Evaluate the importance to CS of being a small business.
2(d)
Indicative content
AO1 Knowledge and understanding
Knowledge of the features of being a small business (max 2 marks), including:
- Lifestyle
- Independence
- Opportunities
- Creative freedom
- Less reliance on other people
- Expertise
- Unique selling point (USP)
- Personal satisfaction
- Personal service for customers
- Focus
- Easy to plan
- Easy to control/coordinate/lead
- Potential for growth
- Encourages innovation/intrapreneurship/entrepreneurship
- May struggle obtaining finance / limited finance
- Increased risk
PUBLISHED
2(d)
AO2 Application
Context applied to features of being a small business □ (max 2 marks), including:
- Yazeem is a highly skilled shoemaker
- Sole trader
- Abir is fully trained in making shoes
- CS opened in 1975
- Currently targeting a mass market (professional men and women)
- Currently produced using batch production
- Shoes sold in own shop
- Range of sizes and colours
- Increase in low-priced mass market shoes - reduced CS sales and repairs
- Abir feels it is time for Yazeem to retire
- Abir would like to design and produce unique shoes for niche markets
- New products would use price skimming
- Use of Table 2.1
- Abir suggested adoption of JIT
2(d)
AO3 Analysis
Limited analysis □ - candidate shows one link in the chain of analysis.
Developed analysis - candidate shows two or more links in the chain of analysis.
- Lifestyle/personal satisfaction; Yazeem (and Abir) can choose their own hours which may increase their happiness -
likely objective of Yazeem as a sole trader.
- Independence; Yazeem does not have to ask anyone's opinion when making decisions which may suit him -
increased happiness.
- Opportunities; as a small business Yazeem and Abir can more easily take advantage of new trends (such as the
niche markets) - increased sales/profit.
- Creative freedom; both Yazeem and Abir are skilled and can create shoes which suit the market without having to
have decisions agreed by others - increased sales/profit.
- Less reliance on other people; less opportunities for wastage - lower costs, increased profitability.
- Expertise; both Yazeem and Abir are highly skilled and can focus these on their small customer base - increased
customer satisfaction.
- Unique selling point (USP); having expert owners may allow CS to sell at a higher price - increased profitability.
- Personal service for customers; customers feel like they are being well looked after (as they are dealing with the
owners) - increased sales/profit.
- Focus; As Yazeem is the owner he is more likely to be motivated - increased productivity.
- Easy to plan; few employees mean that CS can adapt their business to meet current demand - increased sales/profit.
- Easy to control/coordinate/lead; less customers mean that CS can adapt their business to meet current demand -
increased sales/profit.
AO4 Evaluation
Limited evaluation - unsupported judgement and/or a weak attempt at evaluative comment
Developed evaluation □ - supported judgement and/or reasonable evaluative comment
Developed evaluation in context [EE ] - supported judgement in context and/or reasonable evaluative comment in context.
- A judgement the importance of being a small business.
- Evaluation of the relative importance of different advantages/factors.
- Elements that the evaluation/judgement might depend upon - Yazeem and Abir's personal objectives, whether
Yazeem wants to retire (or not), the relative size of competitors in the market, the location of CS, changes in the shoe
manufacture and retail market, changes in technology, price elasticity of demand for CS shoes.
Accept all valid responses.
2(d)
Exemplars for awarding evaluation
L1 □ (limited
supporting
evidence)
L2 ± (developed supporting
evidence)
L3 EE (developed supporting evidence
with context)
Being a small
business is important
for CS.
Being a small business is important for
CS because it means Yazeem can retain
control of his business.
Being a small business is important for CS
because it means Yazeem can retain
control of his sole trader business.
It is not important for
CS to be a small
business.
It is not important for CS to be a small
business because the business should
be allowed to grow to a more efficient
size, where costs are lower.
It is not important for CS to be a small
business because the business should be
allowed to grow to a more efficient size,
where costs are lower, so that it can
compete with the mass market retailers
who are selling cheaper shoes for people
to wear to work or dress smartly.
The importance of CS
being a small
business depends on
the objectives of
Yazeem.
The importance of CS being a small
business depends on the objectives of
Yazeem. If his objective was to maximise
profit, then it is more important for CS to
grow.
The importance of CS being a small
business depends on the objectives of
Yazeem. If his objective was to give the
business to Abir, then maybe she should
decide how important the size of CS is.
In the short term being
a small business is
important.
In the short term being a small business
is important, however in the long term
Yazeem may need to grow to take
advantage of economies of scale.
In the short term being a small business is
important, however in the long term
Yazeem may need to grow to take
advantage of economies of scale to
reduce the cost of the batch production
process used by CS.
