Mark Scheme

Section A — Structured Questions

1. (a) (up to 2) An entrepreneur = a person who sets up and takes the risks of running a business, usually spotting an opportunity and organising the resources to pursue it. [2] (b) (up to 4) Two characteristics explained: risk-taking (willing to invest time/money without a guaranteed return); determination/resilience (to keep going through difficulties); organisation; creativity (to spot and develop the idea). 1 + 1 development each, applied to FreshBox. [4] (c) (up to 4) One risk — the business could fail and they could lose the money invested / income is uncertain; one reward — they could make a profit, be their own boss, and gain satisfaction. Risk (2) + reward (2). [4]

2. (a) (up to 2) A gap in the market = a customer need or want that is not currently being met by existing businesses — an opportunity for a new product/service. [2] (b) (up to 4) Two methods explained: primary research (e.g. surveys/questionnaires of local customers) to find out what recipes/prices they want; secondary research (existing data on food trends/competitors); analysing customer orders/feedback. 1 + 1 development each. [4] (c) (up to 4) E-commerce benefits: reaches customers anywhere/24 hours a day, widening the market; lower costs than a physical shop; easy to take orders and payments online and collect customer data. Developed points applied to FreshBox. [4]

3. (a) (up to 4) Total costs = fixed + variable = 6,000 + 9,000 = $15,000 (M1 A1); profit = revenue − total costs = 18,000 − 15,000 = $3,000 (M1 A1). [4] (b) (up to 4) A fixed cost does not change with output/sales (e.g. rent of FreshBox's kitchen/premises); a variable cost changes with output/sales (e.g. cost of the ingredients in the meal kits). Definition + FreshBox example each. [4] (c) (up to 4) One source explained: a bank loan (borrowed, repaid with interest) / retained profit / new partner's capital; one drawback: a loan must be repaid with interest even if the business struggles, increasing financial risk; a new partner means sharing control/profit. Source (2) + drawback (2). [4]

4. (a) (up to 4) Advantage of a partnership — shared workload and skills (Leo and Aisha can specialise), and more capital than one person alone; Disadvantage — profits must be shared, and there can be disagreements; partners share unlimited liability. Advantage (2) + disadvantage (2). [4] (b) (up to 4) Good customer service matters because customers have choice (especially with the national competitor); good service leads to repeat business, loyalty and good word-of-mouth/reviews, while poor service loses customers and harms reputation. Developed reasoning applied to FreshBox. [4] (c) (up to 4) Two aims: survival (especially with new competition); growth; customer satisfaction; providing a good/healthy product; the owners' independence/personal satisfaction; social/ethical aims (healthy eating, reducing food waste). 1 + 1 development each. [4]

Section B — Extended Response

5. (16 marks) Levels-marked discussion.

• Challenges of growth: managing rising demand (capacity, delivery, staff); maintaining quality as they scale; cash flow to fund growth; the two owners being stretched.
• New competition: the national company has more money for advertising and may undercut prices or take customers.
• Responses/keeping customers loyal: hire/train staff and improve operations to meet demand; secure finance carefully; differentiate from the national chain through personal service, local/fresh produce, flexibility and community feel; use loyalty offers and customer feedback; possibly focus on a niche.
• Level 4 (13–16): developed, balanced discussion applied to FreshBox, with justified advice; Level 3 (9–12): both areas with some development and application; Level 2 (5–8): limited/one-sided; Level 1 (1–4): basic. Credit a reasoned recommendation.

Sample Answers with Examiner Commentary

Question 3(a) — Sample Answers

Grade A response. "First I find total costs by adding the fixed and variable costs together: total costs = $6,000 + $9,000 = $15,000. Then profit = sales revenue − total costs = $18,000 − $15,000 = $3,000. So FreshBox made a profit of $3,000 last month."

Mark: 4/4. Examiner commentary: A clear, fully-shown calculation. The candidate correctly combines fixed and variable costs to get total costs, then subtracts total costs from revenue to find profit, showing each step. Because the method is visible, the marks are secure even if an arithmetic slip had occurred. Setting out "total costs = fixed + variable" and "profit = revenue − total costs" explicitly is exactly what the examiner wants to see.

Grade C response. "18,000 − 9,000 = 9,000. So the profit is $9,000."

Mark: 1/4. Examiner commentary: The candidate has subtracted only the variable costs from revenue and ignored the fixed costs of $6,000, so both the total-costs figure and the profit are wrong (the correct profit is $3,000). One method mark may be given for attempting revenue minus a cost, but the calculation misses the key step of adding fixed and variable costs together to get total costs first. Writing out total costs = fixed + variable before finding profit would have avoided the error.

Question 5 — Sample Answers

Grade A response (extract). "As FreshBox grows, it faces several challenges. Rising demand is hard for just two owners to manage — they may struggle to buy enough ingredients, prepare and deliver all the boxes on time, and maintain quality, which could damage their reputation if orders go wrong. Growth also needs money, which could stretch their cash flow. On top of this, the national meal-kit company has more money for advertising and may offer lower prices, threatening to take FreshBox's customers.

To respond, Leo and Aisha could take on and train staff to help meet demand and keep quality high, and organise their operations better, perhaps investing in the finance needed to do so. To deal with the competition, they should focus on what a big national company cannot easily copy: personal, local service, very fresh local produce, flexibility in recipes, and a community feel. Loyalty offers and listening to customer feedback would help keep existing customers.

In conclusion, the main challenges are managing growth and facing stronger competition. I would advise Leo and Aisha not to try to compete on price with the national company, but instead to grow carefully — hiring help and securing finance — while differentiating FreshBox through personal service and quality, which is the most realistic way for a small local business to keep its customers."

Mark: 15/16. Examiner commentary: A Level 4 answer, applied to FreshBox throughout rather than generic. It identifies the real challenges (managing demand with only two owners, maintaining quality, cash flow, a well-resourced national competitor) and gives developed, practical responses (hiring and training staff, securing finance, differentiating on personal service and local produce, loyalty offers). The conclusion offers clear, justified advice — not competing on price but differentiating — that follows directly from the argument. Consistent use of case-study detail and business terminology places this at the top of the range.

Question 4(a) — Sample Answers

Grade A response. "One advantage for Leo and Aisha of running FreshBox as a partnership rather than as sole traders is that they can share the workload and combine their skills — for example, one might handle the cooking and operations while the other manages marketing and finance — which is helpful as the business grows and demand rises. They can also raise more capital between two people. One disadvantage is that they have to share the profits, so each receives less than a sole trader would, and they could disagree on important decisions, such as how fast to expand, which could cause conflict and slow the business down."

Mark: 4/4. Examiner commentary: A full-mark answer that gives a clear advantage and a clear disadvantage, each explained and applied to FreshBox. The advantage is developed with a relevant example (splitting operations and marketing between the two owners), and the disadvantage covers both sharing profit and the risk of disagreement, with a business-specific example (disputes over how fast to expand). Explaining and applying each point, rather than just naming "shared work" and "shared profit", is what secures all four marks.

Grade C response. "An advantage of a partnership is that there are two people so they can help each other. A disadvantage is that they have to share the money they make."

Mark: 2/4. Examiner commentary: The candidate identifies a valid advantage (two people helping each other) and a valid disadvantage (sharing the profits), earning two marks. However, neither is developed or applied to FreshBox. The advantage could be explained in terms of sharing the workload and combining different skills as the business grows; the disadvantage could add the risk of disagreements over decisions. Developing each point and linking it to Leo and Aisha's situation would gain the remaining marks.