Bowland manufactures bicycles from components purchased from suppliers. The production method makes use of specialisation. The Finance manager said: ‘It has been a successful year because profit is up. However cash flow is still negative. Trade receivables have increased and we have purchased a lot of new equipment.’ Bowland’s management believes that improving quality has been the most important reason why bicycle sales have increased. What is meant by ‘specialisation’? Identify two ways (other than profit) that Bowland could use to measure its success. Way 1: Way 2: Identify and explain two reasons why cash flow is important to Bowland. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two ways in which Bowland could improve its cash flow. Way 1: Explanation: Way 2: Explanation: Bowland’s management believes that improving quality has been the most important reason why sales have increased. Do you agree? Justify your answer. 0450_s15_qp_13 THEORY 2015 Paper 1, Variant 3 View
Rosa is a successful entrepreneur. Her business makes beauty products that she creates including hand and face creams. She employs 5 production workers and Rosa enjoys being in control of everything else including design and marketing. Rosa uses social networks for promoting the business. She said: ‘Increasing added value is important. I am expecting revenue to increase by 300% in 2018. At this rate of growth, I will need a bigger factory. I would like to have customers in other countries so I hope there are no import quotas!’ Rosa has to decide whether to continue to expand the business or keep it small. What is meant by ‘import quota’? Rosa’s revenue was $5000 in 2017. Calculate her expected increase in revenue in 2018. Identify and explain two ways Rosa could increase added value. Way 1: Explanation: Way 2: Explanation: 1 13 Identify and explain one advantage and one disadvantage to Rosa’s business of using social networks for promotion. Advantage: Explanation: Disadvantage: Explanation: Do you think Rosa should continue to expand her business? Justify your answer. [ 1 13 0450_s18_qp_13 THEORY 2018 Paper 1, Variant 3 View