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Mr. M Razaq

EXAM STRUCTURE BOOK 2

IGCSE Business - Paper 2
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Exam Question Structure – Paper 2

8-mark question – Type 1
Question type Structure Requirements
1 knowledge,
1 analysis x 4
• No application marks available for this answer.
Explain four
• You need to identify a point and explain it clearly.
Four separate
paragraphs.

8-mark question – Type 1 – Sample question(s) and answer(s)

Question type Possible Answers
Explain four methods a business
Mark scheme answer
could use to communicate with
• Letter – when more of a formal document is required such as informing an employee of dismissal
its employees

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8-mark question – Type 2

Question type Structure Requirements
Explain 1 knowledge mark
• One advantage and one 1 application mark
• You should write two paragraphs
disadvantage 2 analysis marks x 2
• State your point clearly, and then explain with two analysis points (therefore and as
a result)
Two separate
• Explain two ways • You must include application in your answer which is in context of the case study.
paragraphs.

8-mark question – Type 2 – Sample question(s) and answer(s)

Question type Possible Answers

• Sadiq could keep more control of the whole business – As a result he will have some time to devote to
checking on and communicating with his employees – Therefore, he will be more aware of what is
Explain one advantage and one
happening in the business and if anything needs changing
disadvantage to Sadiq of
delegating tasks to his employees.
Knowledge mark – First analysis mark – second analysis mark

One way in which Saanvi can increase added value is to reduce raw materials cost. She could buy cheaper
fabric. As a result, will increase the gap between price and input costs. Therefore, this will increase her added
value
Explain two ways Saanvi can
increase the added value of ST
Mark scheme answer
products.
• For example: Reduce raw material costs (1) such as buy cheaper fabric/material (app). ST could change to
a cheaper supplier of raw materials (1). This will increase the gap between price and input costs and
therefore increase added value (1).

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8-mark question – Type 3

Question type Structure Requirements
1 knowledge,
Explain two advantages and 1 analysis x 4
• No application marks available for this answer.
two disadvantages of being
• You need to identify a point and explain it clearly.
sole trader Four separate
paragraphs.

8-mark question – Type 3 – Sample question(s) and answer(s)

Question type Possible Answers
Mark scheme answer
Advantages
The owner is their own boss – They will be able to make their own decisions.
Few legal regulations when setting up – They will be able to set up the business and shut down the business
Explain two advantages and two when they want.
disadvantages of being a sole trader.
Disadvantages
No one to discuss business decisions with – Therefore there will be a lack of ideas.
May have to remain small due to lack of capital – They will not be able to exploit economies of scale.

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12-mark question – Type 1

Question type Structure Requirements
Three paragraphs
Consider two 4 marks reserved for • 1st Paragraph – Point, analysis, analysis with application. (3)
recommendation. • 2nd Paragraph - Point, analysis, analysis with application. (3)
2 marks reserved for relevant • 3rd Paragraph – 1st evaluation point with explanation, 2nd evaluation
Consider the advantages of application. point with explanation – you should also try to include application in
both methods your answer. (4) + (2 application points)
6 marks divided into two
Consider how the following paragraphs, each containing a Note: This question is based on levels. The marks indicated are only a
two changes knowledge mark and 2x analysis guidance to help with understanding.
marks. (3 + 3)

12-mark question – Type 1 – Sample question(s) and answer(s)

Question type Possible Answers
For this question you have been provided with two types of marketing that you need to consider.
Your first paragraph will be on niche marketing, the second on mass marketing and the last will be your
recommendation. Remember your answer is based on levels so you need to meet all levels to achieve the highest mark.

To expand the business in the Structure

future ST need to decide whether
to change from niche marketing • Niche Marketing – A benefit of niche marketing is …………. this is a benefit because… therefore…… A limitation of
to mass marketing. niche marketing is ……. this is a limitation because…… therefore……….

Consider the advantages of both • Mass Marketing – A benefit of mass marketing is …………. this is a benefit because… therefore…… A limitation of mass
methods. Which method should marketing is ……. this is a limitation because…… therefore……….
ST use? Justify your answer.
• Recommendation – Choose one methods and state why that method is best one. For your second recommendation
point, you could say the following – (use both for different products, use both SR and LR,)

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12-mark question – Type 2

Question type Structure Requirements
Four paragraphs
• 1st Paragraph – Point, analysis, analysis with application. (2)
4 marks reserved for
• 2nd Paragraph - Point, analysis, analysis with application. (2)
recommendation.
• 3rd Paragraph - Point, analysis, analysis with application. (2)
2 marks reserved for relevant
• 4th Paragraph – 1st evaluation point with explanation, 2nd evaluation
application.
Consider three point with explanation – you should also try to include application in
your answer. (4) + (2 application points)
6 marks divided into three
paragraphs, each containing a
Note: This question is based on levels. The marks indicated are only a
knowledge mark and 1x analysis
guidance to help with understanding.
marks. (2 + 2 + 2)

12-mark question – Type 2 – Sample question(s) and answer(s)

Question type Possible Answers
For this question you have been provided with three types of distributions channels to consider.
Your first paragraph will be on using a wholesaler, the second a retailer and the third selling direct to the customer.
Remember your answer is based on levels so you need to meet all levels to achieve the highest mark.

Consider the advantages and • Wholesaler – A benefit of using a wholesaler is …………. this is a benefit because… therefore…… A limitation of using a
disadvantages to FO of using a wholesaler is ……. this is a limitation because…… therefore……….
wholesaler, retailer or selling
direct to the customer when
distributing its products. • Retailer – A benefit of using a retailer is …………. this is a benefit because… therefore…… A limitation of using a retailer
is ……. this is a limitation because…… therefore……….
Which channel of distribution
should FO use? Justify your • Selling direct to the customer – A benefit of selling direct to a customer is …………. this is a benefit because…
answer. therefore…… A limitation of selling direct to a customer ……. this is a limitation because…… therefore……….

• Recommendation – Choose one methods and state why that method is best one. For your second recommendation
point, you could say the following – (use could use multiple channels, or different methods for different products)

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12-mark question – Type 3 – Calculation with two options

Question type Structure Requirements
Three paragraphs • 1st Paragraph – Option A: Identify a point (ideally where option A is better than
4 marks reserved for option B) you then need to explain why that is important. Then do a calculation of
recommendation. your choice and then say why that answer you have come up with for option A is
2 marks reserved for better than option B. (3)
relevant application. • 2nd Paragraph – Option B: Identify a point (ideally where option B is better than
option A) you then need to explain why that is important. Then do a calculation of
• Consider two
6 marks divided into your choice and then say why that answer you have come up with for option B is
two paragraphs, each better than option A. (3)
containing a • 3rd Paragraph – Recommendation: Here you need to choose which option is better.
knowledge mark and You should do another calculation to justify your point. Then say why the other
2x analysis marks. option is not suitable and then explain why – again this could be another
(3 + 3) calculation. (4)

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12-mark question – Type 3 – Sample question(s) and answer(s)

Question type Possible Answers
For this question you have been provided with two options to consider.
Consider the two products outlined in Appendix 3.
You need to include:
Which product should FJ produce? Justify your
1. A comparison between the two options.
answer using relevant calculations.
2. A detailed discussion on both options.
Insert
3. A detailed justification to say which option is best and why.
Question Paper
Remember your answer is based on levels so you need to meet all levels to achieve the highest mark.
Mark Scheme for this answer.
Gross profit calculation
Price x Quantity = Total revenue
($5.00 x 2000 = $10,000) –
• Drink A: This option has a higher selling price than drink B $5.00 compared to
(Average variable cost x quantity = Cost of sales $4.00 x 2000 =$8000).
$2.00, this suggests FJ is targeting high income consumers for this new fruit
(Total revenue – Cost of sales = Profit $10 000 - $8 000 = $2 000)
drink. Drink A also has a gross profit of $2000 and the GPM for the drink A is
20%. This means for every $1 in sales, the business makes $0.20 in profit.
Gross profit margin calculation
(Profit/Total Revenue= Gross Profit Margin x 100)
$2000/$10 000 x 100 = 20%
Total cost/quantity
Total costs = Average cost per unit x quantity + fixed costs.
• Drink B: This option has a lower price of $2.00, this suggests that FJ is
targeting low-income earners for this new fruit drink. Drink B also has a lower Drink A: $4.00 x 2000 = $8 000 + $500 = $8 500
average cost than Drink B, $1.10 compared to $4.25, which means Drink B is $8 500 / 2000 = $4.25
cheaper to produce.
Drink B: $1.00 x 5000 = $5000 + $500 = $5 500
$5 500 / 5000 = $1.10
• Recommendation: After considering the two options, I believe Drink A is the best option, this is because the drink contains 6 different fruits and it’s seen as
a high-quality drink. As consumer incomes rise, consumers will be more willing to pay for a better drink, therefore the demand for Drink B will fall.
However, the sales are predictions only and this may not reflect what will happen in reality.

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12-mark question – Type 4 – Calculation with three options

Question type Structure Requirements
Four paragraphs
4 marks reserved for
recommendation. • 1st Paragraph – Calculation for both years and a statement to say what the number
2 marks reserved for means.
relevant application. • 2nd Paragraph – – Calculation for both years and a statement to say what the
number means.
• Consider three
6 marks divided into • 2nd Paragraph – – Calculation for both years and a statement to say what the
three paragraphs, number means.
each containing a • 4th Paragraph – Recommendation: Depends on the question type, see next page so
knowledge mark and example question (s).
2x analysis marks.
(2 + 2 + 2)

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12-mark question – Type 4 – Sample question(s) and answer(s)

Question type Possible Answers
Using Appendix 3 and other information, consider For this question you need to discuss all three-profitability ratio’s
whether Peter should be worried about VC’s You need to include:
profitability. Justify your answer using profitability 1. Calculations for each.
ratios. 2. A detailed discussion on what the numbers mean.
Insert 3. A detailed justification to if he should be worried and why.
Question paper Remember your answer is based on levels so you need to meet all levels to achieve the highest mark.
Mark Scheme
Gross Profit Margin (GPM)
Revenue – Cost of Sales = Gross Profit.
• Gross Profit Margin: The gross profit margin for Van Conversions 2017 was 20% Gross Profit/Revenue x 100 = GPM
this has now decreased to 14%, this is because the cost of sales increased by
2017 2018
$49 000.
$100 000 - $80 000 = $20 000 $150 000 - $129 000 - $21 000
$20 000 / $100 000 x 100% = 20% $21 000/ $150 000 x 100 = 14%
Net Profit Margin (NPM)
Gross Profit – Expenses = Net Profit
• Net Profit Margin: The net profit margin figure for 2017 was 5%, this has Net Profit/Revenue x 100 = NPM
decreased to 4%, this was despite revenue increasing by $50 000. 2017 2018
$20 000 – $15 000 - $5 000 $21 000 - $15 000 = $6 000
$5 000/ $100 000 x 100 = 5% $6 000/ $150 000 x 100 = 4%
Return on Capital Employed (ROCE)
• Return on capital employed: The ROCE for 2017 was 16.66%, this has now Net Profit/Capital Employed x 100
decreased to 15%, this is due to Peter investing $5000 more than the previous Capital employed = the money owners have invested in cash and loans
year in his motorhome business. 2017 2018
$5000 / $30 000 x 100 = 16.66% $6 000 / $40 000 x 100 = 15%
• Recommendation: I believe Peter should not be worried as the gross profit and net profit have increased from the previous year ($20 000 -> $21 000) and
($5000 -> $6 000), which is good considering his started his business 2 years ago. However, he could try to reduce his outgoings such as cost of sales this
will help him to improve his profitability ratios.

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