Ownership: liability and franchising
Sole trader — one owner, all profit, but unlimited liability (personal assets at risk). Partnership — 2+ owners share work and finance, split profit, and (unless an LLP) also have unlimited liability. A private limited company (Ltd) gives limited liability: owners lose only what they invested. A franchisee pays fees and royalties for a proven brand — lower risk, but the support is paid for, not free.
Location factors and e-commerce
A firm's location depends on proximity to the market (customers), labour and raw materials, and on competition. E-commerce (online) and m-commerce (mobile) change this: selling online reaches customers anywhere, so the firm needs no costly high-footfall site and can locate cheaply or from home, cutting fixed costs. A question on how the internet affects where a firm locates wants this angle, not general benefits.
Marketing mix (4 Ps) and the business plan
The marketing mix (four Ps) is a firm's toolkit to compete: Product (design, quality, USP), Price, Place and Promotion (ads, social media, sponsorship). The four must stay consistent — a premium product at a low price undermines its image. A business plan sets out aims, marketing and operational plans plus financial forecasts (revenue, costs, cash flow, break-even) to guide decisions and attract finance.
Drawn from real examiner reports.
Limited ≠ unlimited liability
Unlimited liability: the owner's personal assets (home, savings) can be taken to pay business debts — it applies to sole traders and partnerships. Limited liability: shareholders lose only what they invested — it applies to Ltd and plc companies. Reversing the two ("a sole trader has limited liability") scores zero on a definition item.
June 2023 Paper 1, Q1(c): some candidates confused limited with unlimited liability.
Private Ltd ≠ secret finances
"Private" in a private limited company means shares are not sold on the stock exchange — they go to chosen investors. It does not mean the firm's finances are secret: Ltd companies must file accounts at Companies House, so key data is public. "A private limited company keeps its finances private" is factually wrong.
June 2023 Paper 1, Q1(c): some wrongly claimed a private limited company's financial information is private.
Franchise support is not free
A franchisee pays an initial fee and ongoing royalties (a percentage of sales) to the franchisor. In return it gets access to the brand, training, marketing and supply chains — access, not free. "A franchisee gets free advertising" is wrong and scores nothing. The trade-off is lower start-up risk against the fees and limited independence.
June 2024 Paper 1, Q2(e): candidates wrongly claimed advertising and training provided to a franchisee are free -- they are paid for under the agreement.
Competitiveness: how, not benefit
"Explain one way a business could become more competitive" asks how — develop a USP, lower prices, improve quality. The third mark is lost by drifting into an advantage of being competitive ("more customers/revenue/profit"), which answers "why", not "how". Stay on the method and develop the mechanism.
June 2023 Paper 1, Q2(d): the third mark was lost by drifting into an advantage of being competitive instead of explaining how the business becomes more competitive.
Business-plan benefit needs context
On "a benefit of a business plan", most write "sets out aims" or "helps get finance" and stop. The second mark needs development and application: say why a lender needs the plan (to see financial forecasts first) and tie it to the named business. The business name in the stem is not context.
June 2024 Paper 1, Q6(b); June 2023 Paper 1, Q4(a): the second mark needed development, and application to the named business was routinely missing.
Vague partnership drawbacks
Asked for a partnership disadvantage, candidates name a valid point (e.g. profit split, disagreements) but develop it vaguely — "less successful business". Develop the specific consequence: shared profit means less reward per owner; disagreements slow decisions; unlimited liability risks personal assets. Precision earns the marks.
June 2024 Paper 1, Q1(c): partnership disadvantages were handled reasonably but development points were often vague rather than specific.
Location question ≠ internet benefits
A "how/way" question here asks whether e-commerce changes the type of site the firm needs. Not credited: "it brings more customers" — a general benefit, not a location point. Credited: selling online removes the need for a high-footfall site, so the firm can locate cheaply or from home, cutting fixed costs. An answer that ignores the site choice misses it.
June 2023 Paper 1, Q1(d): most candidates discussed the internet's generic effects rather than how it changes the location decision -- a "way" question answered as a "why/benefit" question.
Apply to the named business
In Sections B and C, every Outline, Analyse, Justify and Evaluate needs application to the named business — its product, customers or figures. The business name and words in the stem do not count as context; many lose marks by omitting it.
The 12-mark Evaluate
The 12-mark Evaluate separates grades 7-9. Build balanced analysis — two chains applied to the named firm — then a supported judgement on why one side outweighs the other. Reversing the argument, or listing both sides unweighed, is not evaluation.
How vs why; keep it short
A 3-mark "Explain one..." needs about three sentences — a point plus two linked strands; don't over-engineer it. Distinguish "one benefit/impact" (why) from "one method/way" (how). On no-AO2 items, a definition or example scores nothing.
Analysis = linked strands
Analysis (AO3a) is marked on linked development strands — cause-to-effect chains — not points named. Two advantages are not two strands. Roughly 1 strand = L1, 2-4 = L2, 5+ = L3. A generic answer with no application cannot beat 3/6 on an Analyse item.
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