Cambridge Assessment International Education

Cambridge International Advanced Level

BUSINESS 9609/32
Paper 3 Case Study March 2018
MARK SCHEME
Maximum Mark: 100

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 March 2018 series for most
Cambridge IGCSE®, Cambridge International A and AS Level components and some Cambridge O Level
components.

® IGCSE is a registered trademark.

This document consists of 15 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.

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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Question Answer Marks

1 ‘The Government of country X has decided to end international trading 10

agreements with neighbouring countries.’ (Lines 15–16)

Analyse the likely impact on AP of this decision.

Knowledge Application Analysis

Level
3 marks 2 marks 5 marks
4–5 marks
3 marks 2 marks Good use of reasoned
2 Good knowledge Points well argument or theory to
shown of impacts. applied explain the likely
impacts.
1 mark
1–3 marks
1–2 marks Some attempt to
Some use of reasoned
1 Knowledge shown apply points or
argument or theory to
impacts. one point well
explain likely impacts
applied
0 No creditable content

Answers may include:

Knowledge/definitions
• International trading areas – agreements such as free trade
• Economic slowdown – decrease in economic growth, rising
unemployment, currency depreciation

Benefits
• Depreciating currency – exports will be more competitive
• Slowdown – wage rates in country X will grow more slowly
• country X interest rates are likely to stay low

Limitations
• All imported materials will be more expensive,
• country X consumers will have less disposable incomes,
• Will AP need to increase prices?
• Costs of all overseas projects will increase
• General disadvantages around uncertainty, such as banks’ attitude
towards lending and investor nervousness.

Application
• Reference to data in Table 1, e.g. may be able to trade more freely with
USA and Asia
• Imported products, including processed raw materials such as hair and
beauty ingredients from overseas will be more expensive.
• Falling country X incomes but are cosmetic products luxuries? Some
may see as necessities.
• Cost of new factory, further growth options will increase

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Question Answer Marks

1 Analysis
• New trade agreements could increase sales and market share in other
countries/greater awareness
• Slowdown in Country X will weaken market conditions and sales but this
could be offset by better sales elsewhere due to competitive prices
• Could this affect the decision to relocate more production overseas?
• Higher cost of raw materials could feed through into price rises

Question Answer Marks

2(a) Refer to lines 34–41 and Table 2. Calculate the forecast change in the 6
dividend yield from 2017 to 2018.

2017 (actual) 2018 (forecast)

Revenue 550 580
Operating profit 56 60
Share price $4 per share $3.80 per share
Dividend per share $0.30 per share $0.28 per share
Retained profit 10 12

Dividend yield = (dividend per share/share price) × 100 (1 mark)

Dividend yield 2017: 0.30/4 × 100 = 7.5% (2 marks)

Dividend yield forecast 2018: 0.28/3.80 × 100 = 7.37% (2 marks)

Change in yield: 7.37 – 7.5 – = – 0.13% (or 0.13/7.5 × 100 = 1.73%)

(6 marks)

Accept 7.36% therefore -0.14% (6)

Accept answer as decimal i.e. 0.0737 (2), 0.075 (2) and 0.0013 (6) etc.

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Question Answer Marks

2(b) Refer to your results to part (a) and other information from the case.
Recommend to AP’s shareholders whether they should sell their
shares in the company.

Knowledge Application Analysis Evaluation

Level
2 marks 2 marks 4 marks 4 marks
3–4 marks
2 marks 3–4 marks
2 marks Good use of
At least two Good
2 Points well theory to
relevant judgement
applied answer the
points made shown
question
1 mark 1–2 marks
1–2 marks
1 mark Some attempt Some use of
Some
1 One relevant to apply points theory to
judgement
point made or one point answer the
shown
well applied question
0 No creditable content

Examiner note: L1 An & Eval if only use results to part (a) or other
information

Answers may include:

Knowledge/definitions
• Shareholders as owners of the plc are interested in share prices and
return on shares, so dividend yield is important

Application
• Use of figures/ratios calculated from the data, e.g. change in profit
margin
• Detail of possible expansion plans into men’s products/salons in hotels

Reasons to sell shares

• Share price is predicted to fall, sell before it falls further?
• Dividend yield is predicted to fall (but not significantly)
• Shareholder nervousness about future of company
• Recent fall in profit and dividends

Reasons to keep shares

• Profit margin is forecast to increase (10.2% to 10.3%)
• Interest rates still low so worse returns from banks
• Company expansion plans announced at AGM may be promising
• Strong track record of increasing dividend
• Commitment to CSR could be important to some investors

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Question Answer Marks

2(b) Analysis
• Share price fall decreases value of investment, may be reason to sell
• Dividend yield is not changing significantly, so returns may still be
acceptable to some investors
• Long term view – company success in future potentially helped by new
growth plans.

Evaluation
• Decision either way – sell or not
• How well has Mary communicated the company’s expansion plans?
• Are shareholders in it for the long term or short term?
• Main factor for shareholders holding shares? Return or ethical
considerations
• How are other investments performing?

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Question Answer Marks

3 To what extent might AP’s focus on corporate social responsibility be 16

the most important factor for the success of the proposed new
marketing strategy for international markets?

Knowledge Application Analysis Evaluation

Level
2 marks 2 marks 6 marks 6 marks
4–6 marks
2 marks 4–6 marks
2 marks Good use of
At least two Good
2 Points well theory to
relevant judgement
applied answer the
points made shown
question
1 mark 1–3 marks
1–3 marks
1 mark Some attempt Some use of
Some
1 One relevant to apply points theory to
judgement
point made or one point answer the
shown
well applied question
0 No creditable content

Answers may include:

Knowledge/definitions
• Corporate social responsibility includes attitudes and activities
undertaken by AP to show their company in a positive light in terms of
contributions to society.
• A marketing strategy includes objectives, marketing budget, USP,
marketing mix.
• Issues of cost and competitiveness

Application
• AP’s commitment to girls’ education in Africa. Ethical trading includes
paying fair prices for raw materials, not testing on animals and no
exploitation of child or other very low cost labour.
• (NB allow comments about well known businesses who market
themselves in this way, such as the Body Shop and candidates’ local
examples.)
• Marketing strategy in this case the objective is to increase sales in Asia
and USA.
• Could media reports of worker exploitation in Africa work against AP’s
declared belief in CSR?

Analysis
• Ways in which CSR may be used as part of strategy and increase sales,
e.g. to ‘ethical’ consumers. May enable slightly higher prices to be set.
• Ways in which this could also increase costs – pressure on price for
cost reasons, e.g. paying higher prices to suppliers.
• Do customers really care? May not influence consumers to buy over
cheaper supermarket ‘own brand’.

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Question Answer Marks

3 Evaluation
• Judgement on importance
• Other aspects of the marketing strategy that may be more important e.g.
need to ensure that all parts of the company are run responsibly
• How do these aspects fit in with all aspects of the marketing strategy, for
example to what extent does the company have a USP
• Issues of consumer attitude – to what extent do these aspects ‘sell’
products? Might consumers in some countries be more aware than in
others? Cynically, do consumers actually care?

Question Answer Marks

4(a)(i) Refer to Table 3 and the network diagram. 7

Calculate and enter on the network diagram the earliest start time
(EST) and latest finish time (LFT) for each activity.

See diagram below:

1 mark per correct node

3 marks if all ESTs correct
3 marks if all LFTs correct
OFR

4(a)(ii) Identify on the network diagram the critical path. 1

Critical path is A,B,C,E,G,J

Note: It is not necessary to redraw the network diagram, but credit

candidates who have included answers on their own drawn diagram.

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Question Answer Marks

4(b) Refer to your answer to part (a) and other information from the case. 12
Assess the usefulness of critical path analysis (CPA) to AP when
planning the new factory project.

Knowledge Application Analysis Evaluation

Level
2 marks 2 marks 4 marks 4 marks
2 marks 3–4 marks 3–4 marks
2 marks
At least two Good use of Good
2 Points well
relevant theory to answer judgement
applied
points made the question shown
1 mark
1–2 marks 1–2 marks
1 mark Some attempt to
Some use of Some
1 One relevant apply points or
theory to answer judgement
point made one point well
the question shown
applied
0 No creditable content

Examiner note: L1 An & Eval if only use results to part (a) or other
information

Answers may include

Knowledge/definitions
• CPA or network diagram is a way of sequencing activities and
identifying which may not be delayed without delaying the whole project.
• Needs to be drawn up using expert information and realistic estimates of
time taken. May be time consuming to carry out.
• Useful to work out which activities may be carried out at the same time
• May mean that resources, are ordered when needed and do not have to
be kept for a long time before use.
• But does not take account of unforeseen delays.

Application
• Reference to particular tasks which may/may not be easy to predict the
duration, e.g. installation of services such as water
• Reference to reasons for delays, for example bad weather delaying
building work or unreliable suppliers of building materials
• Possible lack of expertise in AP for planning this type of building project,
due to lack of knowledge of local conditions in Africa.
• Reference to importance of activities on the critical path

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Question Answer Marks

4(b) Analysis
• Line of argument followed as to how a network diagram may help to
plan and sequence activities, avoid waste of time and resources
• Line of argument as to why/how this may be difficult to predict and the
consequences, if a critical activity is delayed, this will delay the whole
project and lead to increased costs.

Evaluation
• Only as accurate as information and expertise used to compile it.
• A useful tool, along with local knowledge, e.g. in African environment in
this case.

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Question Answer Marks

5 Discuss the importance of human resource management to the 16

success of the new African factory.

Knowledge Application Analysis Evaluation

Level
2 marks 2 marks 5 marks 5 marks
4–6 marks
2 marks 4–6 marks
2 marks Good use of
At least two Good
2 Points well theory to
relevant points judgement
applied answer the
made shown
question
1 mark 1–3 marks
1–3 marks
1 mark Some attempt Some use of
Some
1 One relevant to apply points theory to
judgement
point made or one point answer the
shown
well applied question
0 No creditable content

Answers may include

Knowledge/definitions
• Human resources management – all aspects of planning, recruiting, and
motivating the workforce
• Within HRM – workforce planning – assessing and providing for the
workforce needs of the business, both now and in the future.
• Careful planning will be needed for both the factory set-up and
subsequent running and management.
• Recruitment issues – getting the right people for the jobs.
• Involvement and motivation of workforce in decision making, teamwork,
targets (MBO?) Kaizen groups.
• Local cultural issues and language barriers

Application
• This is a project that is being set up ‘from scratch’. Considerable
planning expertise will be needed to set up and equip the new factory.
• Co-ordination may be difficult between local managers and those from
country X who are sent to set up the factory
• Discussion of skills required, both for new systems and for kaizen
groups and related points.
• Discussion of production targets as a means of motivation and related
teamwork issues

Analysis
• Effective HRM will be essential, examples and followed through
arguments of how successful planning, recruitment, training and on-
going motivation and leadership may/may not lead to the success of the fa
• The impact of local issues, such as possible redundancy of ‘unskilled
and unsuitable’ staff.
• The impact of communication barriers between country X and the
factory managers in Africa.

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Question Answer Marks

5 Evaluation
• Successful set up and running will need workforce to operate as a
cohesive team
• Communication will be essential within the factory and with AP in
country X
• Well motivated workforce should lead to more willingness to learn new
skills, but issues of education and expertise
• Expertise and training issues – how will modern techniques be
introduced? Might it be difficult to find local managers with expertise?

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Question Answer Marks

Questions 6 and 7 use this marking grid

Knowledge Application Analysis Evaluation

Level
3 marks 3 marks 4 marks 10 marks
7–10 marks
Good judgement shown throughout with
3 well supported conclusion/
recommendation, focused on the
business in the case
4–6 marks
3–4 marks Some judgement shown in the main body
3 marks Good use of of the answer and an attempt to support
3 marks
Good reasoned conclusion/ recommendation, focused on
Good
2 under- argument or the business in the case
application
standing use of theory OR
to the case
shown to explain effective and well supported conclusion/
points made recommendation, focused on the
business in the case
1–2 marks 1–3 marks
1–2 marks Limited use of Limited attempt to show judgement either
1–2 marks
Some reasoned within the answer
Some
1 under- argument or OR
application
standing use of theory a weakly supported conclusion/
to the case
shown to support recommendation with some focus on the
points made business in the case
0 No creditable content

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Question Answer Marks

6 Evaluate the usefulness of strategic choice techniques to AP’s 20

directors to help them decide between the two options for growth.

L1 Skills maximum if just making a choice based on data rather than

focussing on usefulness of techniques

Answers may include:

Knowledge/definitions
• Strategic choice techniques – Ansoff, Force Field analysis, Decision
trees and how they might be used in this case to weigh up the options
• Option A is selling the same products but in a different market, but also
a new direction into service sector.
• Option B is developing a new range of related products, for a market
that AP has limited knowledge of.
• Balance of costs and risk
• Would either option prove a disaster for the company in the case of
failure?

Application
• Reference to data in table 4 and other information as it applies to
techniques
• Detail of two options applied to strategic choice techniques

Analysis
• Use of techniques to weigh up data – cost and risk, followed through
with affordability to AP
• Comparison between techniques, given the data available.

Evaluation
• Limitations of techniques
• Need to use other information
• Dynamic nature of markets concerned
• Which option is favoured by Directors?

Examiner’s note: maximum L1 Analysis and Evaluation, if only the choice

between options is addressed rather than techniques.

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Question Answer Marks

7 Assume that AP’s directors choose option A. Evaluate how this 20

strategy may be successfully implemented.

L1 maximum if implementation based only on one functional area.

Answers may include:

Knowledge/definitions
• Strategic implementation follows strategic analysis and strategic choice.
It means putting a strategy into effect in a planned way, with the
purpose of achieving an identified objective.
• This is a major decision involving significant change and resources,
including an entry into the service sector.
• Corporate and contingency planning will be needed
• Benefits of business planning in this context
• Resources and finance? Use of retained profit?

Application
• AP knows a lot about production of products but not running salons
• Maintaining supplies of beauty products to salons and hotels
• How to plan for seasonality – flexible staffing for salons? Will staff be
employed/recruited by AP or the hotels?
• Issues of working together with hotel group in different countries
• Will there be a ‘pilot’ project to try this out in a few hotels first? – may
help to iron out difficulties
• If hotel group runs into business problems, this will be out of AP’s
control but will have a negative impact

Analysis
• Possible consequences of issues identified and how they may be
successfully managed
• Followed through chain of argument of the importance of aspects such
as seasonality, business planning, entry into service sector.
• Followed through chain of arguments about the importance of corporate
planning/contingency planning.

Evaluation
• Planning will be essential
• Success will also depend on success of the hotel group, this could
increase risk
• There is a 30% chance of failure – what could this look like? How easy
might it be to withdraw if the project fails?
• Communication will be essential

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