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Pearson Edexcel Level 3 GCE/2020 A Level Business Studies Question Paper 2 and Marking scheme/Paper Reference 9BS0/02-Business Advanced Paper 2: Business activities, decisions and strategy

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Answer ALL questions. SECTION A Read the following extracts (A to C) before answering Question 1. Write your answers in the spaces provided. Extract A Tended Ltd Tended Ltd is a fast-growing tec... hnology start-up company based in Lincoln, UK founded by young entrepreneur Leo Scott Smith, who is the main shareholder. The company has created a personal safety device called the ‘Tended Protect’. Tended Ltd aims to increase its market share of the global wearable technology market. Tended Protect is a wrist-worn wearable safety device that monitors the movements of the user through artificial intelligence and has the ability to learn and detect ‘abnormalities’, such as a fall or strong impact. If the user does not or cannot respond to the device’s safety check, then an alert will be sent to the user’s nominated emergency contact. It gives the GPS location, health and activity information and will open the channel for live audio with the wearer. Tended Ltd has gained £50 000 from Enterprise Loans*, to help further develop the Tended Protect, create new jobs and marketing for the new product, as well as fulfil its initial orders. *A subsidiary of the UK government’s British Business Bank. (Source: adapted from http://www.smeweb.com/2018/07/09/ qa-leo-scott-founder-ceo-tended-protect/ and https://cityx.co.uk/2018/07/tended-wearablesafety-device-developed-lincolnshire/) Extract B The expansion of Tended Ltd Tended Ltd has developed at a fast rate, from one member of staff to a team of 10 in eight months. It encountered difficulties such as raising finance and it ran out of cash on a few occasions. Tended Ltd also faced development issues, which took months to fix. However, it overcame all of these issues. The staff pulled together as a team, worked into the early hours of the morning and constantly innovated and took risks, enabling the business to stay agile and continue to grow rapidly. (Source: adapted from https://www.startupvalley.news/uk/ tended-personal-safety-wearables/) 5 10 1 Extract C The global technology wearables market CCS Insight, a market research business, has updated its forecast on the future of wearable technology, indicating that 411 million smart wearable devices, worth a staggering $34 billion, will be sold in 2020. CCS Insight claims the industry will achieve sales of $14 billion in 2019, with wrist-based devices, such as smartwatches and fitness trackers, continuing to dominate. Its forecast states half of all wearable technology sales over the next 12 months will be from these devices, with smartwatches making up 50%. Ben Wood, Chief of Research at CCS Insight, commented: “Given the falling consumer interest for smartphones, it is little wonder so many companies are chasing the rapidly growing opportunity presented by this dynamic market.” (Source: adapted from https://www.forbes.com/sites/paullamkin/2016/02/17/ wearable-tech-market-to-be-worth-34-billion-by-2020/#192e2d113cb5) 1 (a) Explain one financial reason why Leo Scott Smith decided to establish Tended Ltd as a private limited company. Tended Ltd has constructed the decision tree below to help it decide whether to develop a new smartwatch or launch a new marketing campaign. New smartwatch £1.3 million (£500 000) Success Success (£360 000) Marketing campaign 0.6 Failure Failure 0.4 0.8 £5 million £1 million £3 million (£50 000) The net gain for the new smartwatch is £1.3 million. (b) Using the data in the decision tree, calculate the net gain for the marketing campaign. State your answer to two decimal places. You are advised to show your working (c) Assess the likely value of a business plan to Tended Ltd. (d) Assess the extent to which the problems of rapid growth may have been managed by Tended Ltd. To achieve its aim of increasing its market share of the global wearable technology market, Tended Ltd could produce a new smartwatch or launch a marketing campaign for ‘Tended Protect’. (e) Evaluate these two options and recommend which one is most suitable for Tended Ltd to achieve its aim of increasing its market share. Extract D Sports Direct rescues House of Fraser for £90 million Sports Direct, the British sportswear retailer controlled by Mike Ashley, has bought House of Fraser for £90 million. Billionaire Ashley said his ambition was to transform House of Fraser “into the Harrods of the High Street”, a reference to the luxury department store in London. “This is a massive step forward and further enhances our strategy,” he added. Ashley’s stated desire is to make Sports Direct the “Selfridges of Sport”, matching the status of the department store on London’s Oxford Street. Buying significant shareholdings in other businesses forms part of Ashley’s strategy. Investments have been made in retailers such as Debenhams and French Connection, however this strategy has not always been successful. Last month Sports Direct reported a loss of £85 million resulting from its investment in Debenhams. (Source: adapted from https://uk.reuters.com/article/uk-house-of-fraser-administration/ sports-direct-rescues-house-of-fraser-for-90-million-pounds-idUKKBN1KV0IL) Extract E Extract from Sports Direct plc* Annual Report 2018 £million Revenue 3 359.5 Cost of sales 2 024.4 Selling, distribution and administrative expenses 1 156.1 *Sports Direct plc includes House of Fraser (Source: adapted from http://www.sportsdirectplc.com/~/media/Files/S/ Sports-Direct/annual-report/annual-report-2018.pdf) [Show More]

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