Mark Scheme (Provisional)

Summer 2021

Pearson Edexcel International Advanced

Subsidiary
In Business (WBS12/01)
Unit 2: Managing business activities
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Summer 2021
Question Paper Log Number P64946A
Publications Code WBS12_01_2106_MS
All the material in this publication is copyright
© Pearson Education Ltd 2021
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 ‘partnership’, e.g.

• A type of business ownership/organisation (1) owned by
two or more people (1)
(2)

Question Answer Mark

Number
1(b) Knowledge 1, Application 2, Analysis 1
Knowledge
1 mark for identifying a way, e.g.
• The business would need to offer low prices (1)

Application
Up to 2 marks for contextualised answers, e.g.
• There are over 10,000 qualified solicitors in British
Columbia in competition with BDVP (1)
• BDVP has solicitors dealing in many aspects of law, such as
business, contract and commercial law (1)

Analysis
1 mark for developing the way, e.g.
• Consumers are more likely to choose a legal business that
offers competitive prices because there are over 10,000
solicitors to choose from (1)
(4)
Question Answer Mark
Number
1(c) Knowledge 2, Application 2, Analysis 2

Knowledge
Up to 2 marks for defining employee protection legislation, e.g.
• Laws and procedures a business must follow (1) in the
treatment of its workers (1)

OR

For giving two ways, e.g.

• It must keep up to date with changes to the legislation (1)
• It might reduce the flexibility of existing employees (1)

Application
Up to 2 marks for answers contextualised to BDVP, e.g.
• The change from five days unpaid family responsibility leave to
seven days (1)
• Employees could refuse to work overtime if they have
significant family commitments (1)

Analysis
Up to 2 marks for reasons/causes/consequences for BDVP, e.g.
• The business must follow changes in the legislation to avoid
facing potentially expensive legal action (1)
• When BDVP is busy it may not have enough employees
available to complete the workload (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

• Factoring is a way a business can improve its cash flow by selling

invoices to a third party
• Liquidity is how easily/quickly assets can be converted into cash
• BDVP allows clients 30 or 60 days to pay, meaning the solicitors may
have a period of time when they have a poor cash flow
• Factoring would allow BDVP to continue to offer favourable credit
terms to clients without suffering poor cash flow
• This means BDVP would continue to be competitive amongst the more
than 10,000 solicitors in British Columbia
• However, factoring is costly because BDVP does not receive the full
value of the invoices paid by its clients for legal services
• Factoring alone would not solve long-term liquidity problems which
may be a problem if the business continues to grow
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 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.
Level 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

• Motivation is a factor that encourages employees to be more interested

and committed to their work
• Productivity is a measure of the efficiency with which labour or capital
completes a task
• Secretaries and administrative assistants may increase their work-rate if
they are offered bonuses or profit share incentives
• By empowering employees, BDVP helps its secretaries and administrative
assistants to take pride in their work and to feel a sense of responsibility
• This could encourage employees to work harder in order to complete their
work to a higher standard, meaning they would be more productive
• Consulting with junior associates about alternative working hours to
8.30am – 5pm is likely to increase the productivity of the employees as
they feel more motivated as their views are being taken into account
• Increasing labour flexibility would not only comply with new regulations
but also help employees to balance their work with personal
commitments. This could increase productivity
• However, some junior associates may not be more productive even if
offered financial methods of motivation or by being consulted about the
hours they are in the office, as they may already be working as hard as
they are able
• Improving motivation alone may not be very effective if the technology
used is out-of-date and slow. New technology could be more effective
• Many ways to improve productivity could increase motivation as well, thus
providing multiple benefits to BDVP
• A combination of ways to improve productivity, such as bonuses,
introducing flexible working practices and replacing old technology may
be the best way to increase productivity
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 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.
Level 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.
Level 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 ‘market conditions’, e.g.

• Characteristics such as competitiveness/growth (1) of the place
buyers and sellers meet (1)
(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 profit for the year (net profit) formula:
• operating profit – finance costs (interest) (1)

Application
Up to 2 marks for selecting the correct data from Extract C:
• €6.7m (1) - €0.6m (1)

Analysis
1 mark for calculating the profit for year (net profit):
• Profit for the year (net profit) = €6.1m (1)

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

• If the answer given is €6.1m award 4 marks
• If the answer given is 6.1m award 3 marks
(4)
Question Answer Mark
Number
2(c) Knowledge 2, Application 2, Analysis 2

Knowledge
Up to 2 marks for defining efficiency, e.g.
• Making the best possible use of all a business’s resources (1)
by minimising average costs (1)

OR

For giving two ways, e.g.

• Efficiency could increase as it would be easier/quicker for
customers to make a booking (1)
• Fewer employees would be needed to complete the booking
process because of the use of technology (1)

Application
Up to 2 marks for answers contextualised to Hostelworld, e.g.
• There was an increase of 22% in the number of customers who
made bookings by its app in 2018 (1)
• Hostelworld allows travellers to make bookings on its website
or using its app (1)

Analysis
Up to 2 marks for reasons/causes/consequences for Hostelworld,
e.g.
• As booking on the app increases, it reduces the average cost per
customer of operating the app (1)
• Needing fewer employees would reduce costs for Hostelworld and
therefore profits may increase (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

• Share capital is funding raised by a company in exchange for a share in

the business
• Hostelworld is trying to take advantage of a growing market (forecast to
reach 1.8 billion international tourists by 2030) but needs to finance its
own growth plans
• Share capital is available from shareholders who were set to receive
€0.138 per share from their 2018 investment. They are more likely to be
supportive of the plan if they believe a successful strategy could lead to an
increased return
• As Hostelworld is aiming to return to growth in 2020, share capital would
be suitable because it does not need to be repaid straight away. Its use is
also flexible as there are no restrictions to its use
• However, receiving share capital means the main shareholders of
Hostelworld lose some of the control of the business for each share sold
• Share capital could be an expensive way to fund the plan to grow because
shareholders would expect a higher return than they would get by putting
money in a bank, due to the higher risk
• Operating profit fell €5.2m from 2017 to 2018 and revenue by 5% meaning
shareholders may be less willing to invest in Hostelworld
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 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.
Level 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

• The business cycle measures economic activity over time and shows
stages of boom, downturn (where there is rising unemployment),
recession and recovery
• Possible diagram to show the business cycle

• Tourism is likely to increase during a boom or recovery and decrease

during a downturn or recession
• The business cycle could help Hostelworld to assess whether the
predicted growth in tourism is likely to be accurate for the years in the
forecast
• Although the number of international tourists is predicted to reach
nearly 1.4 billion in 2020, using the business cycle would allow
Hostelworld to take account of fluctuations in the rate of growth of GDP
and therefore access potentially more accurate figures for each year
• Hostelworld could use the business cycle to predict how much impact
GDP might have on the growth in the market for tourism but also on new
competitors entering the market, attracted by increased demand
• However, the business cycle can only provide an estimate of economic
activity over time and may be unrealistic to use as far into the future as
2030
• External economic influences could have an impact that changes the
business cycle and cannot easily be predicted, especially for a business
affected by changes in countries worldwide
• Extract D shows a steady increase of international tourism in actual
figures from the start of the data in 1950. It does not show any effects of
the business cycle so far
• Therefore, it may not be enough to rely on this type of forecast for
Hostelworld for the purposes of making its decisions
• Although the business cycle may be useful to Hostelworld when making
its decisions, it should not be relied upon too heavily and it is important
to use other data available as well
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 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.
Level 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.
Level 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

Quantitative skills assessed:

QS3: Construct and interpret a range of standard graphical forms
QS5: Calculate cost, revenue, profit and break-even
QS8: Use and interpret quantitative and non-quantitative information in
order to make decisions

• The break-even point is the point where total revenue = total costs
• Margin of safety is the difference between the break-even point and
the current level of sales
• The Mountain School needs six students each week in order to break-
even
• The school has spare capacity when only eight students study there
and receives (8 x 2 100) 16 800 Qs in revenue

Advertising
• Advertising could help increase the number of students closer to the
maximum of 14, which would increase the margin of safety to eight
students
• The Mountain School currently only receives 1 000 Qs profit for the
additional two students who receive tuition above the break-even
point and so would benefit from increasing the number of students
through advertising
• As the school could considerably increase its profits (to 4 000 Qs) if the
maximum of 14 students were enrolled each week, it would be a good
idea to advertise in an attempt to increase numbers
• The Mountain School aims to improve the quality of life for local
families. As 600 Qs is paid to each family that provides meals to a
student, increasing the number of students through advertising would
help achieve this aim
• However, in a typical week The Mountain School has eight students. This
means it already has a margin of safety of two students and so the
profit made could be used to benefit the community or as a
contingency if fewer students attended in other weeks
• Even with the current margin of safety there is not a lot of money
available with which to advertise (1 000 Qs per week)
 • Advertising would increase costs and therefore increase the break-
even point. It may actually reduce the margin of safety in the short-
term if it failed to attract more students

Raise price
• By raising the price, the break-even point could be lowered from six
students and therefore increase the margin of safety if The Mountain
School still received an average of eight students per week
• A contribution of only (2 100 – 1 600) 500 Qs is made per student and
so increasing the price would help The Mountain School to break-even
with fewer students
• The Mountain School only charges 2 100 Qs for the tuition, all meals
and accommodation and so it is feasible students would be prepared
to pay more
• However, the average number of students may fall if they do not want
to pay a higher price
• This would therefore risk the existing margin of safety as it may stop
some potential students from attending the school
• It may be better to try to reduce costs rather than increase revenue
Level Mark Descriptor
0 No rewardable material.
Level 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.
Level 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.
Level 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.
Level 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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