LCT manufactures cooking pots. It has 16 employees. As a small business LCT uses social media as its method of advertising. The owner, Carole, knows having a good brand image is important. She is analysing LCT’s break-even chart. This is shown in . Carole is considering possible ways to lower LCT’s break-even level of output. Break-even chart for LCT 12 000 10 000 100 200 300 400 500 units total revenue total costs fixed costs costs / revenue ($) 600 700 800 9001000 Identify two limitations of break-even analysis. Limitation 1: Limitation 2: Calculate LCT’s profit if it sells 800 units. Show your working. Working: Final answer: 1 12 Outline two possible benefits to LCT of having a good brand image. Benefit 1: Benefit 2: Explain two ways LCT might lower its break-even level of output. Way 1: Explanation: Way 2: Explanation: [ 1 12 Do you think social media is the best method of advertising for a small business to use? Justify your answer. 1 12

0450_w23_qp_11

THEORY

2023

Paper 1, Variant 1

View

BPT manufactures bicycles in country A. It uses batch production. The Operations Director is preparing a break-even chart for one of BPT’s bicycles, as shown in . The directors are considering ways to lower BPT’s break-even level of output. BPT imports 60% of its raw materials and exports its bicycles to 8 countries. The Managing Director wants to know how a depreciation in country A’s exchange rate and the introduction of import tariffs might affect BPT. Partly completed break-even chart for one of BPT’s bicycles output in units costs and revenue $ 50 000 100 000 150 000 200 000 250 000 300 000 X Y Identify the lines labelled X and Y in . X: Y: Define ‘import tariff’. Outline two ways BPT could lower its break-even level of output. Way 1: Way 2: Explain two ways a depreciation in country A’s exchange rate might affect BPT. Way 1: Explanation: Way 2: Explanation: Do you think batch production is the best method of production for a business to use? Justify your answer.

0450_w24_qp_13

THEORY

2024

Paper 1, Variant 3

View

PJK makes a range of luxury sports watches. Each watch is handmade by skilled workers. Quality assurance is important. The Operations Director has been looking at costs and prices as he wants to do a break-even analysis. This data is shown in Table 1. He is planning to invest in new technology to automate parts of the production process. The Operations Director thinks this is the best way to improve profitability. Table 1: Costs and revenue ($) Price per watch $100 Variable cost per watch $50 Annual sales Annual fixed costs $200 000 What is meant by ‘quality assurance’? Identify two ways in which break-even analysis might be helpful to PJK. Way 1: Way 2: Using the information in Table 1, draw a break-even chart for PJK on Figure 1. Figure 1 50 000 100 000 150 000 200 000 250 000 300 000 350 000 400 000 450 000 500 000 550 000 600 000 1000 2000 3000 4000 5000 6000 7000 8000 costs and revenue ($ per year) output Identify and explain two advantages to PJK of having skilled workers. Advantage 1: Explanation: Advantage 2: Explanation: Do you think that investing in new technology is the best way to improve profitability at PJK? Justify your answer.

0450_s15_qp_12

THEORY

2015

Paper 1, Variant 2

View

NWA is a large and profitable airline business. It has grown quickly over the past 10 years and new aeroplanes have helped to improve its brand image. NWA offers low priced flights for tourists to 50 countries. Sales promotion is an important part of NWA’s marketing mix. The Finance Director is worried that NWA has a high level of debt as its main source of finance is bank loans. The organisational chart of NWA has many levels of hierarchy with narrow spans of control. Table 3.1 Cost and price data for a typical NWA flight (2019) $40 Price per customer $2000 Fixed costs $24 Variable cost per customer Maximum number of customers Define ‘brand image’. Calculate the break-even number of customers for a typical NWA flight. Show your working. Outline two possible problems for NWA of having a high level of debt. Problem 1: Problem 2: 1 14 Explain how two methods of sales promotion could increase sales for NWA. Method 1: Explanation: Method 2: Explanation: Do you think that having many levels of hierarchy is the best type of organisational structure for a large business? Justify your answer. [ 1 14

0450_s20_qp_11

THEORY

2020

Paper 1, Variant 1

View

Zoff is a large engineering company. It manufactures a wide range of products from bicycles to washing machines, mainly using batch production methods. The company has grown rapidly but its profits are falling. Following the dismissal of the Managing Director, the company has announced that a new Managing Director will be recruited internally. A spokesperson said: ‘Our objectives have to change. Rather than growth, we will focus on improving quality whilst at the same time try to improve our competitiveness.’ What is meant by ‘dismissal’? Identify two advantages to Zoff of using internal recruitment for the new Managing Director. Advantage 1: Advantage 2: Identify and explain two ways (other than improving quality) that Zoff could use to improve its competitiveness. Way 1: Explanation: Way 2: Explanation: Identify and explain two ways in which Zoff might achieve quality production. Way 1: Explanation: Way 2: Explanation: Do you think Zoff should change its objectives? Justify your answer.

0450_m15_qp_12

THEORY

2015

Paper 1, Variant 2

View

Globalisation has changed the way many businesses operate. VKW makes cell phones. It uses just-in-time inventory control. VKW exports 40% of its products. It imports most of its raw materials to help reduce total costs. All 800 of VKW’s employees understand the importance of quality assurance. The Operations Director has asked all suppliers to ensure they do not use child labour. She is also concerned that many governments are planning to increase import controls such as quotas. Define ‘globalisation’. State two advantages to a business of using quality assurance. Advantage 1: Advantage 2: Outline two ways VKW might be affected by increased import controls. Way 1: Way 2: [ 1 24 Explain one advantage and one disadvantage to VKW of using just-in-time inventory control. Advantage: Explanation: Disadvantage: Explanation: Do you think that businesses should be concerned about ethical issues such as child labour? Justify your answer. 1 24

0450_m20_qp_12

THEORY

2020

Paper 1, Variant 2

View

Viktor is starting up a business as a photographer. He will be a sole trader. Quality control will be important. Viktor plans to use sampling when carrying out market research. There are legal controls which could affect his marketing strategy. Viktor will employ 5 photographers. He knows there are many ways to motivate employees. Identify two ways legal controls could affect marketing strategy. Way 1: Way 2: Define ‘quality control’. Outline two reasons why Viktor might use sampling when carrying out market research. Reason 1: Reason 2: [ 1 13 Explain two disadvantages to Viktor of operating as a sole trader. Disadvantage 1: Explanation: Disadvantage 2: Explanation: Explain two ways a service business could motivate its employees. Which would be the best way to use? Justify your answer. 1 13

0450_m23_qp_12

THEORY

2023

Paper 1, Variant 2

View

Kyle is an entrepreneur. He plans to buy a Frydays franchise. Frydays is a leading fast food (take-away) business. Each franchise costs $100 000. Frydays would provide some promotion. ‘I only need to find the right location, hire some people and raise the finance’ said Kyle. ‘I am certain to make a profit.’ What is meant by an ‘entrepreneur’? Identify two methods of promotion Frydays might use. Method 1: Method 2: Identify and explain two factors that would affect Kyle’s choice of source of finance. Factor 1: Explanation: Factor 2: Explanation: Identify and explain two factors that Kyle should consider when choosing a suitable location for his business. Factor 1: Explanation: Factor 2: Explanation: Do you think that owning a franchise would mean Kyle is ‘certain to make a profit’? Justify your answer.

0450_s14_qp_13

THEORY

2014

Paper 1, Variant 3

View

KLG is based in country X. It specialises in making electrical parts which it sells to washing machine manufacturers in country X. The Managing Director is planning to relocate to country Y, which is a low-cost country. She said: ‘This will allow us to pay employees low wages for working long hours as there are few legal controls on employment and health and safety. KLG cannot be both ethical and profitable. Changes in exchange rates and import tariffs might cause us problems when we start exporting.’ What is meant by ‘import tariff’? Identify two benefits to KLG of specialisation. Benefit 1: Benefit 2: Explain how a change in exchange rates might affect KLG when exporting. 1 17 Identify and explain two factors (other than exchange rates and import tariffs) that KLG should consider when deciding where to relocate. Factor 1: Explanation: Factor 2: Explanation: The Managing Director believes that ‘KLG cannot be both ethical and profitable.’ Do you agree? Justify your answer. 1 17

0450_s16_qp_12

THEORY

2016

Paper 1, Variant 2

View

The Government in country Y wants to encourage more secondary sector business activity to help reduce unemployment. It has announced a reduction in taxes and plans to remove some legal controls over business activity. Kasper Construction is a multinational company based in country X which wants to expand. It plans to build a brick-making factory in country Y if it can find a suitable location. Some pressure groups are against this plan as Kasper Construction has a bad reputation for environmental damage. Fig. 1: Employment in country Y Total number of people employed in 2015 = 20 000 000 primary sector 60% tertiary sector 25% secondary sector 15% What is meant by the ‘primary sector’? Calculate the number of people employed in secondary sector businesses in country Y. Identify and explain two benefits to Kasper Construction of a reduction in taxes. Benefit 1: Explanation: Benefit 2: Explanation: 1 21 Identify and explain two factors (other than taxes) that Kasper Construction should consider before making a location decision. Factor 1: Explanation: Factor 2: Explanation: Do you think that the Government of country Y should encourage Kasper Construction to locate in country Y? Justify your answer. [ 1 21

0450_s16_qp_13

THEORY

2016

Paper 1, Variant 3

View

---