify (extra) improvements [k] which can
demotivate employees [an]
• Workers may need training [k] which increases costs [an]
• Not all employees may want/able to implement Kaizen [k]
• Meetings take time [k] which could decrease output [an]
Other appropriate responses should also be credited.

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1(e) Do you think off-the-job training is the best method for a large 6 This is a general question so there are
business to use when introducing new machinery? Justify your no marks for application.
answer.
To gain both evaluation marks response
Award up to 2 marks for identification of relevant points. must clearly relate to a large business.
Award up to 2 marks for relevant development of points.
Award 2 marks for a justified decision as to whether off-the-job training is

the best method of training for a large business to use when introducing new
machinery.
Points might include:
Off-the-job
• Can focus on training [k] so less likely to make mistakes [an]
• Access to up-to-date knowledge [k]
• May have to pay more / high cost of specialists [k]
• Business may not have the skills to train its workers [k]
On-the-job [k]
• Still work while training so output / production does not stop [an]
• Cheaper than off-the-job [an]
• Workers might not have the skills to train others (as its new machinery)
[an]
• Employees learn way the business want them to / can control what is
taught [an] so standards are easier to maintain [an]
• Slows down work of experienced worker [an]

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1(e) Other appropriate responses should also be credited.
Justification might include:
Off-the-job is helpful as workers can focus on training [k] so less likely to

make mistakes [an]. This is likely to be better than on-the-job training [k]
even though some output is still produced [an]. This is because existing
employees may not have any knowledge of the new equipment so off-the-
job training is worth the extra cost [eval] to make sure workers use
machinery correctly and as a result avoid costly mistakes. [eval]

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2(a) Define ‘unemployment’ 2
When people want to work but cannot find a job [2]
OR The proportion or percentage of the population that are capable of

working but are unable to find a job [2]
Partial definition e.g. people have no job [1]
2(b) Identify one cash inflow and one cash outflow a business might have. 2 Only award the first response given for
cash inflow/outflow.
Award 1 mark per cash inflow/outflow.
Cash inflows might include:

• Money from cash/credit sales, sale of fixed assets, money received
from bank loan / overdraft / other sources of finance
Cash outflows might include:

• Payments to employees, rent paid, interest payments, payments to
suppliers, tax payments, dividend payments

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2(c) Outline one advantage and one disadvantage to Asmaa of using a 4 Note: To use words from the stem as
government grant as a source of finance application, the reference must be
Award 1 mark for each relevant advantage/disadvantage. to the point being made.
Award 1 mark for each relevant reference to this business. The following words are likely to be
appropriate for this question:
Points might include: • Car repair
• Small (business)
Advantages • New/start-up (business) / when
• No need to repay [k] by the car repair business [app] started 4 years ago
• No finance cost / no interest to pay [k] which could help the cash-flow • Cash-flow forecast / cash inflow
forecast [app]
Other appropriate examples in context
Disadvantages: can still be credited.
• May not provide full amount needed [k] when she started 4 years ago
[app]
• May be restrictions about how it is used / cannot use the money how
you want to [k]
• Can take time to apply/obtain [k]

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2(d) Explain how the following changes might affect Asmaa’s cash-flow 6 Note: To use words from the stem as
forecast application, the reference must be
Award 1 mark for identification of each relevant effect [max 2]. to the point being made.
Award 1 mark for each relevant reference made to this business [max 2]. The following words are likely to be
Award 1 mark for each relevant explanation [max 2]. • Car repair (business)
• 3/full-time employees
Points might include: • Well-motivated / motivated
employees
Closure of competitors: • Correct use of information in table
• Could increase customers/demand [k] for the car repair business [app] 2.1
increasing cash inflows [an]
• Could increase prices [k] which may lead to higher cash inflow [an] than Other appropriate examples in context
$40 000 in March [app] can still be credited.
Increase in minimum wage:

• May increase costs [k] to her 3 employees [app] which will increase
cash outflow [an]
• No effect [k] as may already pay them a higher amount [an] as she
wants to keep them well-motivated [app]

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2(e) Explain two non-financial methods a small tertiary sector business 6 This is a general question so there are
could use to keep its employees well-motivated. Justify which method no marks for application.
should be chosen.
Award up to 2 marks for identification of relevant points.
Award 2 marks for a justified decision as to which is the best method for a
small tertiary sector business to use to keep its employees well-motivated.

• Job rotation [k] as switching tasks can make work more interesting [an]
• Job enrichment [k] as workers feel they have been given more
responsibility / more important [an]
• Delegation/empowerment [k] so workers feel more important/valued
[an]
• Praise [k] helps employees meet their esteem needs [an]
• Employee of the month awards [k] recognition of hard work /
outstanding service [an]
• Provide opportunities for promotion [k]
• Team working [k]
Justification might include:
Praise [k] helps employees meet their esteem needs. [an] Another method
is job rotation [k]. Switching between tasks can help keep the work
interesting. [an] I think praise is the better option as the problem with job
rotation is whether a small tertiary business may not have sufficient tasks to
be able to rotate everyone [eval] whereas praise can easily be offered to
everyone which can help keep everyone motivated rather than just a few.
[eval]

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3(a) Define ‘economic growth’ 2
When a country’s GDP increases more goods and services are produced
than in the previous year [2]
Partial definition e.g. an increase in a country’s spending [1]
OR Increase in GDP [1]
3(b) Define ‘secondary market research’. 2 Do not award desk research as this is an
alternative name.
Do not award examples as this does not
Uses information that has already been collected and is available for use by define the term.
others [2]
Do not award answers that simply define
OR The collection of data from secondhand sources / data collected by market research e.g. information about
other agencies / businesses [2] the market / customer needs [0]
Partial definition e.g. information already collected [1]

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3(c) Outline how providing a good quality service could help Samuel’s 4 Note: To use words from the stem as
business increase added value. application, the reference must be
Award 1 mark for identification of each relevant point (max 2). to the point being made.
Award 1 mark for each relevant reference made to this business (max 2). The following words are likely to be
Points might include: • Plumbing or related words such as
• Quality service can mean customers are willing to pay higher price [k] bathrooms
for a good plumber [app] which increases the gap between price and • Used all his savings / $500
the cost of inputs [k] which can help him choose an appropriate pricing • New business
method [app] • Sole trader
• Good quality can help boost reputation / brand image [k] which is • Pricing method
important as it is a new business [app] so customers may be willing to • Economic growth
pay a higher price for his services [k] and allow Samuel to take
advantage of economic growth [app] Other appropriate examples in context
can still be credited.

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3(d) Explain two possible disadvantages to Samuel of operating as a sole 6 Note: To use words from the stem as
trader business. application, the reference must be
Award 1 mark for identification of each relevant disadvantage (max 2). to the point being made.
Award 1 mark for each relevant explanation (max 2). • Plumbing or related words such as
bathrooms
Points might include: • Used all his savings / $500
• Unlimited liability [k] so could lose his house as well as the $500 [app] • New business
as his personal assets can be used to repay business debts [an] • Quality service
• Limited sources of finance [k] for his plumbing business [app] which • Pricing method
could create cash flow problems / difficult to fund expansion [an] • Economic growth
• Few / only has own skills [k] so may not be able to do all jobs on time / • Added value
properly [an] so difficult to offer a good quality service [app]
• Has all the responsibility / make decisions on own [k] Other appropriate examples in context
• Business does not have a separate legal identity [k] so he would be can still be credited.
personally liable for the debts of the business [an]
• Has to work long hours / difficult to take holidays [k]
• No one to share risks/losses with [k]

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3(e) Do you think penetration pricing is a better method for a new business 6 This is a general question so there are
to use than cost-plus pricing? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. To gain both evaluation marks, response
must clearly relate to a new business.
Award 2 marks for a justified decision as to whether it is always better for a

new business to use penetration pricing rather than cost-plus pricing.
Answers might include:
Penetration pricing
• Setting a lower price than competitors should attract customers [k]
leading to higher number of sales [an]
• Help build up market share quickly / enter new market quickly [k]
• Customers may get used to low prices and may not buy if prices
increase [k] leading to fewer sales / damage reputation [an]
• Might not be appropriate for a product which is being promoted as
having high quality [k] which can damage image/reputation [an]
Cost-plus pricing
• Easy to apply [k] which could allow time for new business to focus on
other issues [an]
• Ensure costs are covered [k] so will make a profit per item [an]
• Price may be (much) higher than competitors [k] making the business
uncompetitive / leading to fewer sales [an] less revenue [an]
• Little/no incentive to reduce costs [k]

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3(e) Justification might include:
Setting a lower price than competitors using penetration pricing should

attract customers [k] leading to more sales [an]. Cost-plus pricing could
mean the price may be higher than competitors [k] could make the business
uncompetitive [an]. Therefore, penetration pricing is better because a new
business needs to gain customers - and by setting such a low price, more
people might be able to afford it, improving the chances of the new business
being successful. [eval] [eval]

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4(a) Define ‘flow production’. 2
Where large quantities of a product are produced in a continuous process

[2]
OR The production of very large quantities of (identical) goods using a

continuously moving process [2]
Partial definition e.g. large quantities of a (standardised) product [1]

OR large-scale production / large volumes / continuous production [1]
4(b) Calculate output per worker per week in 2020. Show your working. 2 If correct answer given with no working
shown award 2 marks.
Award 2 marks for a correct answer.
Award 1 mark for a correct method but incorrect answer.
Correct answer: 1240 [2]
Method e.g. total output/number of employees OR 310 000 / 250 [1]

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4(c) State four factors a business should consider when selecting an 4 Award only the first four responses given.
appropriate method of internal communication.
Do not award methods of internal
Award 1 mark per factor. communication as this does not answer
the question.
Four from:
• Who the message is to be sent to
• Where/location of the sender/receiver
• How many people does the message need to be sent to?
• Mediums available
• Amount of information to be sent
• How important / urgent is the message / when the message needs to be
sent / received
• How sensitive/confidential is the information?
• Whether feedback required
• Whether a written record is required

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4(d) Explain one reason why the following factors might be important to 6 Note: To use words from the stem as
BEF when deciding whether to export to country Y. application, the reference must be
Award 1 mark for identification of each relevant reason (max 2). to the point being made.
Award 1 mark for each relevant explanation (max 2). • Toothpaste/shampoo
• Wide range of products
Points might include: • 310 000 units
• Flow production
Import tariffs: • Correct use of data from Table 4.1
• Higher import prices / products become more expensive [k] leading to • Large business
lower demand / so less competitive [an] when selling its toothpaste /
shampoo [app] Other appropriate examples in context
• Business may decide to maintain prices / not pass on price increase to can still be credited.
customers [k] reducing profit margin [an]
Language:
• May need to translate/change wording on the packaging (so customers
understand) [k] on some of its 310 000 units [app] which increases costs
[an]
• Communication problems with retailer / agent in other country [k]
leading to wrong orders / decisions being taken [an] especially as have
a wide range [app]
• Potentially fewer sales as customers may not understand what is
written on the packaging [k] leading to less revenue [an]

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4(e) Do you think it is better for a large business to produce a wide range 6 This is a general question so there are
of products than a small range of products? Justify your answer. no marks for application.
Award up to 2 marks for identification of relevant points. To gain both evaluation marks response
must clearly relate to a large business.
Award 2 marks for a justified decision as to whether producing a wide range

of products is likely to be better for a large business.
• Attracts new customers / increase sales / wider customer base [k]

increasing revenue [an]
• Enhances brand image/reputation [k] leading to customer loyalty [an]
• Spread risk [k] as do not have to rely on only one/few products to
generate sales [an]
• May need high levels of inventory [k] which can increase variable costs
[an]
• May need more storage space [k] which can increase fixed costs [an]
• May have many competitors [k] so difficult to manage / respond to
actions of other competitors [an] so may lose customers to rivals /
market share (rather than gain) [an]
• May have limited / not enough production capacity [k] so may have
difficulty in meeting demand for all its products [an]
• High cost of research and development [k] which increases cash
outflows [an]

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4(e) Justification might include:
Having a wide range of products can help spread risk [k] as do not have to
rely on only one/few products to generate sales [an]. However, a wide range
may mean it has many competitors [k] so so may lose customers to other
businesses [an]. Therefore, while having a wide range can help increase
revenue more easily than having fewer products, it may only be successful if
the business is able to manage a wide range of products effectively to be
able to sell them. [eval] [eval]

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Cambridge IGCSE™

BUSINESS STUDIES 0450/13

This document consists of 24 printed pages.

© UCLES 2021 [Turn over

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

GENERIC MARKING PRINCIPLE 2:

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

GENERIC MARKING PRINCIPLE 4:

© UCLES 2021 Page 2 of 24

GENERIC MARKING PRINCIPLE 6:

© UCLES 2021 Page 3 of 24

1 Components using point-based marking:

From this it follows that we:

2 Presentation of mark scheme:

© UCLES 2021 Page 4 of 24

© UCLES 2021 Page 5 of 24

1(a) Define ‘private limited company’ 2

A business owned by shareholders, but they cannot sell shares to the

OR A business owned by shareholders, but they can only sell shares to

OR Often a small to medium-sized business owned by shareholders who

1(b) Define ‘average cost’. 2

Total cost of production divided by total output [2]

OR The cost of producing a single unit of output [2]

Partial definition e.g. cost per unit [1]

© UCLES 2021 Page 6 of 24

Do not award answers which outline

© UCLES 2021 Page 7 of 24

Other appropriate responses should also be credited.

© UCLES 2021 Page 8 of 24

Award up to 2 marks for relevant development of points.

Award 2 marks for a justified decision as to whether off-the-job training is

Points might include:

© UCLES 2021 Page 9 of 24

1(e) Other appropriate responses should also be credited.

Justification might include:

Off-the-job is helpful as workers can focus on training [k] so less likely to

© UCLES 2021 Page 10 of 24

2(a) Define ‘unemployment’ 2

When people want to work but cannot find a job [2]

OR The proportion or percentage of the population that are capable of

Partial definition e.g. people have no job [1]

Cash inflows might include:

Cash outflows might include:

Other appropriate responses should also be credited.

© UCLES 2021 Page 11 of 24

Other appropriate responses should also be credited.

© UCLES 2021 Page 12 of 24

Increase in minimum wage:

Other appropriate responses should also be credited.

© UCLES 2021 Page 13 of 24

Award up to 2 marks for identification of relevant points.

Award up to 2 marks for relevant development of points.

Points might include:

Other appropriate responses should also be credited.

Justification might include:

© UCLES 2021 Page 14 of 24

3(a) Define ‘economic growth’ 2