Types of Budgets | Edexcel A Level Business AS

[Maximum number: 10]

Extract A Żabka Polska Żabka is a chain of shops in Poland. The business started in 1998 and now has over 8,000 shops in Poland. Most of these shops are run by people who have paid for one of the franchising opportunities offered by Żabka. As well as selling a variety of groceries, the shops sell hot drinks and snacks that include hot soup and hot sandwiches. It is also possible to send parcels from the shops, saving customers time from having to visit post offices. More than 15 million Polish consumers live within 500 metres of the nearest Żabka. It prides itself on being close to its customers and understanding their needs. Żabka shops are developed with customers in mind. The shops are not only in the centre of large cities but in smaller towns too. Żabka's head office is in Poznań, where the six members of the Management Board are based. They make the decisions for Żabka, such as whether to use zero based budgeting for marketing the stores.

Extract B Sales revenue data in Polish złoty (zł) from a Żabka shop January-March 2022

Table for Question 2.3.2.5b - Budget types question 1 — Edexcel A-Level Business AS

Extract C Polish Government announces plans for lower income tax In 2022, the Polish Government announced plans to reduce income tax (the tax paid on personal income from paid and self-employment). It has presented the plans as part of its measures to protect Poles from the economic consequences of higher costs of living.

Assess the likely benefits to Żabka of using a zero based marketing budget.

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
- A zero based budget is a type of budget where no money is allocated for spending unless it has firstly been justified
- By using a zero based marketing budget, Zabka would be able to minimise
unnecessary spending when promoting its shops because it encourages an attitude which questions whether the spending is needed
- It already has over 8,000 shops throughout Poland and so the name
'Żabka' will be seen by many potential customers simply by its presence
- This means the business can take the potentially cost-saving approach of only spending money on marketing when it is felt it will be beneficial
instead of doing so simply because it has done so in its previous 25 years of trading
- Therefore, money could be spent on other things within the business, such
as setting up new stores to help meet Zabka's aim of being close to its
customers
- This time may be better spent focusing on understanding the needs of its
customers, such as their requirements when sending parcels
- Some franchisees may lack the skill to accurately present suitable arguments to justify the need for marketing finance
- It may depend on the individual expectations of the decision-makers whether finance for a type of marketing is approved because some may favour alternative ways to spend the money
- It may be that a mix of zero based budgeting and historical budgets is
more suitable, especially as different areas of Poland may have different
requirements

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.

2.3.2.5b - Budget types question 1