9609_w18_qp_22
A paper of Business Studies, 9609
Questions:
2
Year:
2018
Paper:
2
Variant:
2
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1
Clothing Line (CL) Thamir is an entrepreneur who built up an international retail business. He is now a multi-millionaire who provides venture capital. Thamir is currently deciding whether to purchase 50% of the shares in Clothing Line (CL) which is a private limited company. CL is an online clothing retailer which has been operating for five years. The owners cannot finance further internal growth and have invited Thamir to invest in the business. CL purchases clothing from a number of suppliers. CL places orders for items of clothing each month. The clothes are then delivered to a large warehouse where employees sort and package individual items ready for sending to customers when they are ordered. CL has published its latest accounts and Thamir has obtained a copy of them. A summary is shown in Fig. 1. Fig 1: Summary of CL’s published accounts on 31 December 2017 ($000s) Income statement Statement of financial position Revenue Non-current assets Gross profit Current assets Profit for the year Current liabilities Non-current liabilities Equity and reserves CL has a very popular website where customers order their clothes. Products that are ordered by 18:00 each day are guaranteed to be delivered to customers the next day. This means that CL must hold high levels of buffer inventory. Thamir is concerned that the business is holding too much inventory which may lose value over time. He has told the current owners of CL that he will only invest in the company if they introduce a just-in-time (JIT) system of inventory management. Define the term ‘venture capital’ (line 2). Briefly explain the term ‘internal growth’ (line 5). Refer to Fig. 1. Calculate the current ratio as at 31 December 2017. Analyse two limitations to Thamir of using published accounts to decide whether to invest in CL. Explain two qualities that Thamir is likely to need as a successful entrepreneur. Discuss which stakeholders of CL are likely to be most affected by the introduction of just-in- time (JIT) inventory management.
4. Operations management (AS Level)  →  4.2. Inventory management
10. Finance and accounting (A Level)  →  10.1. Financial statements
Open
2
Wet Water (WW) WW is a new business set up by Puja. WW will operate in the primary sector. It will take water from a local lake and process it into drinking water. The details of the product and market are outlined in Fig. 2. Fig. 2: Product and market details for WW WW product details • water will only be sold in country X • it will be sold in bottles targeted at a niche market of consumers who purchase bottled water and regularly take part in sport • no harmful chemicals will be used in the production process • flow production will be used • bottles will be distributed through wholesalers to retailers Market details for country X • the population is 60 million • 80% of the population purchase bottles of water • 15% of the people who purchase bottles of water regularly take part in sport • 15 brands of bottled water are already sold using mass marketing • no brands of water sold in country X currently target consumers who regularly take part in sport Puja needs to decide on suitable promotion methods for the launch of WW’s bottled water. She must also recruit a sales manager. She has designed a brief person specification (Fig. 3). Fig. 3: Person specification for the role of sales manager • must have the confidence to negotiate with retail business customers • must be able to work on his/her own and lead a team of salespeople • must be willing to develop his/her skills • must have good time-management • must be a good communicator Define the term ‘primary sector’ (line 1). Briefly explain the term ‘flow production’ (line 10). Refer to Fig. 2. Calculate the market size of WW’s target market. Explain one benefit to WW of targeting a niche market. Analyse how having two of Goleman’s emotional intelligence competencies could help the person selected fulfil the role of sales manager. Recommend suitable promotional methods for the launch of WW bottled water. Justify your recommendation.
8. Marketing (A Level)  →  8.1. Marketing analysis
3. Marketing (AS Level)  →  3.2. Market research
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