Pearson Edexcel International

Advanced Level

Business Studies

Mark Scheme (WBS03/01)

Unit 3: Strategic Business Decisions

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January 2016
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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.

 Mark schemes will indicate within the table where, and which strands
of QWC, are being assessed. The strands are as follows:

i) ensure that text is legible and that spelling, punctuation and

grammar are accurate so that meaning is clear
ii) select and use a form and style of writing appropriate to purpose
and to complex subject matter
iii) organise information clearly and coherently, using specialist
vocabulary when appropriate.
Section A: Short answer
Question Question Marks
Number
1 (a) What is meant by the term customer demand? 2 marks
(Evidence A, line 8)

Answer
Knowledge – up to 2 marks:
 The desire to buy a good or service from a business
(1) which can be converted by the business into
sales (1)
1-2
 The stimulus for a business to make particular goods
marks
or services available for sale (1) based on what it
perceives/forecasts from research to be a profitable
opportunity (1)

Question Question Marks

Number
1 (b) What is meant by the term employees? 2 marks
(Evidence B, line 1)

Answer
Knowledge – up to 2 marks:
 People/internal stakeholders whose time/labour is
contracted to carry out work for a business (1) for
which they are paid by the business (1)
1-2
 Named persons who have a contract of employment
marks
with a business (1) and the business decides what
the person does and how much they will be paid (1)
Question Question Marks
Number
2 Under ‘Tesco Values’, the business states that its core 6 marks
purpose is to "create value for customers to earn their
lifetime loyalty".

Explain why customer loyalty is likely to be important to

Tesco.

Answer
(Knowledge 2, Application 2, Analysis 2)

Knowledge/understanding: a positive attitude held by a

customer towards a business and/or its products (1) which 1-2
results in a high level of repeat purchases rather than marks
switching to a competitor (1)

Application: up to 2 marks are available for contextualised

answers that illustrate why customer loyalty is likely to be
important to Tesco e.g. Tesco needs customers to produce
revenue (1)Evidence E reports that Tesco is under pressure
from competitors and discounters which will test customers’
loyalty (1) 1-2
marks

Analysis: up to 2 marks are available for developing why

customer loyalty is important to Tesco e.g. the
consequence of competition from other retailers is that
customers will be drawn away from Tesco, reducing
revenue (1) to protect its business/market
share/profitability Tesco will need to maintain the loyalty of
its customers to ensure repeat purchase (1)

1-2
marks
Question Question Marks
Number
3 Analyse two corporate objectives that Tesco is trying to 8 marks
establish in its news releases.(Evidence D)

Answer
(Knowledge 2, Application 2, Analysis 4)

Knowledge/understanding: up to 2 marks are available 1-2

for showing knowledge of corporate objectives e.g. marks
improving their one or an environmental impact (1)
expansion strategy (1)

Application: up to 2 marks are available for contextualised

answers identifying corporate objectives that have been set
for the business e.g. one environmental objective can be
seen in the reference to cutting carbon emissions (1) 1-2
expansionary objectives can be seen in the reference to marks
joint venture with Tata in India (1)

Analysis: Candidate analyses using reasons/causes/

consequences/costs relating to the application and meeting
of corporate objectives e.g environmental concerns are
becoming more important to consumers (1) improving its
environmental impact will make Tesco more competitive
and successful (1) expanding into international markets 1-4
will increase its customer base(1) thereby spreading risk marks
(1)
Question Question Marks
Number
4 Tesco is involved in a wide range of businesses across 10 marks
different continents and will have many options for
investment.

Assess the usefulness of investment appraisal techniques

to Tesco.
Level Mark Descriptor Possible content
0 No rewardable material.
1 1-2 Knowledge/understanding of basic e.g. naming investment
terms. appraisal techniques such as
simple payback/average rate
of return/discounted cash flow

e.g. a set of techniques that

can be used to determine
whether a capital investment
project should be undertaken,
or not
2 3-4 Application: basic points e.g. Tesco will need to be
developed to show awareness of building stores in each country
how investment appraisal in which it trades
techniques could be used by an
international retailer. e.g. Tesco will need to invest
in IT systems to support Tesco
Bank, its e-commerce
business, its Click & Collect
service etc.
3 5-7 Analysis in context must be e.g. investment appraisal
present, i.e. the extent to which techniques are useful when
investment appraisal techniques Tesco decides which of the
could be used many projects they could do,
they will do
N.B. if analysis is not in
context, limit to Level 2. e.g. if Tesco applied simple
payback analysis to the
building of new stores it would
be able to estimate how long it
would take for the new store
to turn a profit

e.g. because it has over 3,000

stores already it would be able
to forecast average rate of
return relatively accurately,
based on its trading history

e.g. discounted cash flow

could be useful when planning
a new project, such as e-
commerce, to forecast
whether the cash flow
generated would make the
project economically viable
4 8-10 Evaluation must be present and in e.g. investment appraisal
context, i.e. a candidate balances techniques are based on
their answer with the limitations estimates/forecasts so will only
of investment appraisal be as accurate as the quality of
techniques. the data used for the
forecasts/the skill or
N.B. if evaluation is not in experience of the team doing
context, limit to Level 3. the forecast

e.g. average rate of return

calculations can only be based
on past data, and whilst past
data may indicate future
performance, it cannot be
guaranteed

e.g. discounted cash flow

calculations may meet the
needs of accountants, but can
stifle speculative ventures as it
excludes entrepreneurial risk

e.g. there are many variables

which could affect the accuracy
of any investment appraisal
technique that is used such as
external economic events

e.g. investment appraisal

techniques cannot take into
account unforeseen external
shocks
Question Question Marks
Number
*5 Tesco, a UK based business, has over 530,000 employees 12 marks
worldwide.

Assess the extent to which Tesco’s corporate culture can

have an impact on all of its employees

Level Mark Descriptor Possible content

0 No rewardable material.
1 1-2 Knowledge/understanding of the e.g. the set of important
concept of corporate culture. assumptions that are
shared by people working in a
Material presented is often particular business
irrelevant and lacks organisation.
Frequent punctuation and/or e.g. the set of important
grammar errors are likely to be assumptions that influence the
present and the writing is ways in which decisions are
generally unclear. taken.

2 3-4 Application must be present, i.e. e.g. with 530,000, employees

the answer must be worldwide the logistics of
contextualised and applied to communicating a corporate
show awareness of how a message with each and every
corporate culture can affect employee will be great
employees
e.g. Tesco continues to
Material is presented with some expand into new countries
relevance but there are likely to such as India and US
be passages that lack proper
organisation. Punctuation and/or e.g. Evidence C with its
grammar errors are likely to be mission statement about
present which affect clarity and creating value for customers
coherence.

3 5-7 Analysis in context must be e.g. That a strong corporate

present, i.e. the candidate must culture will help employees
give reasons/causes/costs bond and work together to a
/consequences of how the common standard
corporate culture can have an
impact in a large retail business e.g. Strong corporate culture
will help employees to feel
N.B. if analysis is not in valued and therefore they will
context, limit to Level 2. be more motivated

Material is presented in a e.g. Shared corporate culture

generally relevant and logical way will give employees
but this may not be sustained transferable skills and
throughout. Some punctuation increased mobility
and/or grammar errors may be
found which cause some passages
to lack clarity or coherence.
4 8-12 Low Level 4: 8-10 marks. e.g. the corporate culture that
Evaluation must be present i.e. a is developed may be
candidate balances their answer appropriate in some
by showing possible downside of countries/markets but may
impacts of the corporate culture not be appropriate in others,
across the 530,000 employees causing conflict or causing it
to be ignored
High Level 4: 11-12 marks.
Evaluation is developed to show a e.g. a corporate culture on
real perceptiveness on the part of paper may appeal to
the candidate. Several strands shareholders (owner
may be developed; the answer is aspiration), but may be
clear and articulate, leading to a onerous on employees and not
convincing conclusion. adhered to, which could affect
employee motivation
N.B. if evaluation not in
context, limit to Level 3. e.g. the impact of a corporate
culture that is strong at head
Material is presented in a relevant office is in danger of being
and logical way. Some diluted by the time it reaches
punctuation and/or grammar some of the further outposts
errors may be found but the of the business, which will
writing has overall clarity and lessen its impact
coherence.
e.g. a corporate culture
established in the UK is likely
to be less relevant in some
areas that the business trades,
so its impact will be reduced

e.g. standards vary across

different cultures, and there is
a danger that what is innocent
and inoffensive in the UK
could cause offence in some
areas
 Section B: Essay questions
Question Question Marks
Number
*6 Evaluate the importance of labour productivity 20 marks
figures for the UK and Asia and their implications for
Tesco. (Evidence H)

Level Mark Descriptor Possible content

0 No rewardable material.
1 1-2 Knowledge/understanding of what e.g. a measurement of the
is meant by labour productivity. efficiency achieved by the
average employee as
calculated by labour
Material presented is often productivity = output per
irrelevant and lacks organisation. time period/number of
Frequent punctuation and/or employees
grammar errors are likely to be
present and the writing is e.g. a tool of human
generally unclear. resource management
designed to help improve
human resource
competitiveness

2 3-6 Application must be present, i.e. e.g. candidate needs to

the answer must be contextualised know the correct formula for
and applied to the Tesco figures. calculating labour
productivity and can apply it
Low Level 2: 3–4 marks to the figures provided in
Candidate accurately calculates 1 the table, Evidence H
or 2 examples of labour
productivity or limits calculation to
one region.

High Level 2: 5–6 marks

Candidate accurately calculates 3
or more examples of labour
productivity across both regions.

Material is presented with some

relevance but there are likely to be
passages that lack proper
organisation. Punctuation and/or
grammar errors are likely to be
present which affect clarity and
coherence.
2010 2011 2012 2013
Revenue UK £m 39 104 40 766 42 803 43 579
Employees 196,604 200,966 205,852 213,304
labour productivity £ 198 897 202 850 207 931 204 305

Revenue Asia £m 8 465 9 802 10 828 11 479

Employees 89,310 94,141 108,149 115,499
labour productivity £ 94 782 104 120 100 121 99 386
3 7 -12 Analysis in context must be present, e.g. UK revenue increased
i.e. the candidate must give each year 2010-2013
reasons/causes/costs/consequences
e.g. the number of UK
Low Level 3: 7–9 marks
employees has increased
Analysis limited: only one or two
each year 2010-2013.
reasons/causes/costs or
consequences are outlined.
e.g. however, having risen
High Level 3: 10–12 marks between 2010 and 2012,
Analysis is more developed: two or labour productivity in the UK
more reasons/causes/costs and/or declined in 2013
consequences are outlined and
developed. e.g. revenue in Asia has
grown steadily since 2010.
N.B. if analysis is not in context,
limit to Level 2.
e.g. the number of employees
Material is presented in a generally in Asia also grew between
relevant and logical way but this 2010 and 2013
may not be sustained throughout.
Some punctuation and/or grammar e.g. however, labour
errors may be found which cause productivity in Asia, peaked in
some passages to lack clarity or 2011, fell back in 2012 and
coherence. declined further in 2013
4 13-20 Evaluation must be present and in e.g. it would appear that, for
context, stating what the measures Tesco, labour productivity
of labour productivity could mean does not necessarily increase
for Tesco in line with growth in revenue
or increasing numbers of
Low Level 4: 13–14 marks.
employees, they should
Some evaluative points are made,
investigate further.
based on analysis of the figures.
Mid Level 4: 15–17 marks. e.g. that Tesco is not
A judgement is attempted with achieving the same level of
some effort to show how well or not labour productivity in Asia as
labour productivity in Asia compares it enjoys in the UK and may
with that in the UK. need to change its processes
and procedures
High Level 4: 18–20 marks.
Convincing evaluation on the extent
e.g. that Tesco could increase
to which labour productivity in Asia
revenue in Asia dramatically if
differs from that achieved in the UK,
it could achieve the same
suggesting reasons why there may
level labour productivity in
be a difference
Asia as in the UK.
Several strands may be developed;
the answer is clear and articulate e.g. Tesco need to identify if
leading to a convincing conclusion. these figures are unique to
them or replicated in other
N.B. if evaluation not in context,
similar businesses. If they are
limit to Level 3.
similar, the need for further
Material is presented in a relevant action may be reduced.
and logical way. Some punctuation
and/or grammar errors may be
found but the writing has overall
clarity and coherence.
Question Question Marks
Number
*7 Evaluate the usefulness to Tesco in forming a joint venture with 20 marks
CRE’s Vanguard.

Level Mark Descriptor Possible content

0 No rewardable material.
1 1-2 Knowledge/understanding of what e.g. when two or more
is meant by a ‘joint venture’. businesses set up a new
business which will be
Material presented is often operated jointly.
irrelevant and lacks organisation.
Frequent punctuation and/or
grammar errors are likely to be
present and the writing is generally
unclear.
2 3-6 Application must be present, i.e. e.g. the joint venture will
the answer must be contextualised massively increase the
and applied to Tesco and its joint number of store that Tesco
venture partner CRE/Vanguard. operates in China, from 134
to over 3,000.
Low Level 2: 3–4 marks
Candidate makes a basic comment e.g. the stores within Tesco’s
on the facts and figures current operation are running
surrounding the joint venture. at a loss, -£222m for the year
to February 2013
High Level 2: 5–6 marks
Candidate makes a detailed e.g. in contrast, CRE’s
reference to the facts and figures Vanguard stores did generate
surrounding the joint venture. profits in 2013.

Material is presented with some e.g. the figures in Evidence F

relevance but there are likely to be confirm that the Chinese
passages that lack proper market offers a massive
organisation. Punctuation and/or opportunity for retailers.
grammar errors are likely to be
present which affect clarity and
coherence.
3 7-12 Analysis in context must be e.g. Tesco clearly see the
present, i.e. the candidate must opportunities in China, but
give have so far not been
reasons/causes/costs/consequences financially successful.
of the nature of company growth.
e.g. Tesco have been
Low Level 3: 7-9 marks struggling to make a success
Candidate will attempt a very basic in some overseas markets
analysis, making general points, on (USA and China noted).
one or two elements from Evidence
F and/or G. e.g. despite losses of £222m
in China Tesco are still keen
High Level 3: 10-12 marks to find some way of operating
Candidate makes a more detailed profitably
analysis, making specific points, on
most of the elements from e.g. the joint venture should
Evidence F and/or G. combine the strengths that
each partner brings to the
new business i.e. Tesco’s
retail expertise and
N.B. if analysis is not in context, CRE/Vanguard’s
limit to Level 2. number/distribution of stores

Material is presented in a generally e.g. Tesco needs to make a

relevant and logical way but this success in China to satisfy
may not be sustained throughout. shareholders who will be
Some punctuation and/or grammar aware of the losses to date.
errors may be found which cause
some passages to lack clarity or e.g. retail supermarkets have
coherence. reached market saturation in
the West, and the operators
need to enter new markets to
maintain growth

e.g. Tesco needs to make a

success in China to maintain
its position against
competition.

e.g. joint venture partner

could provide local knowledge
to help overcome
language/cultural barriers.
 4 13-20 Evaluation must be present and in e.g. joint ventures are all very
context, based on the wisdom of well, but there is a risk that
Tesco forming a joint venture for having established the new
the Chinese market. business, the partners may
have different objectives or
Low Level 4: 13-14 marks may change their
Some basic evaluative points are requirements from the other
made, referring to joint ventures. partner

Mid Level 4: 15-17 marks e.g. joint ventures require the

Candidate gives a range of sharing of sensitive
arguments, covering different information which could be
aspects of joint ventures. damaging if the venture fails

High Level 4: 18-20 marks e.g. a joint venture could end

Candidate gives a wide range of in disaster/a break up which
arguments, to support it will have a negative impact on
arguments for and against forming both parties
a joint venture in China.
e.g. despite the risks, the
N.B. if evaluation is not in market opportunity in China is
context, limit to Level 3 so massive that Tesco is
willing to take the risk and
Material is presented in a relevant form the joint venture.
and logical way. Some punctuation
and/or grammar errors may be e.g. there could be issues
found but the writing has overall relating to a mismatch of
clarity and coherence. corporate cultures,
communication problems with
different languages

e.g. China has had problems

with IPR theft in a market
which is regulated very
differently from the way that
western markets are
regulated/policed

Assessment objectives

Question knowledge application analysis evaluation TOTAL

1a 2 - - - 2
1b 2 - - - 2
2 2 2 2 - 6
3 2 2 4 - 8
4 2 2 3 3 10
5 2 2 3 5 12
6 2 4 6 8 20
7 2 4 6 8 20
TOTAL 16 16 24 24 80