0450_w20_qp_13
A paper of Business Studies, 0450
Questions:
4
Year:
2020
Paper:
1
Variant:
3
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1
Mercy and Ayo are entrepreneurs. They plan to open a shop selling homemade ice cream. Mercy wants the business to be ethical and only buy high quality organic milk from local farms. Ayo used sampling to help him carry out some primary market research. An extract of the results from the 300 people in the sample is shown in Table 1.1. Ayo thinks a new business has a better chance of success if it is located where there is no competition. Table 1.1 Results from a market research question % of sample What price are you willing to pay for a pot of ice cream? 90% $0.50 - $1.50 55% $1.51 to $2.50 20% $2.51 - $3.50 5% Over $3.50 Define ‘entrepreneur’. State two reasons why sampling is used when carrying out market research. Reason 1: Reason 2: 1 14 Outline two ways in which being ethical could help Mercy and Ayo’s business. Way 1: Way 2: Explain two ways in which market research results can help Mercy and Ayo’s business. Way 1: Explanation: Way 2: Explanation: [Turn over 1 14 Do you think a new business has a better chance of success if it locates where there is no competition? Justify your answer. 1 14
3. Marketing  →  3.2. Market research
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2
Lola and Raul are in a business partnership. They make a range of hand-printed products including t-shirts, bags and posters using job production. Most of Lola and Raul’s customers are tourists. Lola designs and prints all the products at the back of a small shop. Raul is responsible for sales and finance. Production is slow and it is difficult for Lola to keep up with demand. Raul wants to increase output. One way of doing this is to introduce some machinery into the process. Raul also wants to develop a website. Define ‘job production’. Identify two reasons why a business might want to expand. Reason 1: Reason 2: Outline two ways Lola and Raul’s business could use a website. Way 1: Way 2: [Turn over 1 14 Explain one advantage and one disadvantage to Lola and Raul of being in a business partnership. Advantage: Explanation: Disadvantage: Explanation: Do you think introducing machinery is a better way for a small business to increase output than recruiting more employees? Justify your answer. 1 14
4. Operations management  →  4.1. Production of goods and services
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3
CLN is a public limited company. It sells a range of electrical products such as televisions and computers. The Managing Director has been analysing CLN’s accounts. An extract is shown in Table 3.1. He said: ‘ We need more finance. Last year CLN made a loss of $250m. I blame increased competition from e-commerce.’ CLN plans to close 30 of its 120 shops. This decision will affect many of its stakeholders including the local communities. The number of sales from each shop will be used to decide which shops to close. Table 3.1 Extract from Statement of financial position as at 30 September 2020 ($m) Non-current assets Current assets of which: Inventories Current liabilities Define ‘non-current assets’. Calculate the acid test ratio. Show your working. [Turn over 1 14 State four factors that can affect the source of finance a business might use. Factor 1: Factor 2: Factor 3: Factor 4: Explain two ways in which local communities might be affected by CLN’s decision to close some of its shops. Way 1: Explanation: Way 2: Explanation: 1 14 Do you think the number of sales from each shop is the best way for a retail business to decide which shops to close? Justify your answer. [Turn over 1 14
5. Financial information and decisions  →  5.5. Analysis of accounts
5. Financial information and decisions  →  5.4. Statement of financial position
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4
Kane started LFP 8 years ago. LFP makes high quality furniture. LFP imports 40% of its materials including wood. Kane knows there are many external influences on business activity including employment levels and import quotas. As demand is increasing, LFP needs to recruit 5 additional production workers. Kane is busy preparing a job advertisement. Having well-motivated employees is important to LFP. Kane is considering either increasing wages or introducing profit sharing. Kane also thinks having a clear organisational structure benefits a business. State two ways quality production can be achieved. Way 1: Way 2: Identify two benefits to a business of having a clear organisational structure. Benefit 1: Benefit 2: Outline two factors Kane should consider when preparing the job advertisement. Factor 1: Factor 2: 1 14 Explain how each of the following external influences might affect LFP: Lower employment rates: Introduction of import quotas: Do you think increasing wages is a better way for a business to motivate employees than introducing profit sharing? Justify your answer. 1 14
2. People in business  →  2.3. Recruitment, selection and training of employees
4. Operations management  →  4.1. Production of goods and services
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