Cambridge IGCSE™

BUSINESS STUDIES 0450/11

Paper 1 Short Answer and Data Response May/June 2022
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 May/June 2022 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 23 printed pages.

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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.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

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.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

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).

GENERIC MARKING PRINCIPLE 6:

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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0450/7115/0986 Business Studies – Paper 1 Annotations

Annotation Description Use

Tick Tick Indicates a point which is relevant and rewardable.

X Cross Indicates a point which is inaccurate/irrelevant and not rewardable.

BOD Benefit of doubt Used when the benefit of the doubt is given in order to reward a response.

TV Too vague Used when parts of the answer are considered to be too vague.

REP Repetition Indicates where content has been repeated.

NAQ Not answered Used when the answer or parts of the answer are not answering the question asked.
question

K Knowledge Indicates knowledge and understanding of the concepts and issues relating to the question.

APP Application Indicates appropriate reference to the information in the stem.

AN Analysis Indicates where the answer has demonstrated analysis.

EVAL Evaluation Indicates where the answer has demonstrated evaluation (part (e) questions only).

OFR Own figure rule If a mistake is made in a calculation, and the incorrect figure that results from the mistake is used for
subsequent calculations.

SEEN Noted but no Indicates that content has been recognised but not rewarded.
credit given

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Question Answer Marks Notes

1(a) Define ‘competitive pricing’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

When a product is priced in line or just below competitors’ prices (to try to capture
more of the market) [2]
OR
Setting a price similar to that of competitors products which are already
established in the market. [2]
OR
When the price of a good is set at the same level as other products in the market
and at a level customers expect or are willing to pay [2]

Partial definition e.g. have similar prices to other businesses [1]

OR bases their prices on the competitors pricing [1]

1(b) Define ‘marketing budget’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

A financial plan for the marketing of a product or product range (for a specified
period of time) [2]
OR
The amount of money made available by a business for its marketing activities
during a particular period of time [2]

Partial definition e.g. money to be spent on marketing [1]

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Question Answer Marks Notes

1(c) Outline two possible threats to Pamela’s business of using e-commerce. 4 To use words from the stem as
application, the reference must be
Award 1 mark for each relevant threat (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Points might include: appropriate for this question:
 Increased competition [k] which makes it harder to calculate a competitive  Gift shop
price [app]  (celebration) Cards/toys/candy
 Unfamiliarity / customers are less likely to buy from a business they don’t  Entrepreneur/the owner
know [k] leading to fewer sales of toys [app]  30 years ago
 No face-to-face contact which could make it difficult to establish a relationship  5 employees
[k] so difficult to gain customer loyalty [app]  Customer loyalty
 Website design must be clear / attractive / easy to use, or customers will not  Competitive pricing
visit [k]  Marketing budget
 Limited/no access to the internet [k]  Sales promotion
 Increasing costs as a specialist may need to be employed / website design /
maintenance of sites [k] Other appropriate examples in context
 May need a larger space to store products increasing costs [k] can still be credited.
 Packaging/delivery of each item will increase costs per product [k]
 Larger number of returns could lead to higher business costs [k] Can outline two separate costs if both
 All customers can see negative reviews [k] clearly related to Pamela/business.

Other appropriate responses can also be credited.

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Question Answer Marks Notes

1(d) Explain two methods Pamela’s business can use to maintain customer 6 To use words from the stem as
loyalty. application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for identification of each relevant method (max 2). relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2).  Gift shop
 (celebration) Cards/toys/candy
Points might include:  5 employees
 Communicate with customers e.g. newsletters, social media [k] so that they  Entrepreneur
remember your business [an] when they next need candy (sweets) / toys /  30 years ago
cards [app]  Competitive pricing
 Offer rewards to existing customers / introduce a loyalty scheme [k] using  Marketing budget
money from the marketing budget [app] so consumers have an incentive to  Sales promotion
return [an]
 Train staff / offer good quality service [k] from all 5 employees [app] Other appropriate examples in context
 Extra services or examples such as delivery / credit facilities [k] can still be credited.
 Ask for feedback / carry out market research [k] so the items you are selling
match customer needs [an]
 Resolve complaints quickly [k] so that customers don’t go to other businesses
[an]
 Introduce new products / high quality products [k] satisfying the customers’
needs [an]
 Brand loyalty [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

1(e) Do you think being a risk-taker is a more important characteristic of a 6 This is a general question so there are
successful entrepreneur than being creative? Justify your answer. no marks for application.

Award up to 2 marks for identification of relevant points. For evaluation to be awarded

justification will usually follow on from
Award up to 2 marks for relevant development of points. relevant analysis of points.

Award 2 marks for a justified decision as to whether being a risk-taker is a more

important characteristic of a successful entrepreneur than being creative.

Points might include:

Risk-taker:
 A successful entrepreneur must take risks otherwise there is no business [k]
 Entrepreneurs take the risk of investing their own money [k] this may bring
high rewards [an] however they may fail and lose their personal possessions
[an]
 Taking risks is a way to learn [k] if an idea is good or not [an]

Creative:
 New ideas [k] leading to increased sales/revenue [an]
 Creativity adds value [k] so higher prices can be charged [an].
 Creativity alone does not guarantee success [k] if customers do not purchase
[an]

Other appropriate responses should also be credited.

Justification might include:

Entrepreneurs take the risk of investing their own money [k] this may bring high
rewards [an]. Being creative maybe a more important characteristic as making a
business different to its competitors [k] can lead to increased sales [an]. In a
competitive market creativity is especially important because it helps the business
stand out from competitors. [eval] An entrepreneur can take risks, but if customers
will not buy, they will not be successful. [eval]

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Question Answer Marks Notes

2(a) Define ‘public limited company’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

Businesses owned by shareholders, but they can sell shares to the public and
their shares are tradeable on the stock exchange [2]
OR
Often a large company, owned by shareholders who have limited liability. The
company can sell its shares to the general public [2]
OR
A company that sells its shares to the general public through a stock exchange
(because the company can sell shares to anyone, it can raise massive amounts of
money) [2]
OR
A business whose shares can be freely bought and sold to the general public [2]

Partial definition e.g. a business that can sell shares [1]

2(b) Calculate the margin of safety for CTF’s children’s beds. Show your 2
working.

Correct answer: 4000 [2]

Correct method but incorrect answer e.g. Current outputbreak-even output [1]

OR 18 000 – 14 000 [1] = 4000 [1]

If correct answer given with no working shown, award 2 marks.

Award only 1 mark if 4000 is written as part of the answer but is not given as the
final answer.

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Question Answer Marks Notes

2(c) Outline two ways an increase in inflation might affect CTF. 4 To use words from the stem as
application, the reference must be
Award 1 mark for each relevant way (max 2). appropriate (i.e. make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Points might include: appropriate for this question:
 Employees might ask for pay rise [k] reducing its margin of safety [app]  Public limited company (PLC)
 Increase in raw material costs[k] for manufacturing (beds) [app]  (children’s) Beds
 Prices may have to increase [k]  Factory/manufacturer
 Fewer sales / customers cannot afford to buy [k] the beds [app]  Margin of safety / 4000
 Batch production
Other appropriate responses should also be credited.  Environmental pressures
 14 000 (break-even output)
 18 000 (current output)
 25 000 (capacity)

Other appropriate examples in context

can still be credited.

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Question Answer Marks Notes

2(d) Explain two possible advantages to CTF of using batch production. 6 To use words from the stem as
application, the reference must be
Award 1 mark for identification of each relevant advantage (max 2). appropriate (i.e., make sense) in
relation to the point being made.
Award 1 mark for each relevant reference to this business (max 2).
The following words are likely to be
Award 1 mark for each relevant explanation (max 2) appropriate for this question:
 Public limited company (PLC)
Points might include:  (children’s) Beds
 Flexible [k] easy to change the type of beds [app] to adapt to customer  Factory/manufacturer
demands [an]  Margin of safety / 4000
 Economies of scale / materials can be bought in bulk [k] which can help  Environmental pressures
reduce average costs [an] improving the margin of safety [app]  14 000 (break-even output)
 Production may not be affected to any great extent if machinery breaks down  18 000 (current output)
[k] so some output made [an] so help reach its break-even output of 14 000  25 000 (capacity)
[app]
 Variety of products [k] which could lead to increased sales [an] Other appropriate examples in context
 Variety of tasks can motivate workers [k] leading to less absenteeism / lower can still be credited.
labour turnover [an] at the factory [app]
 Spread risk (as can make more than one type of product) [k] Advantages should focus on
advantages to the business not
Other appropriate responses should also be credited. employees. Answers such as variety of
work on own are too vague [tv].

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Question Answer Marks Notes

2(e) Do you think manufacturing businesses should always respond to 6 This is a general question so there are
environmental pressures? Justify your answer. no marks for application.

Award up to 2 marks for identification of relevant points. For evaluation to be awarded

justification will usually follow on from
Award up to 2 marks for relevant development of points. relevant analysis of points.

Award 2 marks for a justified decision as to whether manufacturing businesses

should always respond to environmental pressures.

Points might include:

 Reduces the risk of a customer boycott [k]
 Enhance brand image / reputation [k] leading to more potential customers /
revenue [an]
 Help recruit / retain employees [k]
 Help attract investors [k] so raise more capital [an]
 Reduces risk of legal action/fines [k] avoiding bad publicity[an]
 May need to buy new equipment [k] which increases costs [an] leading to
higher prices [an]
 Reduce productivity [k] which could lower profit margin [an]
 May need to find new suppliers of raw materials [k] leading to higher unit
costs [an]

Other appropriate responses should also be credited.

Justification might include:

Yes, although this could mean the business has to find new suppliers of raw
materials [k] increasing unit costs [an]. However, responding to environmental
pressures can improve the reputation of the business [k] leading to an increase in
revenue [an]. The additional revenue gained could offset the costs of responding
to environmental pressures. So, if they can find the resources they need at a
competitive price, they should. [eval] [eval]

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Question Answer Marks Notes

3(a) Define ‘shareholders’ equity’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

(Total sum of) money invested into the business by the owners of the
company [2]
OR
Share capital plus reserves [2]
OR
Total assets minus total liabilities [2]

Partial definition e.g. money raised from selling shares [1]

3(b) Identify two financial statements a public limited company is legally 2 Only award the first two responses
required to publish each year. given.

Award 1 mark for each financial statement. Do not award cash-flow forecast.

Two from:
 Income statement (Profit and loss)
 Statement of financial position (Balance sheet)
 Cash-flow statement/statement of cash flows
 Statement of changes in equity

3(c) State whether each of the following are classified as a current asset or a 4
current liability.

Award 1 mark for each correct answer.

Overdraftcurrent liability
Trade receivablescurrent asset
Trade payablescurrent liability
Cash in bankcurrent asset

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Question Answer Marks Notes

3(d) Explain one way each of the following stakeholder groups might use VCG’s 6 To use words from the stem as
accounts: application, the reference must be
appropriate (i.e., make sense) in
Award 1 mark for identification of each relevant way (max 2). relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2).  Bags or examples such as
briefcase / travel bag
Points might include:  (second) Factory
Shareholders:  $2m (revenue)
 Help assess business performance / profits [k] to see whether they will  $800 000 (equity)
receive a dividend / return on their investment [an] from this bag manufacturer  $300 000 (current assets)
[app]  $250 000 (current liabilities)
 Help decide whether to continue to invest [k] as the business is looking to  1.2 (current ratio)
open a second factory [app] which could mean less dividends paid [an]  Highquality
 Assess the liquidity [k] they do not want to invest in a business with serious  50 / Skilled workers
cash or liquidity problems [an]
 To compare performance over time [k] and how much the $800 000 in equity Other appropriate examples in context
increases [app] to decide whether they should take their money and invest can still be credited.
elsewhere [an]
 Compare performance between different businesses [k] to decide whether it Candidates must quote the numbers to
is a good investment [an] be awarded application for use of
Table 3.1 information.
Suppliers:
 Can see the total value / level of debt [k] current liabilities $250 000 [app] to Calculation of current ratio is not [an]
help decide whether they should offer (more) credit [an] as it does not answer the question.
 Assess whether the business has sufficient cash [k] within current assets of
$300 000 [app] for the business to be able to repay them when debts become
due [an]
 Assess profitability / level of sales [k] successful business may need more
materials so maintains or increase revenue for the supplier [an] especially as
make high-quality products [app]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

3(e) Do you think access to labour is the most important factor for a 6 This is a general question so there are
manufacturing business to consider when deciding where to locate a new no marks for application.
factory? Justify your answer.
For evaluation to be awarded
Award up to 2 marks for identification of relevant points. justification will usually follow on from
relevant analysis of points.
Award up to 2 marks for relevant development of points.

Award 2 marks for a justified decision as to whether access to labour is the most
important factor for a manufacturing business to consider when deciding where to
locate a new factory.

Points might include:

Access to labour:
 Skilled labour may be difficult to find/recruit [k] which could increase
recruitment/labour costs [an] but can use machinery to reduce the need for
labour [an]
 Labour intensive production requires access to labour [k] without labour they
cannot operate[an]
 Can depend on type of workers required (k) unskilled workers may be easy to
find [an]

Other factors might include:

 Good transport links [k] to ensure products arrive / sent when needed [an]
 Proximity to market [k] to ensure sales / revenue can be made [an]
 Type of product [k] a fragile / heavy product may need to be closer to
customers to reduce risk of damage / cost [an]
 Access to raw materials / components [k] so production is not delayed[an]
 Availability/cost of suitable land [k] which could restrict size of factory / limit
output / increases fixed costs [an]
 Government influence or examples e.g. government grants [k] can help
reduce costs [an] whereas legal controls could prevent the business from
locating in certain areas [an]

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Question Answer Marks Notes

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

Justification might include:

Skilled labour may be difficult to find [k] which could increase recruitment costs
[an] Factory machinery can replace some labour [k] reducing the importance of
labour in the location decision [an]. Labour is the most important factor if the
business is labour intensive because without labour the new factory cannot
produce output [eval] however, other factors would be of greater importance in a
new capital-intensive factory. [eval]

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Question Answer Marks Notes

4(a) Identify two objectives for a business organisation in the public sector. 2 Only award the first two responses
given.
Award 1 mark per objective.

Points might include:

 Financial or examples e.g. meet targets set by government, improve
efficiency/reduce costs
 Make product/service affordable to all
 Provide a service to everyone
 Protect or create jobs in certain areas (social objectives)

Other appropriate responses should also be credited.

4(b) Define ‘chain of command’. 2

Award 2 marks for a full definition. Award 1 mark for a partial definition.

The structure in an organisation which allows instructions to be passed down

from senior management to lower levels of management [2]
OR
The route through which authority is passed down through an organisation [2]
OR
Shows how communication and tasks are passed down the business from the top
to the bottom [2]

Partial definition e.g. shows who gives orders [1]

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Question Answer Marks Notes

4(c) Outline two ways MBH can use ideas from Herzberg’s theory to motivate its 4 To use words from the stem as
employees. application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for each relevant point. relation 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:  440 / doctors
 Could give employees more responsibility [k] in the hospital [app]  (5) Hospitals / or related words
 Offer more interesting work [k] as many are skilled employees [app]  5600 employees
 Offer more praise for good work [k]  Public sector
 Give chances for promotion [k] as there is a tall organisational structure [app]  Communication barriers
 Phone/email
Other appropriate responses should also be credited.  Long chain of command
 Tall organisational structure
 Skilled employees

Other appropriate examples in context

can still be credited.

Do not award examples of hygiene

factors on their own e.g., Pay, improve
working conditions as these are not
motivators

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Question Answer Marks Notes

4(d) Explain how MBH might reduce or remove each of the following 6 To use words from the stem as
communication barriers: application, the reference must be
appropriate (i.e. make sense) in
Award 1 mark for identification of each relevant way (max 2). relation to the point being made.

Award 1 mark for each relevant reference to this business (max 2). The following words are likely to be
appropriate for this question:
Award 1 mark for each relevant explanation (max 2).  440 / doctors
 (5) Hospitals / or related words
Points might include:  5600 employees
Messages lost:  Public sector
 Ask for feedback [k] to ensure that the message is received [an] by all 5  Phone/email
hospitals [app]  Long chain of command
 Make sure the medium of communication is suitable/works [k]  Tall organisational structure
 Delayering/ flattening the structure [k] because it is a long chain of command  Externally recruited
[app]
Other appropriate examples in context
Use of jargon: can still be credited.
 Use simple language [k] on the phone/email [app] so easy for everyone /
receiver to understand [an]
 Make sure language is appropriate to the receiver [k] to make sure there is no
misunderstanding [an]
 Providing opportunities for the receiver to ask questions [k]

Other appropriate responses should also be credited.

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Question Answer Marks Notes

4(e) Do you think an organisation should always use external recruitment when 6 This is a general question so there are
recruiting skilled employees? Justify your answer. no marks for application.

Award up to 2 marks for identification of relevant points For evaluation to be awarded

justification will usually follow on from
Award up to 2 marks for relevant development of points. relevant analysis of points.

Award 2 marks for a justified decision as to whether an organisation should Advantages of external recruitment
always use external recruitment when recruiting skilled employees. can be disadvantages of internal but
do not award the same point twice as
Points might include: mirror answers are not accepted.

External recruitment:
 Bring in new skills / ideas [k] which could help improve productivity /
effectiveness / efficiency of business [an]
 Can bring in valuable knowledge and experience of competition [k] gaining a
competitive edge [an]
 Wider choice of applicants [k] increases possibility of finding best person for
job [an]
 No knowledge of how business works / current operations [k] so might need
induction training [an]
 Avoids risk of upsetting employees when someone internal is promoted [k]
 Higher recruitment costs [k]
 More time spent / takes longer to fill vacancy [k]
 Required if no suitable candidates in the business [k]

Internal recruitment :
 Can help motivate other employees [k] which could lead to fewer people
leaving / reduce absenteeism [an]
 Internal promotion can create another vacancy that then needs to be filled [k]

Other appropriate responses should also be credited.

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0450/11 Cambridge IGCSE – Mark Scheme May/June 2022
PUBLISHED
Question Answer Marks Notes

4(e) Justification might include:

External recruitment can bring in new skills and ideas [k] helping improve
productivity [an]. Whereas using internal recruitment can help motivate other
employees [k] which could lead to fewer people leaving [an]. Overall, it depends
on the skills within the business because if there are no suitable workers external
recruitment would be the only choice. [eval] [eval]

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