UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education * 9 8 4 7 2 0 2 0 3 3 * 0450/11 BUSINESS STUDIES Paper 1 May/June 2012 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner’s Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. DC (RCL (JDA)) 49142/3 © UCLES 2012 [Turn over 2 1 IRKAM is a company that produces high quality doors for hotels and offices. The company currently uses job production. The Managing Director, Abdul, believes that quality control is important. He is looking for ways to increase productivity. All workers receive on-the-job training. Abdul is thinking of including off-the-job training as well. (a) What is meant by ‘productivity’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) What is meant by ‘on-the-job training’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain one advantage and one disadvantage of off-the-job training for IRKAM. Advantage: ....................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Disadvantage: .................................................................................................................. .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/11/M/J/12 For Examiner’s Use 3 (d) Identify and explain two reasons why quality control might be important to IRKAM. Reason 1: ........................................................................................................................ For Examiner’s Use .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) Over the past three years there has been a large increase in demand for IRKAM’s doors. Do you think job production is still the best method of production for IRKAM? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/11/M/J/12 [Turn over 4 2 Sunil is a sole trader. He likes owning a small business. His shop sells low price raincoats. Sales vary throughout the year. The market for raincoats is competitive, but as Sunil makes a profit he doesn’t think competition is a problem for his business. In order to protect consumers, the Government of Sunil’s country has recently introduced new laws to protect consumers. (a) What is meant by ‘profit’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Identify two factors which could affect demand for Sunil’s products. Factor 1: ........................................................................................................................... .......................................................................................................................................... Factor 2: ........................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two reasons why profit is important to small businesses like Sunil’s. Reason 1: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/11/M/J/12 For Examiner’s Use 5 (d) Identify and explain one way in which consumer protection laws might affect Sunil’s business and one way consumer protection laws might affect his customers. For Examiner’s Use Way consumer laws affect Sunil’s business: .................................................................... .......................................................................................................................................... Explanation: ...................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Way consumer laws affect Sunil’s customers: ................................................................. .......................................................................................................................................... Explanation: ...................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) Do you think the advantages of owning a small business are greater than the disadvantages for Sunil? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/11/M/J/12 [Turn over 6 3 The Government of country H is concerned about the effect of business activity on the environment. It wants to encourage sustainable development. To do this, it is planning to introduce laws to encourage environmentally-friendly production methods. A number of businesses will be affected by these new laws. The Government of country H has collected the data shown in Table 1. Gross Domestic Product (GDP) measures the value of the total output produced in a country in one year. The GDP of country H has risen from $625m in 2000 to $825m in 2011. Table 1: Percentage of GDP by different sectors % of GDP 2000 2011 Primary sector 35 15 Secondary sector 40 25 Tertiary sector 25 60 (a) What is meant by ‘tertiary sector’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) What is meant by ‘sustainable development’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two changes between 2000 and 2011 that are shown in Table 1. Change 1: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Change 2: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/11/M/J/12 For Examiner’s Use 7 (d) Identify and explain three ways a Government could encourage more businesses to set up in its country. For Examiner’s Use Way 1: .............................................................................................................................. Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Way 2: .............................................................................................................................. Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Way 3: .............................................................................................................................. Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) Do you think that all businesses will be affected by the introduction of the new laws to encourage environmentally-friendly production methods? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/11/M/J/12 [Turn over 8 4 Rapid Call is a private limited company. It manufactures a range of cell (mobile) phones. The demand for these is increasing. Its products have several special features that are not available from other phone manufacturers. It sells its products directly to retail shops. Rapid Call uses competitive pricing for all products. The Finance Director has been looking at the accounts. A summary is shown in Table 2. In 2011 the gross profit margin was 40%. Table 2: Profit/Loss Account for Rapid Call for year ending 30 April 2012 ($000s) Sales 450 Cost of Sales 300 Gross Profit 150 Overheads 95 Net Profit 55 (a) What is meant by ‘private limited company’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Calculate the gross profit margin for the year ending 30 April 2012. .......................................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two ways in which Rapid Call’s Finance Director could use the information in Table 2. Way 1: .............................................................................................................................. .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Way 2: .............................................................................................................................. .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/11/M/J/12 For Examiner’s Use 9 (d) The Marketing Director is thinking about changing the channel of distribution. Identify and explain three factors that Rapid Call should consider when choosing a suitable channel of distribution. For Examiner’s Use Factor 1: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 2: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 3: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [6] (e) How important is increased competition in influencing the marketing strategy of Rapid Call? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/11/M/J/12 [Turn over 10 5 Favell is a woodworker. He is planning to set up his own woodworking business. He plans to use marketing to help his business become established in the local area. Favell thinks cash flow will be a problem because his business will have a lot of cash outflows. A friend has suggested he prepares a cash flow forecast. (a) What is meant by ‘marketing’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Identify two possible cash outflows for Favell’s business. Cash outflow 1: ................................................................................................................. Cash outflow 2: ............................................................................................................ [2] (c) Identify and explain two benefits for any business of preparing a cash flow forecast. Benefit 1: .......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Benefit 2: .......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/11/M/J/12 For Examiner’s Use 11 (d) Favell is looking at various methods of promotion for his business. Identify and explain three suitable methods of promotion that Favell could use to attract customers. Method 1: ......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Method 2: ......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Method 3: ......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [6] (e) Favell needs $10 000 to buy a motor vehicle so that he can carry all his equipment. He is planning to ask the bank for an overdraft. Do you think this is the most suitable source of finance for him to choose? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/11/M/J/12 For Examiner’s Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2012 0450/11/M/J/12 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education BUSINESS STUDIES Paper 1 0450/01 October/November 2006 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner’s Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. SP (NH) T17653/5 © UCLES 2006 [Turn over 2 1 Gulliver Travel sells family holidays. Gulliver researched the market and discovered that what families wanted was good value for money when buying their holidays. Gulliver’s Managing Director told other directors that ‘there are a lot of companies selling holidays so it is very important that we give the customer exactly what they want’. Figures 1 and 2 give data regarding the family holiday market. Market share of total family holiday market 2005 $m 400 Gulliver’s share of market Total value of family holiday market sales 2003–2005 320 300 2003 Figure 1 (a) (i) 2004 year 2005 Figure 2 Calculate the value of Gulliver Travel’s sales in 2005. ................................................................................................................................... ...............................................................................................................................[2] (ii) Using Figure 2 calculate the % growth in the total value of family holiday market sales between 2003 and 2005. ................................................................................................................................... ...............................................................................................................................[2] (b) Explain why the demand for Gulliver’s sales of family holidays is likely to be price elastic. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] © UCLES 2006 0450/01/O/N/06 For Examiner’s Use 3 (c) How could one element of the marketing mix, other than price, be used to increase Gulliver’s sales of holidays? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] (d) Gulliver researched the market by giving a questionnaire to families at the end of their holidays. (i) Explain why the business might have used this method of gathering data. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[4] (ii) Explain one reason why the data gathered might not be accurate. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[4] © UCLES 2006 0450/01/O/N/06 [Turn over For Examiner’s Use 4 2 Giovanni had been to see his bank manager to talk about ways of financing the growth of his business. He wanted to open five new shops selling electrical goods such as televisions and radio equipment. The bank manager told him that he must think very carefully about the capital needs of this expansion which would involve both fixed and current assets. The bank manager told Giovanni that he would need to see the accounts of the business including a cash flow forecast before the bank could increase its lending. (a) (i) Explain what is meant by a fixed asset. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[2] (ii) Give an example of a current asset that Giovanni’s business would own. ................................................................................................................................... ...............................................................................................................................[1] (iii) What is meant by a cash flow forecast? ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[2] (b) (i) Explain two reasons why the bank manager would want to see the accounts of the business before increasing the bank’s lending to Giovanni. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[4] © UCLES 2006 0450/01/O/N/06 For Examiner’s Use 5 (ii) Outline the factors Giovanni should consider before deciding which methods of finance would be best suited for this expansion. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[5] (c) Table 1 Extract from Giovanni’s Balance Sheet as at 1 November 2006 Stock Debtors Cash $000’s 50 60 0 110 Overdraft Creditors 80 40 120 (i) Calculate the current ratio for the business from the information given in Table 1. ................................................................................................................................... ...............................................................................................................................[2] (ii) Is the liquidity position of Giovanni’s business good? Explain your answer. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[4] © UCLES 2006 0450/01/O/N/06 [Turn over For Examiner’s Use 6 3 The directors of Philochem are thinking about building a chemical factory in country Z. (a) Identify and explain three factors the directors need to consider in making this location decision. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[6] (b) Using examples show why a knowledge of health and safety laws in country Z would be important for the management of this business. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] © UCLES 2006 0450/01/O/N/06 For Examiner’s Use 7 (c) Most of the employees in existing factories of Philochem are members of a trade union. What benefits does a worker gain from being a member of a trade union? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] (d) Figure 3 shows data relating to the rates of pay in Philochem (P) and two other large chemical companies (A and B) in Europe between 2000 and 2005. Average Annual Wage Rate 2000 $ 20,000 17,000 10,000 Average Annual Wage Rate 2005 $ 23,000 P P A A 19,500 B 14,000 B Figure 3 (i) Which company raised its wages by the greatest amount between 2000 and 2005. Explain your answer. ................................................................................................................................... ...............................................................................................................................[2] (ii) Using Figure 3 explain why different companies increase their wage rates over time by different amounts. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[4] [Turn over © UCLES 2006 0450/01/O/N/06 For Examiner’s Use 8 4 Gurinder Singh set up his successful business ten years ago. Gurinder makes all the decisions in his business. He tells staff what to do and he expects them to follow his orders. Gurinder doesn’t hold meetings as he feels that they are unnecessary and a waste of time. ‘Why consult and discuss when I know best,’ he said. ‘Everyone who is employed in my company is directly answerable to me. I pay high wages and I expect results. Everyone knows that if they don’t work hard I will dismiss them. Employees like my wages even if they don’t like me!’ (a) (i) Describe the management style used by Gurinder. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[3] (ii) Do you think that this is a good way to manage a business? Justify your answer. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[6] © UCLES 2006 0450/01/O/N/06 For Examiner’s Use 9 (b) It has been suggested to Gurinder that he might introduce delegation into his business. Explain what is meant by delegation. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[3] (c) Recently Gurinder dismissed an employee for failing to carry out his orders. (i) Is this an example of an employee being made redundant? Explain your answer. ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[2] (ii) To what extent do you think high wages motivate staff in companies such as Gurinder’s? ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ................................................................................................................................... ...............................................................................................................................[6] © UCLES 2006 0450/01/O/N/06 [Turn over For Examiner’s Use 10 5 J.T. Enterprises is a large private sector business that owns a number of farms in country A. The business breeds a variety of animals such as cows and sheep as well as growing crops. They employ many workers and the business is successful and profitable. (a) Why is profit important to a business such as J.T. Enterprises? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[3] (b) Using an example from J.T. Enterprises explain what is meant by added value. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[3] (c) Many farmers such as J.T. Enterprises export their animals and crops. If the currency of Country A depreciates on the foreign exchange markets explain how this could affect the sales of J.T. Enterprises in export markets. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] © UCLES 2006 0450/01/O/N/06 For Examiner’s Use 11 (d) Business activity may result in social costs and social benefits. Describe the social benefits that you would expect J.T. Enterprises to produce. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] (e) Identify and explain two important changes that have happened in your country in terms of employment and contribution to national wealth in recent times. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[6] © UCLES 2006 0450/01/O/N/06 For Examiner’s Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the University of Cambridge Local Examination Syndicate (UCLES) which is itself a department of the University of Cambridge. 0450/01/O/N/06 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education *4730436574* 0450/11 BUSINESS STUDIES Paper 1 May/June 2010 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner’s Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. DC (CB/LD) 17527/3 © UCLES 2010 [Turn over 2 1 Gabby is the production manager at a factory that manufactures a range of electrical products including televisions. The company uses flow production methods in its factory. Gabby was looking at some data produced by the finance department. This data is shown in Table 1. Table 1: Cost and Output Data Output per week [units] 2000 3000 Fixed costs [$000’s] 8000 8000 Variable costs [$000’s] 6000 7000 (a) Calculate the cost per unit if the output of the factory is 3 000 units per week. .......................................................................................................................................... ...................................................................................................................................... [2] (b) Identify two economies of scale that the factory might gain by increasing its weekly output. Economy of scale 1: ........................................................................................................ .......................................................................................................................................... Economy of scale 2: ........................................................................................................ ...................................................................................................................................... [2] (c) The factory uses flow production methods. Identify and explain two features of flow production. Feature 1: ........................................................................................................................ .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Feature 2: ........................................................................................................................ .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/11/M/J/10 For Examiner’s Use 3 (d) Rather than making components, Gabby’s company is going to buy them from another manufacturer. Identify and explain three advantages to Gabby’s company of doing this. For Examiner’s Use Advantage 1: ................................................................................................................... Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Advantage 2: ................................................................................................................... Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Advantage 3: ................................................................................................................... Explanation: .................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Recently Gabby’s company has become much larger. Do you think that becoming larger is an advantage for a business? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/11/M/J/10 [Turn over 4 2 AB is a large business providing services in country Z. Fig. 1 shows the market distribution of its sales in 2009. Table 2 shows a summary of its financial data in the same year. Table 2: Financial Data (2009) Fig. 1: Market Distribution of Sales (2009) domestic sales export sales Sales turnover $750m Net Profit $150m Net profit margin 20% Return on capital employed 15% (a) What is meant by a return on capital employed [ROCE]? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) Calculate the value of domestic sales in 2009. .......................................................................................................................................... ...................................................................................................................................... [2] (c) AB has borrowed a lot of money from banks in order to expand. Identify and explain two disadvantages to a company of owing a lot of money to banks. Disadvantage 1: .............................................................................................................. Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Disadvantage 2: .............................................................................................................. Explanation: .................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/11/M/J/10 For Examiner’s Use 5 (d) Country Z is in recession. Identify and explain three ways in which a recession might affect AB. For Examiner’s Use Way 1: ............................................................................................................................. Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Way 2: ............................................................................................................................. Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Way 3: ............................................................................................................................. Explanation: .................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) The Government of country Z is to take control of AB. Do you think that this will be in the best interests of the stakeholders in AB? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/11/M/J/10 [Turn over 6 3 Deco is an electronics company manufacturing a wide range of products. The company operates in a highly competitive and fast changing market. The management of Deco believe that the company is ‘market orientated’. (a) What is meant by a ‘market orientated’ company? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) Identify two possible disadvantages to Deco of having a wide range of products. Disadvantage 1: .............................................................................................................. .......................................................................................................................................... Disadvantage 2: .............................................................................................................. ...................................................................................................................................... [2] (c) Deco is about to carry out some market research. It intends to use sampling to research the market. Identify and explain two methods of sampling that Deco could use. Method 1: ........................................................................................................................ Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Method 2: ........................................................................................................................ Explanation: .................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/11/M/J/10 For Examiner’s Use 7 (d) Deco also uses secondary market research. Identify and explain three reasons why the results of secondary market research might not always be useful to a business. For Examiner’s Use Reason 1: ........................................................................................................................ Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 3: ........................................................................................................................ Explanation: .................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Deco wants to spend more on developing new products. In order to do this it will have to spend less on market research. Do you think Deco should do this? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/11/M/J/10 [Turn over 8 4 Zola is the general manager of a hotel. He believes that customer service is important if guests are to enjoy their stay at the hotel. Zola manages his staff by a mixture of financial incentives, such as bonuses, and by threats. The staff are paid on a time rate basis. (a) What is meant by a financial bonus? .......................................................................................................................................... ...................................................................................................................................... [2] (b) Identify two reasons why customer service is important. Reason 1: ........................................................................................................................ .......................................................................................................................................... Reason 2: ........................................................................................................................ ...................................................................................................................................... [2] (c) Identify and explain one advantage and one disadvantage of paying staff by time rate. Advantage: ...................................................................................................................... Explanation: .................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Disadvantage: ................................................................................................................. Explanation: .................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/11/M/J/10 For Examiner’s Use 9 (d) The hotel has a high staff turnover with a large number of employees leaving their job each year. Identify and explain three consequences of a high staff turnover to the business. For Examiner’s Use Consequence 1: .............................................................................................................. Explanation: ...................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Consequence 2: .............................................................................................................. Explanation: ...................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Consequence 3: .............................................................................................................. Explanation: ...................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Do you think that financial incentives are likely to be effective in motivating staff? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/11/M/J/10 [Turn over 10 5 General Auto is a large global business. The management of General Auto are looking for a country where they might open a factory. (a) What is meant by a ‘global business’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) Identify two factors that might influence General Auto’s choice of country in which to locate the factory. Factor 1: .......................................................................................................................... .......................................................................................................................................... Factor 2: .......................................................................................................................... ...................................................................................................................................... [2] (c) Multinational companies are not always welcome in a country because they might misuse their power. Explain how pressure groups might try and influence the behaviour of such companies. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/11/M/J/10 For Examiner’s Use 11 Movements in exchange rates can cause problems for any business that trades globally. General Auto’ s home country is the United States. (d) Identify and explain three consequences for General Auto of a rise in the exchange rate of the United States dollar. Consequence 1: .............................................................................................................. Explanation: ...................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Consequence 2: .............................................................................................................. Explanation: ...................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Consequence 3: .............................................................................................................. Explanation: ...................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) By examining the advantages and disadvantages that multinational companies create, do you think that a Government should seek to attract these companies to their country? Justify your recommendation. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/11/M/J/10 For Examiner’s Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2010 0450/11/M/J/10 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education *6213261395* 0450/11 BUSINESS STUDIES October/November 2009 Paper 1 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner's Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. IB09 11_0450_11/2RP © UCLES 2009 [Turn over 2 1 Joel owns a business that specialises in decorating offices. In 2008 Joel’s business carried out a contract to redecorate the offices of Yinvesco. The work took three months to complete. Yinvesco then took a further two months to pay the account and deducted 15% because they said that not all the work had been completed satisfactorily. Joel was very unhappy about this because the contract only had a small profit margin. “I base my price on full costs including overheads and add on 10%” he said. (a) Identify the pricing method used by Joel’s business. [2] (b) Explain what is meant by ‘a small profit margin’. [2] (c) Explain two reasons why Joel’s business might have experienced cash flow problems when carrying out the Yinvesco contract. Reason 1: Reason 2: [4] © UCLES 2009 0450/11/O/N/09 For Examiner's Use 3 Joel is thinking of changing his supplier of paint. (d) Identify three factors Joel should consider when choosing a paint supplier and explain why each factor is important. For Examiner's Use Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: [6] (e) Do you think that Joel should use a different pricing method for his business? Justify your answer. [6] © UCLES 2009 0450/11/O/N/09 [Turn over 4 2 Table 1 shows the Balance Sheet for Ulwar, a public limited company. For Examiner's Use Table 1: Balance Sheet Ulwar as at 30 September 2009 Fixed assets Current assets Current liabilities Net current assets Net assets Financed by Shareholders funds Long term liabilities Capital employed $m 80 20 12 8 88 38 50 88 In 2008 Ulwar made a profit of $8m and in 2009 the company made a profit of $10m. In 2008 the return on capital employed by the business was 10%. (a) Identify an example of: A current liability A long term liability [2] (b) Calculate the return on capital employed (ROCE) of Ulwar in 2009. [2] (c) Explain why the amount of long term liabilities on Ulwar’s Balance Sheet might be of concern to its bank. [4] © UCLES 2009 0450/11/O/N/09 5 The management of Ulwar is thinking of raising extra capital by issuing more shares. (d) Identify and explain three factors the company should consider before making this decision. For Examiner's Use Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: [6] (e) Referring to the measures of business success, such as ROCE, do you think Ulwar had a successful year in 2009? Justify your answer. [6] © UCLES 2009 0450/11/O/N/09 [Turn over 6 3 Reo is the manager of a computer business. The company repairs computers and designs software for businesses. Reo pays his employees by piece rates but the workers do not like this method. Reo believes that the best way to manage and motivate his employees is by being an autocratic manager. (a) What is meant by ‘piece rates’? [2] (b) What is meant by an ‘autocratic manager’? [2] (c) Explain two possible reasons why Reo’s employees do not like being paid by piece rates. Reason 1: Reason 2: [4] © UCLES 2009 0450/11/O/N/09 For Examiner's Use 7 Reo is thinking of introducing new training for his employees. (d) Identify and explain three factors that Reo should consider before taking a decision about new training. For Examiner's Use Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: [6] (e) Recommend how Reo can improve the motivation level of his employees. Justify your answer. [6] © UCLES 2009 0450/11/O/N/09 [Turn over 8 4 Isaiah had been to college to study business. His tutors told him that added value was very important if a business was to be successful and profitable. Table 2 shows a task given to Isaiah by his tutors. Table 2: The concept of added value Type of Business Raw Material Process of Added Value End Product or Service Petrol Supplier Oil Oil Refining Petrol Meal Restaurant (a) Complete Table 2 above by filling in the two gaps for the restaurant business. [2] (b) What is meant by ‘added value?’ [2] Isaiah is about to set up a business manufacturing fashionable sports clothes. (c) Identify and explain the importance of two factors that Isaiah should consider in deciding on the location of his business. Factor 1: Explanation: Factor 2: Explanation: [4] © UCLES 2009 0450/11/O/N/09 For Examiner's Use 9 (d) Identify and explain three methods that Isaiah could use in marketing his new business to potential customers. For Examiner's Use Method 1: Explanation: Method 2: Explanation: Method 3: Explanation: [6] (e) Do you think that if Isaiah adds value then his business will be successful and profitable? Justify your answer. [6] © UCLES 2009 0450/11/O/N/09 [Turn over 10 5 The government of country W is concerned about the level of imports. Local pressure groups have been asking for import restrictions to be introduced. Other groups want the exchange rate of country W to fall (depreciate). (a) Identify two methods that could be used to restrict imports into country W. Method 1: Method 2: [2] (b) What is meant by ‘an exchange rate fall’? [2] (c) Identify and explain two reasons why consumers might be disadvantaged by the introduction of import restrictions. Reason 1: Explanation: Reason 2: Explanation: [4] © UCLES 2009 0450/11/O/N/09 For Examiner's Use 11 The ‘structure’ of an economy refers to the relative importance of the primary, secondary and tertiary sectors. (d) Identify three major changes that have occurred in the structure of your country’s economy in recent years and explain why these changes have happened. Change 1: Explanation: Change 2: Explanation: Change 3: Explanation: [6] (e) Do you think that a fall in the exchange rate of country W will help businesses in that country? Justify your answer. [6] © UCLES 2009 0450/11/O/N/09 For Examiner's Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. 0450/11/O/N/09 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education * 8 8 6 2 3 9 8 7 2 5 * 0450/12 BUSINESS STUDIES Paper 1 October/November 2012 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner’s Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. DC (LEO/SW) 49285/1 © UCLES 2012 [Turn over 2 1 Kruger Enterprises manufactures a range of electrical products such as washing machines. Its best-selling product is in the decline stage of its life cycle. The management uses cost plus pricing and believes that the demand for the company’s products is price inelastic. Changes in Kruger’s marketing mix are being considered. The company is researching the market and plans to introduce some new products next year. (a) Label on Fig. 1 the other two stages of the product life cycle. I II III IV Sales Introduction Decline Time Fig. 1: Product life cycle [2] (b) What is meant by ‘cost plus pricing’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (c) Identify and explain two possible advantages to Kruger Enterprises of researching the market. Advantage 1: .................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Advantage 2: .................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ...................................................................................................................................... [4] © UCLES 2012 0450/12/O/N/12 For Examiner’s Use 3 (d) Identify and explain three benefits to Kruger Enterprises of introducing new products. Benefit 1: .......................................................................................................................... For Examiner’s Use .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Benefit 2: .......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Benefit 3: .......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ...................................................................................................................................... [6] (e) Do you think reducing the price of its washing machines will increase the sales turnover of Kruger Enterprises? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2012 0450/12/O/N/12 [Turn over 4 2 Just4U manufactures motor car parts. The production methods are capital intensive. The management believes that the company benefits from economies of scale. However, problems with the workers in the factory have led to poor quality production. Despite this, the Managing Director believes that the company must continue to grow if it is to achieve its objectives. The business is planning a takeover of a competitor. (a) What is meant by ‘capital intensive’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) Identify two objectives that a business like Just4U might have. Objective 1: ...................................................................................................................... .......................................................................................................................................... Objective 2: ...................................................................................................................... ...................................................................................................................................... [2] (c) Identify and explain two economies of scale from which Just4U could benefit. Economy of scale 1: ......................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Economy of scale 2: ......................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ...................................................................................................................................... [4] © UCLES 2012 0450/12/O/N/12 For Examiner’s Use 5 (d) Identify and explain two problems that poor quality might create for Just4U. Problem 1: ........................................................................................................................ For Examiner’s Use .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Problem 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Do you think that a takeover of a competitor will benefit the shareholders of Just4U? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2012 0450/12/O/N/12 [Turn over 6 3 Celtic Springs, a public limited company, is a water bottling business. Its shareholders have been unhappy with the performance of the business and are threatening to take action at the next Annual General Meeting (AGM). Table 1 shows an extract from the company’s latest Profit/Loss Account. Table 1: Celtic Springs Profit/Loss Account 2011 ($m) Sales revenue Cost of sales Gross profit Overheads/expenses Net profit ? 150 ? 70 10 The accounts of the business also show that the capital employed by Celtic Springs was $650m. (a) Calculate gross profit and sales revenue in 2011. Gross profit: ..................................................................................................................... Sales revenue: ............................................................................................................. [2] (b) Identify two functions of an Annual General Meeting. Function 1: ....................................................................................................................... .......................................................................................................................................... Function 2: ....................................................................................................................... ...................................................................................................................................... [2] (c) Identify and explain two ways Celtic Springs could reduce its cost of sales. Way 1: .............................................................................................................................. .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Way 2: .............................................................................................................................. .......................................................................................................................................... Explanation: ..................................................................................................................... ...................................................................................................................................... [4] © UCLES 2012 0450/12/O/N/12 For Examiner’s Use 7 (d) Identify and explain three reasons why profit is important to a company such as Celtic Springs. For Examiner’s Use Reason 1: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Reason 3: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... ...................................................................................................................................... [6] (e) Do you think that the shareholders of Celtic Springs are right to be unhappy with the company’s performance? Justify your answer using the data provided. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2012 0450/12/O/N/12 [Turn over 8 4 Colour Rack manufactures paint in country Z. It sells its products to customers both nationally and internationally. Colour Rack uses a specialist transport company to deliver its products to customers. The Colour Rack brand is well known. Many of its factory employees are unhappy at work. They are well paid but lack motivation due to the repetitive nature of their work. (a) Paint manufacturing is a secondary sector business activity. Identify two types of business activity in the tertiary sector. Type 1: ............................................................................................................................. Type 2: ......................................................................................................................... [2] (b) Identify two problems Colour Rack could have when exporting its paint to customers in other countries. Problem 1: ........................................................................................................................ .......................................................................................................................................... Problem 2: ........................................................................................................................ ...................................................................................................................................... [2] (c) Explain how a manufacturing business adds value to its products. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2012 0450/12/O/N/12 For Examiner’s Use 9 (d) Identify and explain three factors Colour Rack should consider in deciding which transport company to use to deliver its products. For Examiner’s Use Factor 1: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 2: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 3: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ...................................................................................................................................... [6] (e) Recommend two strategies for improving the motivation of Colour Rack’s factory employees. Justify your answer. Strategy 1: ........................................................................................................................ .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Strategy 2: ........................................................................................................................ .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2012 0450/12/O/N/12 [Turn over 10 5 Country W has a mixed economy. Herio is a Government economist. He said: ‘Business activity in the private sector can lead to external costs, such as pollution. It can also create external benefits. I believe that businesses that create external benefits should be encouraged and those that create external costs should be closed down.’ Country W has low economic growth and rising inflation. (a) What is meant by ‘the private sector’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) What is meant by ‘rising inflation’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (c) Most businesses set objectives. Identify and explain two reasons why having objectives may be important for a business. Reason 1: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... ...................................................................................................................................... [4] © UCLES 2012 0450/12/O/N/12 For Examiner’s Use 11 (d) Identify three external benefits and explain how business activity can create each benefit. Benefit 1: .......................................................................................................................... Explanation of how benefit is created: ............................................................................. .......................................................................................................................................... .......................................................................................................................................... Benefit 2: .......................................................................................................................... Explanation of how benefit is created: ............................................................................. .......................................................................................................................................... .......................................................................................................................................... Benefit 3: .......................................................................................................................... Explanation of how benefit is created: ............................................................................. ......................................................................................................................................... ...................................................................................................................................... [6] (e) Herio believes businesses that create external costs should be closed down. Do you agree with him? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2012 0450/12/O/N/12 For Examiner’s Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2012 0450/12/O/N/12 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education * 3 1 7 6 7 3 1 6 0 8 * 0450/12 BUSINESS STUDIES Paper 1 October/November 2011 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner’s Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. DC (NF/SW) 36796/2 © UCLES 2011 [Turn over 2 1 Stilvan always wanted to run his own business. When he left school he borrowed money from his parents to start a gardening business. The business name is Stilvan Grass Cutters. Stilvan bought some equipment to cut grass and trees. Stilvan delivers leaflets to people’s homes to promote his business. Table 1 shows data for a typical week for Stilvan’s business. Table 1 Average price per customer Variable cost per job Weekly overheads Number of customers $15 $7 $320 50 Demand for his services is seasonal and this causes problems for Stilvan. (a) Identify two objectives that Stilvan might have had when he set up his business. Objective 1: ...................................................................................................................... .......................................................................................................................................... Objective 2: ...................................................................................................................... ..................................................................................................................................... [2] (b) Identify two advantages of using leaflets as a method of promotion. Advantage 1: .................................................................................................................... .......................................................................................................................................... Advantage 2: .................................................................................................................... ..................................................................................................................................... [2] (c) Using the information given in Table 1, draw a break-even chart for Stilvan’s business. $ 1000 750 Revenue & Costs Weekly Break-Even Chart 500 250 0 0 20 40 Number of customers per week 60 [4] © UCLES 2011 0450/12/O/N/11 For Examiner’s Use 3 (d) Identify and explain three problems that seasonal demand can cause for Stilvan’s business. For Examiner’s Use Problem 1: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Problem 2: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Problem 3: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) Stilvan wants to make his business more profitable. Recommend ways in which this could be achieved. Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2011 0450/12/O/N/11 [Turn over 4 2 Cycles4u make a wide range of bicycles. The business is ‘product orientated’ as it believes that good products will sell easily. The business does not use any market research to help in decision making. However, Cycles4u does spend a lot of money on promoting its products to the target markets. (a) What is meant by the term ‘product orientated’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) What is meant by the term ‘target market’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two possible disadvantages to a business of having a wide product range. Disadvantage 1: ............................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Disadvantage 2: ............................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] © UCLES 2011 0450/12/O/N/11 For Examiner’s Use 5 (d) Identify and explain three channels of distribution that Cycles4u could use to help launch a new range of bicycles. For Examiner’s Use Channel 1: ....................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Channel 2: ....................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Channel 3: ....................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) Do you think that Cycles4u should use market research in the future? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2011 0450/12/O/N/11 [Turn over 6 3 Mayfair Solutions, a public limited company, develops software packages for customers. The staff it employs are highly paid, but Mayfair Solutions believes that this is money well spent. The company has to keep updating its software packages because customer requirements keep changing. The software market is very competitive. (a) What is meant by the term ‘public limited company’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Identify two features of a very competitive market. Feature 1: ......................................................................................................................... .......................................................................................................................................... Feature 2: ......................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two possible reasons why the staff at Mayfair Solutions are paid high wages. Reason 1: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] © UCLES 2011 0450/12/O/N/11 For Examiner’s Use 7 (d) Identify and explain three problems that the need to keep updating its software packages may create for Mayfair Solutions. For Examiner’s Use Problem 1: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Problem 2: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Problem 3: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) Mayfair Solutions has recently received a takeover bid from a large rival software company. Do you think that this takeover would benefit both employees and shareholders of Mayfair Solutions? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2011 0450/12/O/N/11 [Turn over 8 4 Travelscene is a company that specialises in holiday tours for people with interests in sport. It arranges trips like ski holidays and group visits to major events such as the Olympic Games. This is a niche market. Travelscene is a very profitable business. The company has an excellent reputation as an efficient business. It employs experienced tour managers who look after the needs of tourists during their trip. It currently has a vacancy for a tour manager. (a) What is meant by the term ‘a niche market’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) What is meant by ‘an efficient business’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two qualities that a new Travelscene tour manager will need. Quality 1: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Quality 2: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] © UCLES 2011 0450/12/O/N/11 For Examiner’s Use 9 (d) Identify and explain three possible reasons why Travelscene is a very profitable business. Reason 1: ......................................................................................................................... For Examiner’s Use Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 3: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) The management of Travelscene is thinking of starting a new range of family beach holidays, aimed at the mass market. Do you think that this would be a good idea? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2011 0450/12/O/N/11 [Turn over 10 5 The structure of the economy in country W has changed greatly in the last ten years. Primary sector activities have declined in importance, but a range of new tertiary sector businesses have started up. Output in the secondary sector has increased, but employment in this sector has fallen. These changes have caused social and economic problems, with many people finding it difficult to get jobs. The wages of workers in the primary sector businesses have been falling. (a) What is meant by ‘primary sector activities’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Identify two examples of businesses that would be classified as being in the tertiary sector. Example 1: ....................................................................................................................... Example 2: .................................................................................................................. [2] (c) Identify and explain two possible reasons why workers’ wages in primary sector businesses are falling. Reason 1: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] © UCLES 2011 0450/12/O/N/11 For Examiner’s Use 11 (d) Identify and explain three possible causes of the structural changes that have occurred in country W. Cause 1: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Cause 2: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Cause 3: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] (e) Do you think that the Government should subsidise primary sector businesses to stop them from closing? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2011 0450/12/O/N/11 For Examiner’s Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2011 0450/12/O/N/11 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education *0731346511* 0450/12 BUSINESS STUDIES Paper 1 October/November 2010 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner’s Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. DC (SM) 24022/2 © UCLES 2010 [Turn over 2 1 Mike is a sole trader. He owns a shop selling fruit and vegetables. ‘I am always looking for ways of increasing my profits’ he said, ‘but it is hard to compete against big supermarket shops. I have low profit margins on most of my goods so I cannot cut prices any more.’ The business also has an overdraft with the bank. (a) Identify two variable costs of Mike’s business. Variable cost 1: ................................................................................................................ .......................................................................................................................................... Variable cost 2: ................................................................................................................ ...................................................................................................................................... [2] (b) What is meant by a ‘low profit margin’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (c) Identify and explain two advantages to Mike of using a bank overdraft. Advantage 1: .................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Advantage 2: .................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/12/O/N/10 For Examiner’s Use 3 (d) Identify and explain three methods that Mike could use to compete against larger competitors. For Examiner’s Use Method 1: ......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Method 2: ......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Method 3: ......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Do you think Mike should take on a business partner? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/12/O/N/10 [Turn over 4 2 Imogen is a Human Resources manager in a chain of hotels. Recruiting and retaining employees is a major part of her job. ‘Recruiting staff is easy but keeping them is much harder’ she said. The employees are paid a wage plus a bonus but wages are low. All employees are given an employment contract when they join the company. (a) Identify two items that are in an employment contract. Item 1: .............................................................................................................................. .......................................................................................................................................... Item 2: .............................................................................................................................. ...................................................................................................................................... [2] (b) What is meant by a ‘bonus’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (c) Identify and explain two possible reasons why wage levels are low in this business. Reason 1: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/12/O/N/10 For Examiner’s Use 5 (d) Other than paying higher wages, identify and explain three methods that Imogen could use to help keep staff. For Examiner’s Use Method 1: ......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Method 2: ......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Method 3: ......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Do you think that it is always important for a business to reduce the number of employees leaving each year? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/12/O/N/10 [Turn over 6 3 Manfred is the Finance Director of a large public limited company BTX. After looking at the data in Table 1, Manfred was worried that BTX might be facing problems. Table 1: Selected Financial Data for BTX ($’000s) Sales Net profit Capital employed Dividends 2008 2009 1200 200 1000 150 800 100 400 20 The current ratio was 1.2 in 2008 and 1.5 in 2009. (a) What is meant by ‘dividends’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) Calculate the return on capital employed (ROCE) in 2009. .......................................................................................................................................... ...................................................................................................................................... [2] (c) Explain how ROCE can be used to assess the performance of a company. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/12/O/N/10 For Examiner’s Use 7 (d) Identify and explain three ways by which the company can improve its net profits. Way 1: .............................................................................................................................. For Examiner’s Use Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Way 2: .............................................................................................................................. Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Way 3: .............................................................................................................................. Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Do you think that the management of BTX should be worried about the performance of the company in 2009? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/12/O/N/10 [Turn over 8 4 Gorgeous Chocs is a manufacturer of high quality chocolates. The company spends a lot of money on marketing but the management knows that it is important that such spending is cost effective. The company accountant has just introduced new financial budgets for each department. (a) What is meant by ‘cost effective’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) What is meant by a ‘financial budget’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (c) Identify and explain two factors that Gorgeous Chocs needs to consider in designing the packaging for its products. Factor 1: ........................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Factor 2: ........................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/12/O/N/10 For Examiner’s Use 9 (d) Identify and explain three factors that Gorgeous Chocs should consider when advertising its products. For Examiner’s Use Factor 1: ........................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Factor 2: ........................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Factor 3: ........................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) Do you think that the prices charged by Gorgeous Chocs for its products are important in determining the success of these products? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/12/O/N/10 [Turn over 10 5 ATC is a large exporting company with many offices throughout the world. The senior managers know that effective communication is vital in such a large business. Recently the management held a meeting to consider ways of improving communication in the business. Discussion focused on the problems of one-way communication and the importance of feedback. (a) What is meant by ‘one-way communication’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [2] (b) Identify two benefits of the telephone as a means of communication. Benefit 1: .......................................................................................................................... .......................................................................................................................................... Benefit 2: .......................................................................................................................... ...................................................................................................................................... [2] (c) Identify and explain two benefits to the management of receiving feedback from employees. Benefit 1: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Benefit 2: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [4] © UCLES 2010 0450/12/O/N/10 For Examiner’s Use 11 (d) ATC invests heavily in new technology in its business. Identify and explain three benefits that ATC may gain from this investment in new technology. Benefit 1: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Benefit 2: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Benefit 3: .......................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] (e) As a large employer of people, ATC knows that it must follow all the laws that affect people at work. Do you think that such laws benefit both ATC and its staff? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ...................................................................................................................................... [6] © UCLES 2010 0450/12/O/N/10 For Examiner’s Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2010 0450/12/O/N/10 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education * 2 3 3 0 2 2 7 1 4 0 * 0450/13 BUSINESS STUDIES Paper 1 May/June 2012 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. For Examiner’s Use 1 2 3 4 5 Total This document consists of 11 printed pages and 1 blank page. DC (NF) 58382 © UCLES 2012 [Turn over 2 1 Made Fresh is a company that manufactures high quality organic foods. The company uses ingredients that have been grown by local farmers in country J. Market research has shown that branding has helped the company to achieve its objectives. Recent bad weather in country J has led to many of the farm crops failing. Made Fresh is thinking about importing organic food ingredients from other countries nearby. (a) What is meant by ‘market research’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Identify two possible objectives Made Fresh could have. Objective 1: ...................................................................................................................... .......................................................................................................................................... Objective 2: ...................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two advantages to a business of branding. Advantage 1: .................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Advantage 2: .................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/13/M/J/12 For Examiner’s Use 3 (d) Identify and explain three possible problems Made Fresh might face if they have to import organic ingredients for the foods they manufacture. For Examiner’s Use Problem 1: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Problem 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Problem 3: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [6] (e) The Government in country J wants to encourage international trade. Do you think this would be an advantage to Made Fresh? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/13/M/J/12 [Turn over 4 2 Bray Electrics is a large manufacturing company. The company makes engine parts for the car industry using batch production. The Managing Director is always looking for ways to introduce new technology in the business. He believes ‘our workers like change’. He is interested in using lean production methods. (a) What is meant by ‘batch production’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Identify two ways of measuring the size of a company. Way 1: .............................................................................................................................. Way 2: ......................................................................................................................... [2] (c) Identify and explain two benefits of lean production for a business. Benefit 1: .......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Benefit 2: .......................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/13/M/J/12 For Examiner’s Use 5 (d) Identify and explain three advantages to the management of Bray Electrics of introducing new technology in the business. For Examiner’s Use Advantage 1: .................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Advantage 2: .................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Advantage 3: .................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [6] (e) The Managing Director believes ‘our workers like change’. Do you think that all the workers at Bray Electrics would like the introduction of new technology? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/13/M/J/12 [Turn over 6 3 HTB is a public limited company. It manufactures a range of computers. HTB spends a lot of money on advertising as it is in a competitive market. The management believes that the product is the most important element in their marketing mix. To meet increasing demand HTB is looking to expand their business. It plans to raise extra capital by issuing more shares. The Finance Director has been looking at the data in Table 1. Table 1: Selected financial data from HTB ($m) Sales Net Profit Long Term Liabilities Capital Employed 2011 2012 400 40 200 400 520 75 220 500 (a) What is meant by ‘public limited company’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Calculate the Return on Capital Employed for 2012. .......................................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two reasons why shareholders might be interested in the accounts of HTB. Reason 1: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/13/M/J/12 For Examiner’s Use 7 (d) Identify and explain three factors that HTB should consider before issuing more shares. Factor 1: ........................................................................................................................... For Examiner’s Use .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 2: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 3: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [6] (e) Do you think that the product is the most important element of the marketing mix for HTB? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/13/M/J/12 [Turn over 8 4 Cole Brokers is a medium sized company. The company provides a range of insurance products to customers around the world. It operates in a highly competitive market. Many insurance businesses are now using the Internet as a way to sell their products. The management of Cole Brokers has been looking at its current organisational structure. They think the span of control and chain of command need to be changed. (a) What is meant by ‘organisational structure’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) What is meant by ‘chain of command’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two possible disadvantages for a business of having a wide span of control. Disadvantage 1: ............................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Disadvantage 2: ............................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/13/M/J/12 For Examiner’s Use 9 (d) Identify and explain three reasons why effective communication within a business is important to the management. For Examiner’s Use Reason 1: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Reason 2: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Reason 3: ........................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [6] (e) The management of Cole Brokers think that the disadvantages of e-commerce are greater than the advantages to their business. Do you agree? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/13/M/J/12 [Turn over 10 5 Sachs-Tech makes parts for the mobile phone industry. Sales have risen very quickly. The company needs a new factory to meet demand. The management is not sure where to build the factory. The company is currently looking to recruit three new production supervisors. The Human Resources manager, Manuel, is busy writing a job description and person specification for these supervisor roles. (a) What is meant by a ‘job description’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Identify two possible features of a person specification. Feature 1: ......................................................................................................................... .......................................................................................................................................... Feature 2: ......................................................................................................................... ..................................................................................................................................... [2] (c) Identify and explain two suitable places where Manuel could advertise the vacancies. Place 1: ............................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Place 2: ............................................................................................................................ .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [4] © UCLES 2012 0450/13/M/J/12 For Examiner’s Use 11 (d) Identify and explain three factors that Sachs-Tech should consider when deciding where to locate a new factory. Factor 1: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 2: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... .......................................................................................................................................... Factor 3: ........................................................................................................................... .......................................................................................................................................... Explanation: ..................................................................................................................... ..................................................................................................................................... [6] (e) The Finance manager is worried that the business might be growing too quickly. Do you think he is right to be worried? Justify your answer. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] © UCLES 2012 0450/13/M/J/12 For Examiner’s Use 12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2012 0450/13/M/J/12 Topic What is business? Each choose a local business and explain why it exists/purpose – profit/provide a service? -Why is the business successful? How do businesses add value? How can they add more value? What will the impact of this be (more profit.) Pot example. Furniture example (link to primary/secondary/tertiary sectors) What is the difference between a need and a want? What does Scarcity and opportunity cost mean? How can scarcity impact business decisions? How can opportunity cost impact business decisions? What is specialisation? Why may it occur? Examples of specialisation. Advantages/disadvantages of specialisation. Why is it important? Describe and classify business activity in I know this I am not too sure I do not know this terms of primary, secondary and tertiary sectors - Identify areas in the world where there is more Tertiary/Primary and secondary - Explain reasons why the primary and secondary industry has declined in some areas of the world (developed economy) -Explain how the sectors are changing identify nature and importance of each sector in own country. Identify the difference between private/public sector businesses What is an entrepreneur Describe the characteristics of an entrepreneur. Could you be one? What issues have they dealt with? Why are certain entrepreneurs very successful? How does the government in different countries around the world support business start up’s? Why does the Gov support start up’s How can the help the economy? What is a business plan Why is a business plan needed What are the contents of a business plan Advantages/disadvantages of a business plan Learn the ways of measuring size. Define these. Why would business size be measured? What are the limitations of measuring business size? Why businesses might want to expand, as well as reasons why some businesses remain small and some fail. describe the different ways that businesses can grow, the problems linked to growth and be able to suggest how these problems may be overcome Causes of business failure, and be able to explain why new businesses are at a greater risk of failure Define the different types of business organisation To be able to explain the features of the different organisations. To be able to give advantages and disadvantages of each type of ownership To be able to explain the difference between unincorporated and limited companies. To be able to explain advantages and disadvantages of limited/unlimited liability To be able to explain the concept of risk Recommend and justify a suitable form of business organisation to owners/management in a given situation. Business organisations in the public sector ,e.g. public corporations To be able to define the four main business objectives. To be able to explain why businesses need objectives. To explain why businesses may have different objectives. To explain how and why objectives may change over time. What is a social enterprise? What is their main aim/objective Demonstrate an awareness of the differences in the aims and objectives of private sector and public sector enterprises Define the main stakeholders in businesses in general. Identify the stakeholders in a business and explain what their interests are How may stakeholder objectives conflict The importance of a well-motivated workforce: Why people work and what motivation means The concept of human needs –Maslow’s hierarchy Key motivational theories: Taylor and Herzberg Methods of motivation: Financial and non-financial rewards and methods Recommend and justify appropriate method(s) of motivation in given circumstances To be able to define the different types of organisational charts. To be able to define the terms; span of control, hierarchy, chain of command and delegation and apply this to a business. Consider communication in different structures and why smaller organisations tend to have a flatter structure. Investigate why a business may change its structure. To be able to identify and explain the functions of management. planning, organising, coordinating, commanding and controlling To be able to understand the importance of delegation, and the difference between trust versus control. To be able to define the different management styles autocratic, democratic and laissez-faireand explore the key features To be able to identify the different management styles is different situations To be able to critically assess which management style they think is the best…what they are? To be able to identify a suitable management style for different circumstances To be able to define a trade union. To be able to give examples of trade unions and explain why they exist. Explain the benefits of being part of a trade union and any potential problems/impacts on the business/staff. To be able to define the terms recruitment/selection and explain the difference between them. To be able to explain the main stages in the recruitment process. Why do businesses follow a recruitment process? Why do they produce a person specification? Job description? To be able to explain the difference between internal and external recruitment. To be able to discuss advantages and disadvantages of both To be able to state the different methods of training. To be able to explain why training is important to a business. To be able to apply different types of training to different professions. To be able to define and give benefits and limitations of induction training and off the job training. To be able to define and give examples of redundancy and dismissal. Why may companies make people redundant? Why may businesses dismiss staff? Link to organisational structure here; delayering. How does a firm decide who to make redundant? How do they choose who to make redundant? To be able to define the main types of legal control over employment. To explain the impact on employers and employees. Discuss how each law can impact; contracts, unfair dismissal, discrimination, health and safety, minimum wage. (be able to define the terms) Effective communication and its importance to business Benefits and limitations of different communication methods including those based on information technology(IT) Recommend and justify which communication method to use in given circumstances Define the term ‘ communication barrier’ Why may a barrier arise? Can they think of any barriers? Why may this impact a business? How can they be reduced or removed? The role of marketing: Identifying needs of both existing and new customers Satisfying customer needs Maintaining customer loyalty; building customer relationships What is a competitive market. Name the different types of competition (e.g Oligopoly) How does a business respond to a more competitive market? What is a customer spending pattern? Why may these change? Define niche marketing
