Mark Scheme (Results)

November 2020

Pearson Edexcel International GCSE

In Business (4BS1)
Paper 1: Investigating Small Businesses
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Autumn 2020
Publications Code 4BS1_01_2011_MS
All the material in this publication is copyright
© Pearson Education Ltd 2020
General Marking Guidance

• All candidates must receive the same treatment. Examiners

must mark the first candidate in exactly the same way as they
mark the last.
• Mark schemes should be applied positively. Candidates must
be rewarded for what they have shown they can do rather than
penalised for omissions.
• Examiners should mark according to the mark scheme not
according to their perception of where the grade boundaries
may lie.
• There is no ceiling on achievement. All marks on the mark
scheme should be used appropriately.
• All the marks on the mark scheme are designed to be awarded.
Examiners should always award full marks if deserved, i.e. if
the answer matches the mark scheme. Examiners should also
be prepared to award zero marks if the candidate’s response
is not worthy of credit according to the mark scheme.
• Where some judgement is required, mark schemes will
provide the principles by which marks will be awarded and
exemplification may be limited.
• When examiners are in doubt regarding the application of the
mark scheme to a candidate’s response, the team leader must
be consulted.
• Crossed out work should be marked UNLESS the candidate has
replaced it with an alternative response.
Question Answer Mark
Number
1 (a) (i) AO1 = 1 mark

The only correct answer is B – Income tax

A is not correct because sales tax is not a tax

C is not correct because it is a tax paid by limited businesses

D is not correct because it is not a tax

(1)
Question Answer Mark
Number
1 (a) (ii) AO1 = 1 mark

The only correct answer is D – Packaging

A is not correct because it is a fixed cost

B is not correct because it is a fixed cost

C is not correct because it is a fixed cost

(1)
Question Answer Mark
Number
1 (a) (iii) AO1 = 1 mark

The only correct answer is C – Focus groups

A is not correct because it is a method of secondary market

research

B is not correct because it is a method of secondary market

research

D is not correct because it is a method of secondary market

research

(1)
Question Answer Mark
Number
1 (a) (iv) AO1 = 1 mark

The only correct answer is A –

Total cash inflow – total cash outflow

B is not correct because it is the incorrect calculation

C is not correct because it is the incorrect calculation

D is not correct because it is the incorrect calculation

(1)
Question Answer Mark
Number
1 (a) (v) AO2 = 1 mark

The only correct answer is D - €86.25

A is not correct because this is worked out by multiplying five

lessons by the exchange rate of €1.15

B is not correct because this is the cost of the lesson

C is not correct because this is worked out by multiplying the

cost of each lesson at £15 by five lessons
(1)
Question Answer Mark
Number
1 (a) (vi) AO2 = 1 mark

The only correct answer is A – A decrease in cash outflows

B is not correct because this is not an impact of a

decrease in the exchange rate

C is not correct because this is not an impact of a

decrease in the exchange rate

D is not correct because this is not an impact of a

decrease in the exchange rate

(1)
Question Answer Mark
Number
1 (b) AO1 = 1 mark

Award 1 mark for a correct definition of fixed costs.

• Costs that do not vary with the level of output (1).

(1)

Question Answer Mark

Number
1 (c) AO1 = 1 mark

Award 1 mark for the correct definition of stakeholder.

• An individual or a group with an interest in the business

(1).
(1)

Question Answer Mark

Number
1 (d) AO2 = 1 mark

Award 1 mark for a valid response that relates to investing in

computer technology in the context of the business.

• TADS could improve the quality of the sound that the

drums make (1).
(1)

Question Answer Additional guidance Mark

Number
1 (e) AO2 = 2 marks Award 1 mark for correctly
substituting numbers into
(350 – 190) / 190 x 100 (1) formula.

= 84.21% (1) Award full marks for correct

numerical answer without
working.
(2)
Question Answer Mark
Number
1 (f) AO1 = 3 marks

Award 1 mark for identification of a disadvantage, plus 2

further marks for explaining how this will affect a business for
a maximum of 3 marks.

• Partners may disagree and fall out (1) meaning decision

making can take longer (1) stopping the business
moving forward with new ideas (1).

Accept any other appropriate response.

(3)

Question Indicative content Mark

Number
1 (g) AO2 = 3 marks AO3 = 3 marks

AO2
• TADS is located in a wealthy area near to people with
more disposable income.
• TADS needs to be far away from competitors in the
music school industry.

AO3
• It is important to be located close to the target market
as parents may not want to travel far for the lessons
for their children.
• As the service provided is specialised it is best to be far
away from other drumming schools as not everyone
will want to play them. (6)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 • Limited application of knowledge and understanding of
business concepts and issues to the business context. (AO2)
• Attempts to deconstruct business information and/or
issues, finding limited connections between points. (AO3)
Level 2 3–4 • Sound application of knowledge and understanding of
business concepts and issues to the business context
although there may be some inconsistencies. (AO2)
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies. (AO3)
Level 3 5–6 • Detailed application of knowledge and understanding of
business concepts and issues to the business context
throughout. (AO2)
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning. (AO3)

Question Answer Mark

Number
2 (a) AO2 = 1 mark

Award 1 mark for a valid reason of business failure in the

context of the business.

• Ollie may not have enough experience of other musical

instruments so costs could increase as he may have to
employ a specialist musician (1).
• An increase in the economy could lead to an increase in
the demand of leisure activities and Ollie may not be
able to cope with the demand (1).

Accept any other appropriate response. (1)

Question Answer Mark

Number
2 (b) AO2 = 1 mark

Award 1 mark for a valid benefit of employing casual staff in

the context of the business.

• If TADS is successful it can employ music teachers for

instruments other than drums when needed (1).
• When TADS has quieter periods of business it can
reduce the hours of the specialist teachers (1). (1)
Question Answer Mark
Number
2 (c) AO1 = 3 marks

Award 1 mark for identification of a purpose of market

research, plus 2 further marks for explaining this purpose for a
business, for a maximum of 3 marks.

• A purpose of market research can be to identify your

customers’ needs (1) this will help you to design your
products to meet those needs (1) and allow the
business to be more successful (1).

NB Answers that list three purposes with no explanation will

get a maximum of 1 mark.

Accept any other appropriate response. (3)

Question Answer Mark
Number
2 (d) AO1 = 3 marks

Award 1 mark for identification of a measure of business

success, plus 2 further marks for explaining this measure for a
business, for a maximum of 3 marks.

• A measure can be through customer satisfaction (1). If

customers are happy with the products/services they
are likely to revisit the business (1) and this could lead
to them recommending the business to friends and
family (1).

NB Answers that list three measures with no explanation will

get a maximum of 1 mark.

Accept any other appropriate response. (3)

Question Answer Mark
Number
2 (e) AO1 = 3 marks

Award 1 mark for the identification of an impact of an increase

in interest rates, plus 2 further marks for explaining that
impact, for a maximum of 3 marks.

• An increase in interest rates could lead to higher costs

for a business (1). This can lead to a reduction in profits
because each month the business must pay back part
of the debt (1) and the interest charged on the loan will
be higher (1).

Answers that list three impacts of an increase in interest rates

with no explanation will get a maximum of 1 mark.

NB No marks are awarded for a definition.

Accept any other appropriate response. (3)

Question Indicative content Mark
Number
2 (f) AO2 = 3 marks AO3 = 3 marks
AO4 = 3 marks

AO2
• Option 1 – By using commission TADS would encourage
its teachers to find new pupils who want to learn music.
• Option 2 – Increasing the hourly rate would encourage
music teachers to work for longer hours.

AO3
• Option 1 – By recruiting more pupils teachers will be
paid a commission on top of their hourly rate for
teaching.
• Option 2 – Teachers are more likely to remain with TADS
as they believe they are being paid well for the work
they do.

AO4
• Option 1 – However, the commission is a one-off
payment and once paid the teachers would only receive
their hourly rate, which may not be sufficient to continue
to be employed by TADS.
• Option 2 – However, if TADS cannot increase the number
of pupils it may not be able to retain all of the teachers it
currently employs. (9)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 • Limited application of knowledge and
understanding of business concepts and issues to
the business context. (AO2)
• Attempts to deconstruct business information
and/or issues, finding limited connections between
points. (AO3)
• Makes a judgement, providing a simple justification
based on limited evaluation of business information
and issues relevant to the choice made. (AO4)
Level 2 4–6 • Sound application of knowledge and understanding
of business concepts and issues to the business
context although there may be some
inconsistencies. (AO2)
• Deconstructs business information and/or issues,
finding interconnected points with chains of
reasoning, although there may be some logical
inconsistencies. (AO3)
• Makes a judgement, providing a justification based
on sound evaluation of business information and
issues relevant to the choice made. (AO4)
Level 3 7–9 • Detailed application of knowledge and
understanding of business concepts and issues to
the business context throughout. (AO2)
• Deconstructs business information and/or issues,
finding detailed interconnected points with logical
chains of reasoning. (AO3)
• Makes a judgement, providing a clear justification
based on a thorough evaluation of business
information and issues relevant to the choice made.
(AO4)
Question Answer Mark
Number
3 (a) AO1 = 1 mark

Award 1 mark for the correct definition of liquidity.

• Liquidity is how easily a business can change its assets

into cash (1). (1)

Question Answer Mark

Number
3 (b) AO2 = 2 marks

Award 1 mark for identifying a possible financial objective TADS

might have. One further mark for outlining it in the context of
the business.

• Ollie is looking to increase his profits (1). He could do this

by increasing the number of instruments taught (1).
(2)

Question Answer Additional guidance Mark

Number
3 (c) A02 – 2 marks Award 1 mark for
correctly substituting
Net cash flow = 7 000 – 3 000 numbers into formula.
= 4 000 (1)
Award full marks for
Closing balance = 4 000 + 4 000 correct numerical
= 8 000 (1) answer without
working.
(2)
Question Indicative content Mark
Number
3 (d) AO2 = 3 marks AO3 = 3 marks

A02
• If TADS has sufficient cash it can pay its electricity bills
for the music studio.
• If TADS runs out of cash it means it cannot pay its
music teachers.

A03
• If TADS cannot afford to pay its bills, then the
electricity would be cut and no lessons could take
place.
• If TADS can no longer pay its teachers, it cannot offer
any music lessons.

(6)

Level Mark Descriptor

0 No rewardable material.
Level 1 1–2 • Limited application of knowledge and understanding of
business concepts and issues to the business context. (AO2)
• Attempts to deconstruct business information and/or
issues, finding limited connections between points. (AO3)
Level 2 3–4 • Sound application of knowledge and understanding of
business concepts and issues to the business context
although there may be some inconsistencies. (AO2)
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies. (AO3)
Level 3 5–6 • Detailed application of knowledge and understanding of
business concepts and issues to the business context
throughout. (AO2)
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning. (AO3)
Question Indicative content Mark
Number
3 (e) AO2 = 3 marks AO3 = 3 marks AO4 = 3 marks

AO2
• Option 1 – Teaching other musical instruments will
bring in new music students and revenue.
• Option 2 – By offering online lessons more students
will be able to take drum lessons and therefore
increase revenue.

AO3
• Option 1 – This would increase its target market due
to the wider range of musical instruments being
offered leading to an increase in revenue.
• Option 2 – This would increase revenue as more
students can be taught at the same time in different
locations around the country and the world.

AO4
• Option 1 – However, although this may lead to more
revenue for the business it would need to find and
pay additional teachers to provide this service.
• Option 2 – However, there could be technical issues
that might lead to lessons being interrupted and not
delivered, giving TADS a bad reputation.

(9)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 • Limited application of knowledge and understanding of
business concepts and issues to the business context. (AO2)
• Attempts to deconstruct business information and/or
issues, finding limited connections between points. (AO3)
• Makes a judgement, providing a simple justification based
on limited evaluation of business information and issues
relevant to the choice made. (AO4)
Level 2 4–6 • Sound application of knowledge and understanding of
business concepts and issues to the business context
although there may be some inconsistencies. (AO2)
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies. (AO3)
• Makes a judgement, providing a justification based on
sound evaluation of business information and issues
relevant to the choice made. (AO4)
Level 3 7–9 • Detailed application of knowledge and understanding of
business concepts and issues to the business context
throughout. (AO2)
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning. (AO3)
• Makes a judgement, providing a clear justification based on
a thorough evaluation of business information and issues
relevant to the choice made. (AO4)
Question Answer Additional guidance Mark
Number
4 (a) AO2 = 2 marks Award 1 mark for
correctly substituting
7.70 x 0.025 = 0.1925 (1) numbers into formula.

0.1925 + 7.70 = 7.89 (1) Award full marks for

correct numerical
answer without
working. (2)
Question Indicative content Mark
Number
4 (b) AO2 = 3 marks AO3 = 3 marks

A02
• TADS could use sales promotions such as coupons in
the local newspaper that Ollie writes a column for.
• TADS could go to music festivals to showcase the
skills of its students.

A03
• Coupons in the newspaper may lead to local readers
using them thus increasing the number of students.
• By doing this spectators will see the skills that have
been taught and be encouraged to learn to play a
new musical instrument.

(6)

Level Mark Descriptor

0 No rewardable material.
Level 1 1–2 • Limited application of knowledge and understanding of
business concepts and issues to the business context. (AO2)
• Attempts to deconstruct business information and/or
issues, finding limited connections between points. (AO3)
Level 2 3–4 • Sound application of knowledge and understanding of
business concepts and issues to the business context
although there may be some inconsistencies. (AO2)
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies. (AO3)
Level 3 5–6 • Detailed application of knowledge and understanding of
business concepts and issues to the business context
throughout. (AO2)
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning. (AO3)
Question Indicative content Mark
Number
4 (c) AO1 = 3 marks AO2 = 3 marks
AO3 = 3 marks AO4 = 3 marks

A01
• A private limited company is a suitable type of
ownership for small and medium-sized businesses.
• In a private limited company, the shareholders can
only lose the money they invest.

A02
• As a one-man business becoming a private limited
company means Ollie could raise more funds from
family and friends.
• TADS will have a separate legal identity meaning the
business could carry on if anything happened to
Ollie.

A03
• If TADS opts for a private limited company then Ollie
can control who the other owners will be allowing
him to choose people who have an interest in music
and can invest in the business.
• Having Ltd status means that Ollie’s personal
possessions are protected as are those of his
shareholders. The benefit of this is that the risk for
shareholders is reduced.

A04
• However, Ollie may not get a lot of interest so cannot
raise large amounts of money and this can slow
down his expansion plans. He may find it easier to
opt for another source of finance such as a bank
loan rather than change the legal ownership of the
business, so he does not lose any control of the
business.
• However, becoming a Ltd will involve an increase in
paperwork and some information will have to be
shared publicly and this could be of some interest to
Ollie’s competitors. (12)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–4 • Demonstrates elements of knowledge and understanding of
business concepts and issues, with limited business
terminology used. (AO1)
• Limited application of knowledge and understanding of
business concepts and issues to the business context. (AO2)
• Attempts to deconstruct business information and/or issues,
finding limited connections between points. (AO3)
• Makes a judgement, providing a simple justification based on
limited evaluation of business information and issues
relevant to the choice made. (AO4)
Level 2 5–8 • Demonstrates mostly accurate knowledge and
understanding of business concepts and issues including
appropriate use of business terminology in places. (AO1)
• Sound application of knowledge and understanding of
business concepts and issues to the business context
although there may be some inconsistencies. (AO2)
• Deconstructs business information and/or issues, finding
interconnected points with chains of reasoning, although
there may be some logical inconsistencies. (AO3)
• Makes a judgement, providing a justification based on sound
evaluation of business information and issues relevant to the
choice made. (AO4)
Level 3 9–12 • Demonstrates accurate knowledge and understanding of
business concepts and issues throughout, including
appropriate use of business terminology. (AO1)
• Detailed application of knowledge and understanding of
business concepts and issues to the business context
throughout. (AO2)
• Deconstructs business information and/or issues, finding
detailed interconnected points with logical chains of
reasoning. (AO3)
• Makes a judgement, providing a clear justification based on a
thorough evaluation of business information and issues
relevant to the choice made. (AO4)
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