Question
Refer to the Accord case study (SL/HL paper 1 Nov 2019).
a. With reference to Accord, outline two possible steps for Aran and Kayla in starting the business.[4]
b. Other than a business angel (line 108), explain methods of external finance that Accord could use to increase production capacity (line 108).[6]
▶️Answer/Explanation
Ans:
a.
PLEASE NOTE: Steps to starting a business is not included in the syllabus for 2024 exams onward. Related parts of this multi-part question may be used.
It is a partnership, so needs to incorporate:
finding finance – needed for premise, equipment
identifying/researching the market – it seems Aran has already done some of this but flawed
building a customer base – gyms, etc
creating a business plan.
Accept any other reasonable step.
Award [1] for each step up to a total of [2].
Award [1] for putting the step into context up to a total of [2].
b.
Refer to Paper 1 markbands for May 2016 forward, available under the “Your tests” tab > supplemental materials.
New partner. Realistic? Anyone suitable? May upset existing partnership.
Bank loan. Difficult for small businesses, does not have much of a track record. Assets for security?
Working capital sources (debt factors, reducing stocks, creditors/debtors) likely to be insufficient for the expansion.
Grants/subsidies. Unlikely to be available.
Lease rather than buy: often used for premises, so promising.
Do not accept share capital – it is a partnership.
Explanation should come from how relevant the sources are.
Marks should be allocated according to the paper 1 markbands for May 2016 forward section A.
Award a maximum of [2] if the source chosen is internal.
Award maximum [3] for a theoretical answer.
Award maximum [5] if the answer is mainly descriptive but in context.