9707 BUSINESS STUDIES

Transcription

1 CAMBRIDGE INTERNATIONAL EXAMINATIONS GCE Advanced Subsidiary Level and GCE Advanced Level MARK SCHEME for the October/November 2013 series 9707 BUSINESS STUDIES 9707/11 Paper 1 (Short Answer/Essay), maximum raw mark 40 This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2013 series for most IGCSE, GCE Advanced Level and Advanced Subsidiary Level components and some Ordinary Level components.

2 Page 2 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) Performance related pay can be defined as a bonus scheme to reward staff for above average performance e.g. achieving/exceeding expectations against a set standard. Partial definition given [1] Full definition given [2] (b) Disadvantages of PRP are often given as: It can be difficult/costly for the company to establish the appropriate standard/system/ supervision for awarding PRP. It can fail to motivate staff if their needs are not primarily financial. PRP can be divisive if there is a focus on individual performance (to the detriment of the team). It can lead to allegations of favouritism by management. Levels of PRP can often be inadequate. Can lead to greater control over workers and encourage a controlling type of management. Partial explanation of one disadvantage or a list of two. [1] Sound explanation of one disadvantage or partial explanation of two. [2] Sound explanation of two disadvantages. [3] 2 (a) Primary research is defined as: the collection of first hand data directly related to the needs of a business/customer/market/products accurate examples of methods used to carry out primary research Partial definition [1] Sound definition [2] (b) Disadvantages of conducting primary research include: On its own primary research might not be sufficient for the organisation. Expensive detailed and specific surveys are costly. It may well be time-consuming (internet secondary research much quicker). There may be doubts over accuracy and validity because of the need to use sampling these may not be representative of the total population. On its own primary research may not be sufficient for the organisation. Partial explanation of one disadvantage or a list of two. [1] Sound explanation of one disadvantage or partial explanation of two. [2] Sound explanation of two disadvantages. [3]

3 Page 3 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November The rights of employees as a stakeholder group include: To be treated within the minimum limits of protective legislation, e.g. minimum wage, health and safety. To be treated by the employer according to employment contract. To be allowed to join a trade union make representations to employers. The responsibilities of employees as stakeholders include: To meet the conditions of the employment contract. To co-operate with management in all reasonable requests. To observe any ethical code of conduct. Limited reference to employees as stakeholders and/or to their rights and responsibilities or definition of stakeholders. [1] Sound explanation of either employee rights or employee responsibilities. [2 3] Partial explanation of employee rights and employee responsibilities. [2 3] Sound explanation of employee rights and employee responsibilities. [4 5] 4 (a) Businesses can be described as either being capital intensive operations involving a high level of capital equipment compared with labour input, or labour intensive where operations involve a high level of labour input compared with capital equipment. Partial distinction made or accurate definition of either capital intensive or labour intensive [1] Sound distinction made [2] (b) A switch from labour to capital intensive production methods might be explained by: Relative prices of the two inputs may change labour costs significantly increase. Cost of capital machinery may reduce. Technological development may allow production process (or parts of it) to be mechanised. Competitors may force a business into capital intensive approach. Business may become large enough/profitable enough to purchase capital machinery. Partial explanation of one factor or a simple list of two. [1] Sound explanation of one factor or partial explanation of two. [2] Sound explanation of two factors. [3]

4 Page 4 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) The distinction between capital and revenue expenditure may be explained in the following terms: Definitions of both: capital expenditure purchase of long-lasting assets; revenue expenditure spending on costs and assets other than fixed assets. They will almost certainly be financed in different ways. In accountancy terms, they will be recorded differently All revenue expenditure will be recorded on each year s Income Statement and will, therefore, reduce that year s profits; capital expenditure is recorded on the Balance Sheet as a depreciation item on each year s Balance Sheet. Capital expenditure more likely to increase the earning capacity of a business (its noncurrent assets) while revenue expenditure merely maintains the assets earning capacity. Capital expenditure increases a business s asset position. Improper asset classification can skew the financial position of a business. Analysis of the distinction between revenue and capital expenditure. [7 8] Good explanation of the distinction between revenue and capital expenditure. [5 6] Limited explanation of the distinction between revenue and capital expenditure. [3 4] Little understanding of the distinction between revenue and capital expenditure/ definition given. [1 2] (b) Internal sources of finance to fund capital expenditure include: Retained profits in a business can finance capital expenditure assuming it is trading profitably. Newly-formed companies or loss trading companies limited opportunity to use/access internal sources. Sale of assets can raise cash for established companies leasing will also raise capital (e.g. a company can sell its valuable HQ and lease it back). Reductions in working capital can lead to liquidity concerns. Many advantages for using internal sources no direct cost to the business no increase in liabilities or debts, or loss of control by owners. But not available to all companies. May slow down growth as there will be a limit to amount of capital available usually. So external sources may well be required. Evaluative comment on appropriateness of using internal sources. [9 12] Analysis of appropriateness of internal financing. [7 8] Discussion of appropriateness of internal financing. [3 6] Limited discussion of appropriateness or some understanding of internal financing. [1 2]

5 Page 5 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November Business enterprise defined as activity where the primary motive is profit production of goods/ services to consumers at a profit create wealth. Social enterprise more narrowly defined social mission-driven organisations applying marketbased strategies to achieve a social purpose/environmental purpose re-investment of profits into community or back into business. In many ways they are very different but in some ways very similar. Business enterprise may be identified as: (entrepreneurs) create employment generate business activity. increase economic growth GDP of a country increased. business grows and develops multi-nationals. innovation and technological development takes place. international competitiveness improved export markets. economic development improves social cohesion. all the benefits of a successful market enterprise system. but can be socially responsible (and socially irresponsible) and advance social issues and cohesion. Social enterprise may include: (triple bottom line) specific social benefit to economies (national and local). create employment for often disadvantaged employees and communities. protect and advance environmental issues alongside production processes. re-distribute production benefits, not just to shareholders or a limited number of shareholders. complement wholly public sector owned organisations. highlight ways in which business enterprise can be improved. in so doing create employment generate taxation and economic benefit. Social enterprise units can be entrepreneurial and very efficient, and business enterprise units can be very socially responsible. Evaluative comment on the differences and similarities between business enterprise and social enterprise for economies. [17 20] Analysis of the differences and similarities between business enterprise and social enterprise for economies. [13 16] Discussion of the differences and similarities between business enterprise and social enterprise for economies. [11 12] Some understanding of the differences and similarities between business enterprise and social enterprise for economies. [5 10] Very little understanding of business enterprise and/or social enterprise. [1 4]

6 Page 6 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) Above the line promotion is: A form of paid-for communication by business in the mass media to inform and persuade e.g. advertising on TV, cinema, newspapers. Main aim is to inform, raise awareness and build brand positioning relatively high cost promotion. It can be targeted but often is seen by anyone outside of the target audience. Communication targeted to a wider spread of audience and not specific to individual consumers. Below the line promotion is: Promotional activities where business has direct control over the target or intended audience sales promotions personal selling, sponsorship, PR, point of purchase promotions. Designed to achieve short-term sales increases and repeat purchases by consumers. More one-to-one approach, e.g. sampling, demonstrations more touch and feel. Why use both: These two types of promotion are used in pursuit of essential marketing objectives To maximise the present information to customers and others. To increase demand and build brand awareness. To differentiate a product and drive sales through specific promotional offers. The distinction between the two kinds of promotion is not absolute and some see the terminology as antiquated digital communication has broken down the boundaries now the phrase Through the line is increasingly being used where for example a TV advert is combined with a flyer through the door multiple consumer engagement points. Analysis of why ATL and BTL might be used. [7 8] Good explanation of why ATL and BTL might be used. [5 6] Limited explanation of why ATL and/or BTL might be used. [3 4] Little understanding of promotion methods. [1 2] (b) The discussion of advantages from effective branding could include: A strategy that differentiates a product from competitors by creasing an identifiable image and clear expectations of the product. It can create a powerful image in the minds of customers, e.g. for quality/style. Provides a product with a unique identity. Increase the chances of brand recall by consumers. Allow for a family of closely associated products to be established. Reduce price elasticity of demand as consumers prefer well known brands. Increases consumer loyalty to brands. Brand can give reputation and goodwill. Creating durable and distinctive perceptions in the minds of consumers is then potentially very valuable but it can be expensive to establish and it needs careful protection and safeguarding. Evaluative comment on advantages of effective branding in context. [9 12] Analysis of advantages of effective branding in context. [7 8] Discussion of advantages of effective branding. [3 6] Limited understanding of branding. [1 2]

7 CAMBRIDGE INTERNATIONAL EXAMINATIONS GCE Advanced Subsidiary Level and GCE Advanced Level MARK SCHEME for the October/November 2013 series 9707 BUSINESS STUDIES 9707/12 Paper 1 (Short Answer/Essay), maximum raw mark 40 This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2013 series for most IGCSE, GCE Advanced Level and Advanced Subsidiary Level components and some Ordinary Level components.

8 Page 2 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) Price discrimination can be defined as: the charging of different groups of consumers different prices for the same product/service. Partial definition given [1] Full definition given [2] (b) e.g. airlines. Conditions necessary for price discrimination could include: it is possible to apply different rates for the same product/service e.g. different groups of customers. it is not possible for groups of consumers to re-sell products/services between them. the elasticity of demand for the product/service needs to be different with a relatively high price for those with a more price inelastic demand. Partial explanation of one condition or a list of two. [1] Sound explanation of one condition or partial explanation of two. [2] Sound explanation of two conditions. [3] 2 (a) The private sector is defined as businesses owned and controlled by individuals or groups of individuals not by the state/government (and managed for profit). Accept responses that are not restricted to a definition of a private sector business or organisation and discuss concepts such as the price mechanism and the role of the market. Partial definition. [1] Sound definition. [2] (b) Characteristics of public sector enterprises may include: Owned/controlled by the government. Profit is not likely to be a major objective. Social objectives are a priority. May be loss-making or subsidised. Finance comes mainly from government/state. May be monopoly/critical services. May be subject to direct political interference. Produce merit goods. Partial explanation of one characteristic or a list of two. [1] Sound explanation of one characteristic or partial explanation of two. [2] Sound explanation of two characteristics. [3]

9 Page 3 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November The benefits/advantages of team-working are often assumed to have no limitations. However, some disadvantages are said to exist: Not everyone is a team player some like to work alone may become marginalised. Effective team working may require training and development support. Team values can become very strong and form opposition to other team values, or organisational values (divisive). Team training may be costly or disruptive to an organisation. Team membership and changes in membership may become problematic. Individuals take advantage of team and make little contribution. May delay decision-making. Can lead to conflict between team members with different views. Limited reference to team working. [1] Some identification/explanation of possible team working disadvantages. [2 3] Sound explanation of disadvantages of team working. [4 5] 4 (a) Intellectual capital is the collective knowledge of individuals in an organisation or society an intangible asset an organisation s processes, technologies, patents, employee skills, information about customers and stakeholders. Partial definition given. [1] Sound definition given. [2] (b) This knowledge, experience, professional skills, relationships, networks can be a source of value or profit. Adds to the Goodwill on the balance sheet (statement of financial position). It can be a source of distinctive competitive advantage as it is applied to other more tangible resources land, labour, capital. It provides an extra capability that other organisations may not have. Software industry illustrates how a business can be based almost entirely on the power of intellectual assets. It needs to be recognised, harnessed and exploited. It has the seeds of self-renewal new discovery, new inventions. Distinctive branding can be seen as the application of intellectual capital. Very limited attempt to apply the concept. [1] Sound understanding of the potential value of intellectual capital but with limited explanation. [2] Sound understanding with developed explanation. [3]

10 Page 4 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) Cash flow forecasts. Identifies sources and amounts of cash coming into a business. Identifies destinations and amounts of cash going out of a business. Usually done for a year or quarter in advance. Allows the prediction of peaks and troughs in cash balances. Helps to plan how much and when to borrow. Banks require cash flow forecasts before considering a loan. All these factors are important for new businesses who may well encounter cash flow problems. New business planning requires cash flow forecasts to help identify future problems, inspire confidence in lenders, help obtain funding and help new businesses to survive in the short term. Analysis of importance of cash flow forecasts to new businesses. [7 8] Good explanation of importance of cash flow forecasts to new businesses. [5 6] Limited explanation of importance of cash flow forecasts. [3 4] Little understanding of cash flow forecasts. [1 2] (b) The reasons for cash flow problems may include: Lack of financial planning (e.g. no cash flow forecasts). Poor credit control bad debts will increase. Too generous trade credit. Unexpected cost increases. Unexpected dip in customer demand. Incorrect forecasts. Expansion too fast. Possible solutions to cash flow problems: Essentially, more cash inflows overdraft/short-term loans. sale of assets. sale and leaseback of assets. reduce credit terms. debt factoring. Essentially, less cash outflows delay payments to suppliers. delay spending on capital equipment. use leasing of capital equipment. cut overhead expenses (e.g. promotion costs). Evaluative comment on causes and solutions for cash flow problems. [9 12] Analysis of causes and solutions for cash flow problems. [7 8] Discussion of causes and solutions for cash flow problems. [3 6] Limited understanding of cash flow problems. [1 2]

11 Page 5 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November The most important factors affecting the location decision are likely to include: A recognition that this is a long-term, strategic, optimal decision. Location should sustain long-term profitability. Location should have flexibility to expand and grow. Specific factors might include: site, building, fitting costs labour costs transport costs/facilities sales revenue possibilities availability of government grants cultural features of alternative locations environmental issues quality of infrastructure site of competition Decisions likely to be a set of compromises an optional solution is not always clear cut level of risk. Optimal location decisions can be affected by cost and other factors changing over time. Evaluative comment on the complexity of location decision, in context. [17 20] Analysis of a range of relevant location factors that are important for location decisions, in context. [13 16] Good discussion of a range of relevant location factors that are important for location decisions. [11 12] Some understanding of relevant location factors that are important for location decisions. [5 10] Very limited understanding of relevant location decisions. [1 4]

12 Page 6 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) Herzberg two factor theory Hygiene factor is related to aspect of a worker s job that may have the potential to give dissatisfaction. Pay, working conditions, status, type of supervision these are seen as lower order needs. The extrinsic factors that surround a job these need to be addressed by management in order to remove dissatisfaction. But if hygiene factors are OK, they would not, by themselves, lead to motivated workers. A second set of factors motivators need to be addressed. These are the intrinsic factors achievement, recognition, work itself, responsibility and advancement. To motivate, you focus on these higher order needs, e.g. job enrichment. So, to remove dissatisfaction, focus on the job environment to increase motivation, focus on the job itself. NB. An acceptable alternative approach would to discuss Herzberg s hygiene factors and then general motivating factors Analysis of hygiene factors and general motivating factors. [7 8] Good explanation of hygiene factors and general motivating factors. [5 6] Limited explanation of hygiene factors and general motivating factors. [3 4] Little understanding of hygiene factors and general motivating factors. [1 2] (b) The discussion will likely include the following: Reference to Maslow s hierarchy of human needs. these needs can be satisfied at work. lower and higher order needs. some general concerns about this theory, e.g. money is important for lower order needs but can play a role in satisfying higher order needs, e.g. status and esteem. specific concerns do workers work in fast food restaurants to satisfy higher order needs? Application of the hierarchy to the context is expected. Reference to Herzberg and his two-factor theory. extrinsic factors more likely to be significant in the context of a fast food restaurant? how significant are motivators? opportunity for team work and job enrichment may exist in a fast food restaurant so motivators may be important. Evaluative comment on the relevance of one or both of these theorists to the context of a fast food restaurant. [9 12] Analysis of the relevance of these motivational theories in context. [7 8] Discussion of the relevance of these motivational theories. [3 6] Limited understanding of the relevance of motivational theories. [1 2]

13 CAMBRIDGE INTERNATIONAL EXAMINATIONS GCE Advanced Subsidiary Level and GCE Advanced Level MARK SCHEME for the October/November 2013 series 9707 BUSINESS STUDIES 9707/13 Paper 1 (Short Answer/Essay), maximum raw mark 40 This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2013 series for most IGCSE, GCE Advanced Level and Advanced Subsidiary Level components and some Ordinary Level components.

14 Page 2 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) Piece rate is payment system to a worker for each unit produced. Commission is a payment often to a sales person for each sale made, often a proportion of the value of the sale. One mark for each accurate definition given (maximum 2 marks) [2] (b) The disadvantages of a piece rate are said to include: May lead to falling quality/safety levels as workers speed to complete production. May lead to a worker settling for a limited pay and productivity level. Leads to insecurity among workers e.g., if production line breaks down, or supplies not available. Workers reluctant to accept change if it results in a loss of pay. It ignores all other possible motivating factors. System only possible if work can be measured and standardised. Lack of security of pay. Competitive environment could lead to jealousy/high staff turnover. Pressure to produce can lead to stress/illness. Low motivation due to pressure to produce. One disadvantage partially explained or a list of two. [1] One disadvantage soundly explained or two partially explained. [2] Two disadvantages soundly explained. [3] 2 (a) Cost-based pricing is when firms assess their costs of production or supply and then add an amount on top of this calculated cost (there are a number of different methods of cost-based pricing). Partial definition [1] Sound definition [2] (b) Penetration pricing is setting a relatively low price, often supported by heavy promotion to achieve a high volume of sales: Gain a mass market (price may then be slowly increased). It is used to influence customers to switch to a new brand with the marketing objective of increasing market share in the short term rather than to make profits. Take the competition by surprise appropriate when demand is highly price elastic. Once established get brand loyalty/price inelasticity/prices likely to increase in the long-run. Penetration pricing is defined or identifies business use. [1] Limited explanation of business use. [2] Sound explanation of business use. [3]

15 Page 3 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November Efficiency is producing output at the highest ratio of output to input ( doing the thing right ). Effectiveness is meeting business objectives by using inputs appropriately to meet customer needs ( doing the right thing ). A business can become very efficiently ineffective efficiency in operations is only one factor the type and quality of goods/services produced has to meet customer needs and still make a profit. For any business the relationship between efficiency and effectiveness depends on the market segment it is aiming at, e.g. volume, value, exclusive designer range etc. Limited understanding of efficiency and/or effectiveness. [1] For an accurate definition of either efficiency or effectiveness. [2] Accurate distinction made but explanation is limited. [2 3] Sound explanation of the two concepts with good business concepts/examples. [4 5] 4 (a) Stakeholder can be defined as people or groups of people who can be affected by, and therefore have an interest in, a business/organisation. Partial definition given. [1] Sound definition given. [2] (b) Conflict may arise between different stakeholder groups due to: Stakeholders who insist on social responsibility policies may conflict with short-term shareholder interests (profit) Consumers/tax payers/communities may suffer at the expense of uncontrolled shareholder pursuit of profit. Employees lose out with companies outsourcing or mechanising or cost cutting. Management may receive performance-related pay other employees basic wage and sickness, etc. Only a general reference to stakeholder groups. [1] Partial explanation of one conflict situation. [2] Sound explanation of one conflict situation. [3]

16 Page 4 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) Inventory management is considered a critical business activity because without efficient inventory management there may be: insufficient stocks to meet demand and changes in demand. out of date stock. stock wastage. excessive storage costs. late deliveries. low discounts from suppliers. opportunity cost implications. The factors above (especially the first 3) are vital for retail businesses with their potential impact on customers. Analysis of the importance of inventory management in context. [7 8] Good explanation of the importance of inventory management in context. [5 6] Limited explanation of inventory management. [3 4] Little understanding of inventory management. [1 2] (b) The factors that might need to exist for JIT to work effectively are generally considered to be (after defining JIT): Relationships with suppliers need to be good flexible. Production staff need to be multi-skilled and flexible. Similar flexibility required in equipment and machinery. Demand forecasts and production schedules need to be accurate. Up-to-date IT equipment will help. Sound employer-employee relations required. A distinctive organisation culture required. JIT might not always be the answer. Evaluative comment on the relative importance of the factors and/or recognition of the problematic application of the system. [9 12] Analysis of factors that will likely determine the effectiveness of a JIT system. [7 8] Discussion of factors that will likely determine the effectiveness of a JIT system. [3 6] Limited understanding of JIT and its application. [1 2]

17 Page 5 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November Business leadership is said to be about giving clear direction and vision for an organisation often requiring charismatic attributes and strategic vision. Intellectual ability can be said to be important ability to see the big picture ability to differentiate between tactical and strategic issues ability to analyse, evaluate, make decisions ability to understand and apply theory and concept ability to convince others negotiate compromise etc. Emotional intelligence a recent concept is seen by many as important, if not more important than intellectual intelligence for effective leadership the concept of multiple intelligences. definition of emotional intelligence the ability to understand own emotions and that of their colleagues, manage them to support improved performance. the concept of Emotional Intelligence Quotient and Golemans EI competences. the potential liability of a leader without a competent EIQ. The relative importance of IQ and EIQ reviewed different assertions and conclusions in the literature. Evaluative comment on the statement vis-à-vis intellectual ability and emotional intelligence. [17 20] Analysis of the importance of emotional intelligence and intellectual ability. [13 16] Good discussion of the importance of emotional intelligence and intellectual ability [11 12] Some understanding of emotional intelligence and/or intellectual ability. [5 10] Very limited understanding of leadership and this assertion. [1 4]

18 Page 6 Mark Scheme Syllabus Paper GCE AS/A LEVEL October/November (a) The identification and calculation of business costs is considered important as: Cost information is vital in a wide range of business decision-making. Business costs are a key factor in calculating profit or loss. In making location decisions, pricing decisions, product profitability over time. Acting as a start point for future budgets. Decisions about resource use if cost of labour is low, then focus on labour intensive methods. Cost information facilitates different options being analysed for decision-making e.g. different location decision options. So cost calculation and data vital for so many business decisions. NB: Credit discussion of social costs Analysis of the importance of cost identification and calculation. [7 8] Good explanation of the importance of cost identification and calculation. [5 6] Limited explanation of cost identification and calculation. [3 4] Little understanding of cost identification and calculation. [1 2] (b) The use of break-even analysis for introducing a new product could make the following points: Discuss how break-even analysis will categorise production costs and compare them with potential sales revenue to determine a break-even point where the costs of resources to create a new product are covered. Managers may also want to know the point at which the sales volume reaches a pre-set profit level. To help increase the odds of success for a new product a business needs to ask a number of questions such as what is the potential size of the market, how shall the product be priced?, where is the break-even point? Is one of these questions it can provide vital management information. E.g.: if the B/E point is over say 12 months, how does the business capitalise that product, and is it worth going ahead with this new product. B/E charts relatively easy to construct and interpret. However, there are limitations as to the use of B/E analysis simplistic, a static model, the effectiveness depends on the quality and accuracy of the data used assumes linearity, no account of possible changes in costs over time does not allow for changes in market conditions in the time period etc. So some general limitations plus some specific to new product decisions noneconomic factors may influence such a decision e.g. subjective personal owner preference decisions political interference, social/cultural influences, etc. Evaluative comment on the usefulness of B/E analysis and its possible limitations, in context. [9 12] Analysis of how B/E analysis could be useful with some in context reference to extent of usefulness and/or limitations. [7 8] Discussion of how B/E analysis could be useful. [3 6] Limited understanding of B/E and its usefulness. [1 2]