Jergen Cosmetics makes a range of beauty products for women in country A. ‘We are a market orientated company’ said Klaus, the Managing Director. ‘One of our business objectives is to increase sales turnover. We have just set up our own website and increased our marketing budget. Our country’s economic growth is forecast to be 4% next year and this will guarantee our company’s profitability.’ What is meant by ‘market orientated company’? What is meant by ‘Managing Director’? Identify and explain two benefits to Jergen Cosmetics of setting business objectives. Benefit 1: Explanation: Benefit 2: Explanation: Identify and explain two benefits to Jergen Cosmetics of having its own website. Benefit 1: Explanation: Benefit 2: Explanation: Do you think that economic growth in country A will lead to increased profitability for Jergen Cosmetics? Justify your answer.

0450_w12_qp_11

THEORY

2012

Paper 1, Variant 1

View

BKH is a large public limited company. It has 2000 employees across 18 locations. BKH sells a range of insurance products including house and car insurance. BKH’s shareholders want the business to increase profit. The Managing Director knows increasing profit can conflict with the objectives of other stakeholder groups. She said: ‘Private sector businesses have different objectives to public sector organisations.’ BKH is also planning to expand by taking over another insurance company. Define ‘public sector’. Define ‘profit’. Identify four ways to measure the size of a business. Way 1: Way 2: Way 3: Way 4: 1 9 Explain one way each stakeholder’s objectives might conflict with BKH’s objective to increase profit. Customers objective: How this objective might conflict: Employees objective: How this objective might conflict: Do you think economies of scale are the most important reason for taking over another business? Justify your answer. [ 1 9

0450_s21_qp_11

THEORY

2021

Paper 1, Variant 1

View

KTF makes building materials, including cement and bricks. Last year KTF had sales of $25bn. KTF’s objectives have often changed since it was started 60 years ago. The Managing Director wants KTF to expand. KTF is going to take over one of its main competitors. The newly expanded business will have combined sales of $40bn. The Managing Director said: ‘Many stakeholder groups will be affected by this decision.’ She knows there are many external factors that affect business activity including the business cycle, interest rates and legal controls to protect the environment. Define ‘business cycle’. Identify two reasons why a business might change its objectives. Reason 1: Reason 2: Outline one advantage and one disadvantage to KTF of taking over the other business. Advantage: Disadvantage: 1 12 Explain how two external stakeholder groups might be affected by the take over. Stakeholder group 1: Explanation: Stakeholder group 2: Explanation: Do you think businesses will be more affected by new legal controls to protect the environment than an increase in interest rates? Justify your answer. 1 12

0450_w20_qp_11

THEORY

2020

Paper 1, Variant 1

View

Ali has just been appointed as Managing Director of Anypart, a large manufacturing business. He told Anypart’s Board of Directors: ‘Behaving ethically will always lead to lower profits. I want our employees to work longer hours, have fewer holidays and become more productive. This will reduce costs of each unit of output and will benefit all our stakeholders’. Not all of the directors agreed with him. What is meant by a ‘Board of Directors’? Identify two of Anypart’s stakeholder groups (other than employees). Stakeholder group 1: Stakeholder group 2: Identify and explain two benefits to Anypart of reducing costs of each unit of output. Benefit 1: Explanation: Benefit 2: Explanation: Identify and explain two possible ways of improving productivity in Anypart’s business. Way 1: Explanation: Way 2: Explanation: Do you think that ‘behaving ethically will always lead to lower profits’? Justify your answer.

0450_w14_qp_12

THEORY

2014

Paper 1, Variant 2

View

ReBag is a social enterprise. Asha started the business three years ago using micro-finance. ReBag employs 30 women in four small towns in different parts of the country. They work from home and make a range of bags from pieces of old fabric . Last year ReBag’s revenue was $700. Asha said: ‘Our external stakeholders want ReBag to employ women in five more towns. Getting a bank loan to expand the business will be a problem. What will I do about management? How will I communicate? I cannot keep visiting everyone.’ What is meant by a ‘social enterprise’? Identify two functions of management (other than communication) that Asha performs. Function 1: Function 2: Identify two external stakeholder groups of ReBag. Explain why each stakeholder group might be interested in this business. External stakeholder group 1: Explanation: External stakeholder group 2: Explanation: 1 11 Identify and explain two possible reasons why it might be difficult for ReBag to get a bank loan. Reason 1: Explanation: Reason 2: Explanation: Explain two possible methods Asha could use to communicate with ReBag workers. Recommend which method she should choose. Justify your answer. 1 11

0450_w16_qp_13

THEORY

2016

Paper 1, Variant 3

View

SWQ owns 200 clothing shops in country A. All inventory is purchased from 3 local clothing manufacturers. The Marketing Director has to decide whether to change suppliers. SWQ could buy inventory from country C, a low cost country. He showed the newspaper article, see Figure 2, to other directors. He said: ‘Look at this newspaper article. We operate in a mass market and our customers want low prices. Changing suppliers to manufacturers in country C will affect our stakeholders.’ Factory life in country C You can see why many retailers are buying from country C. 15-hour days for wages of $2 a week. A spokesperson for one pressure group said: ‘Today I saw 8-year-old children sewing buttons onto suits and it is legal in this country.’ Figure 2: Newspaper article What is meant by ‘pressure group’? Identify two advantages to a business of selling to a mass market. Advantage 1: Advantage 2: [ 1 9 Identify two stakeholder groups of SWQ. Explain one possible objective for each stakeholder group. Stakeholder group 1: Explanation: Stakeholder group 2: Explanation: Identify and explain two suitable methods of communication SWQ might use with manufacturers in country C if it decided to purchase supplies from them. Method 1: Explanation: Method 2: Explanation: 1 9 Do you think SWQ should start buying its products from country C? Justify your answer. 1 9

0450_s19_qp_13

THEORY

2019

Paper 1, Variant 3

View

QF Group manufactures a range of electrical products such as computers and televisions. All QF managers have a wide span of control so delegation is important. The main objective of QF Group is growth. The Finance Director has been looking at the accounting data in Table 2. She is pleased about the performance of the business. Table 2: Extract from accounts Revenue ($m) (Net) profit ($m) Capital employed ($m) Gross profit margin 50% 45% (Net) profit margin 12% ? Return on Capital Employed 10% ? What is meant by ‘span of control’? What is meant by ‘delegation’? Identify and explain two reasons why delegation might be important to businesses like QF Group. Reason 1: Explanation: Reason 2: Explanation: Identify two stakeholder groups. Explain why each of these stakeholder groups might support QF Group’s objective of growth. Stakeholder group 1: Explanation: Stakeholder group 2: Explanation: Do you think the Finance Director is right to be pleased about the performance of QF Group? Justify your answer using the data in Table 2 and appropriate ratios.

0450_w15_qp_13

THEORY

2015

Paper 1, Variant 3

View

CHONS is a public limited company. The directors want to open a new coal mine. All the coal will be exported. The Managing Director is hopeful that the Government will allow the coal mine to be opened. She said: ‘CHONS always meets legal controls. In an area of high unemployment surely creating jobs is more important than protecting the environment. Most stakeholder groups including shareholders and suppliers are happy. CHONS will not be asking for any Government support.’ Table 3: Information about the proposed coal mine 50m tonnes per year Planned output 60 years Number of years coal mine will operate Jobs created High Level of waste products causing pollution High Risk of traffic problems What is meant by a ‘stakeholder group’? Identify two ways (other than legal controls) that a government might use to influence business decisions. Way 1: Way 2: Identify and explain one advantage and one disadvantage of CHONS being a public limited company. Advantage: Explanation: Disadvantage: Explanation: 1 8 Identify and explain two ways in which legal controls might affect CHONS. Way 1: Explanation: Way 2: Explanation: Do you think the Government should allow CHONS to open the coal mine? Justify your answer using the information in Table 3. 1 8

0450_w17_qp_11

THEORY

2017

Paper 1, Variant 1

View

SBG makes a range of products including specialist paints. It has 6 factories and 700 employees. All SBG’s employees are encouraged to be involved in decision-making. SBG’s products are exported to 16 countries using wholesalers as its main channel of distribution. The Managing Director said: ‘Our objectives are to grow and make a profit.’ He also recognises that all business activity creates externalities for SBG’s stakeholder groups. Define ‘externalities’. Define ‘stakeholder groups’. Outline two reasons why profit might be important to SBG. Reason 1: Reason 2: 1 9 Explain two ways SBG can involve its employees in decision-making. Way 1: Explanation: Way 2: Explanation: Do you think using wholesalers is the best way for a large business to distribute its products? Justify your answer. [ 1 9

0450_w21_qp_11

THEORY

2021

Paper 1, Variant 1

View

GOP is an oil producer based in country X. It is a public corporation. GOP plans to build a 200km pipeline across the country using retained profits to pay for it. The pipeline will need planning permission from the Government. Environmental pressure groups are concerned. A spokesperson for GOP said: ‘GOP’s objectives are different to businesses in the private sector. This pipeline will create 2000 skilled construction jobs and reduce the need for other businesses to import oil.’ What is meant by ‘public corporation’? Identify two economic objectives of country X’s government. Objective 1: Objective 2: Identify and explain two ways a pressure group might try to influence the actions of GOP. Way 1: Explanation: Way 2: Explanation: 1 15 Identify and explain two ways in which the objectives of GOP might be different if it was in the private sector. Way 1: Explanation: Way 2: Explanation: Do you think the Government should allow GOP to build the pipeline? Justify your answer. [ 1 15

0450_w19_qp_12

THEORY

2019

Paper 1, Variant 2

View

---