0450_s21_qp_13
A paper of Business Studies, 0450
Questions:
4
Year:
2021
Paper:
1
Variant:
3
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1
WYP is a business partnership. Greg and his 3 friends started the business 7 years ago. WYP make eyeglasses which are only sold through its website. The price of each pair of glasses is $95. This is $200 cheaper than its main competitor. Greg said: ‘It was difficult at the start as we could not get trade credit. We also knew it would take time to develop customer loyalty.’ Greg thinks choosing the right method of promotion is important to the success of any new product. Define ‘partnership’. Define ‘customer loyalty’. Outline two possible reasons why WYP could not get trade credit. Reason 1: Reason 2: 1 12 Explain two possible problems for WYP of selling products at low prices. Problem 1: Explanation: Problem 2: Explanation: Do you think promotion is more important than product for a new business? Justify your answer. [Turn over 1 12
3. Marketing  →  3.1. Marketing, competition and the customer
3. Marketing  →  3.3. Marketing mix
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2
Nadia started her successful hairdressing business 4 years ago. Maintaining quality has always been important to Nadia. She said: ‘I started with no experience of business plans, recruitment, cash flow or profit. I did not understand how economic issues such as inflation could affect a business. Now I have 5 hairdressing shops and 20 employees. Last year I made a profit of $100000.’ Nadia is planning to expand her business. One way she could do this is by selling franchises. Define ‘business plan’. Identify two stages in the recruitment process. Stage 1: Stage 2: Outline one advantage and one disadvantage to Nadia’s business of selling franchises to expand. Advantage: Disadvantage: 1 12 Explain two possible effects of an increase in the rate of inflation on Nadia’s business. Effect 1: Effect 2: Do you think making a profit is more important for a growing business than managing cash flow? Justify your answer. [Turn over 1 12
1. Understanding business activity  →  1.3. Enterprise, business growth and size
2. People in business  →  2.3. Recruitment, selection and training of employees
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3
CTF is an ethical business. It manufactures a range of toys. CTF operates in a competitive market. Over the years technology has changed production at CTF. The Operations Manager is analysing break-even information. An extract of the cost and revenue data for product X is shown in Table 3.1. Following the closure of its local supplier, the Operations Manager is considering importing raw materials for product X. Table 3.1 Cost and revenue data for product X in 2020 $210000 Fixed costs $25 Variable cost per toy $40 Price per toy Output Define ‘ethical business’. Calculate the total variable cost for product X. Show your working. 1 12 Outline one benefit and one limitation to CTF of using break-even analysis. Benefit: Limitation: Explain two ways that technology might have changed production at CTF. Way 1: Explanation: Way 2: Explanation: [Turn over 1 12 Do you think reliability of the supplier is the most important factor for a large manufacturing business to consider when deciding whether to import materials? Justify your answer. 1 12
4. Operations management  →  4.2. Costs, scale of production and break-even analysis
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4
DCN is a large chemical company. It has 8000 employees across its 3 factories. DCN has agreed to set up a joint venture with a glass making business to develop a new type of environmentally friendly packaging. DCN’s Managing Director said: ‘There are disadvantages to a joint venture. The companies have different leadership styles and business objectives. We will need to look at ways to overcome possible communication barriers.’ Define ‘business objective’. Identify two ways that business activity might affect the environment. Way 1: Way 2: Identify four examples of communication barriers. Example 1: Example 2: Example 3: Example 4: [Turn over 1 12 Explain two possible advantages to DCN of setting up a joint venture with the other business. Advantage 1: Explanation: Advantage 2: Explanation: Do you think autocratic leadership is the most effective style for managers to use when an organisation has a large number of employees? Justify your answer. 1 12
2. People in business  →  2.4. Internal and external communication
1. Understanding business activity  →  1.5. Business objectives and stakeholder objectives
2. People in business  →  2.2. Organisation and management
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