VVA is a business based in country X. It manufactures school backpacks . VVA uses retailers as its channel of distribution. The Managing Director knows there are many factors that can affect demand including the stage of the business cycle and how competitive the market is. VVA imports 45% of its raw materials. The Managing Director is worried that the introduction of import tariffs and import quotas, as well as an appreciation in country X’s exchange rate, will affect VVA. Define ‘import tariff’. Identify two reasons why some markets can become more competitive. Reason 1: Reason 2: State the four stages of the business cycle. 1: 2: 3: 4: [ 1 15 Explain one possible effect of the following changes on VVA when importing raw materials: Introduction of import quotas in country X: Explanation: Appreciation of country X’s exchange rate: Explanation: Do you think retailers are the best channel of distribution for a manufacturing business to use? Justify your answer. 1 15

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THEORY

2023

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Extracto is a multinational mining business. It has recently found mineral deposits in country X. The Managing Director hopes that the deposits found are large enough for them to make a good profit. Some pressure groups in country X think that Extracto has only considered the financial benefits of its plans and has ignored the social costs. What is meant by a ‘financial benefit’? Identify two examples of social costs that extraction of minerals might create. Example 1: Example 2: Identify and explain two ways in which pressure groups could influence Extracto’s decisions. Way 1: Explanation: Way 2: Explanation: Identify and explain three factors that Extracto should consider before deciding whether to begin mining in country X. Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: Governments often aim to attract multinational companies into their countries. Do you think that they should do this? Justify your answer.

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THEORY

2011

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The economy of country U is in recession. The Government has cut interest rates to attract businesses to set up in country U. JWR is a large multinational energy company. JWR may decide to open a power station in country U. The Government thinks that opening a new power station will create many external benefits. Some pressure groups do not want companies like JWR operating in their country. Identify two features of a recession. Feature 1: Feature 2: Identify two effects of a cut in interest rates on businesses like JWR. Effect 1: Effect 2: Identify and explain two actions that pressure groups could use to influence JWR’s decision. Action 1: Explanation: Action 2: Explanation: Identify and explain two external benefits as a result of opening a new power station in country U. External benefit 1: Explanation: External benefit 2: Explanation: Do you think that the Government of country U should try to attract multinational businesses? Justify your answer.

0450_s14_qp_11

THEORY

2014

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The economy of country U is enjoying an economic boom. Many new businesses are being set up in country U. There are many sources of external finance available for new businesses. GGC is a multinational mining company. Its directors have agreed to form a joint venture with another mining company that is already based in country U. All mine workers are members of a trade union. Identify two features of an economic boom. Feature 1: Feature 2: Identify two possible advantages to mine workers of being members of a trade union. Advantage 1: Advantage 2: Identify and explain two possible advantages to GGC’s management of its mine workers being members of a trade union. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain two sources of external finance that GGC might use when setting up a new mine. Source 1: Explanation: Source 2: Explanation: Do you think it is a good idea for GGC to form a joint venture in country U? Justify your answer.

0450_s14_qp_13

THEORY

2014

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Alkin is a multinational company. It manufactures breakfast food products including many leading brands of cereal. Alkin plans to start selling in country Z, which is a fast-growing market. Alkin plans to form a joint venture with a local business, based in country Z. ‘Effective communication will be important to our success but I think there are many advantages in expanding this way’ said Alkin’s Managing Director. The Government of country Z is worried about the effect of multinational companies like Alkin on consumers. What is meant by a ‘multinational company’? What is meant by a ‘brand’? Identify and explain two reasons why effective communication might be important for Alkin. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two advantages to Alkin of using a joint venture to expand into country Z. Advantage 1: Explanation: Advantage 2 Explanation: Do you think that the Government in country Z is right to be worried about the effect of multinational companies such as Alkin on consumers? Justify your answer.

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THEORY

2015

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BMT is a business partnership owned by 2 brothers. The brothers received government support when they started BMT 6 years ago. BMT now has 30 employees who make high quality watches. The business tries to achieve lean production. Demand has increased each year and in 2019 BMT sold 8000 watches. BMT makes some parts for watches and all the other parts are imported. BMT had to consider a number of factors, including exchange rates, when deciding whether to import parts for watches. Identify two reasons why a government might support business start-ups. Reason 1: Reason 2: State two types of business organisation (other than partnership). Type 1: Type 2: Outline two disadvantages of BMT being a business partnership. Disadvantage 1: Disadvantage 2: 1 14 Explain two ways BMT could achieve lean production. Way 1: Explanation: Way 2: Explanation: Do you think the exchange rate is the most important factor for a business to consider when deciding whether to import parts for a high quality product? Justify your answer. 1 14

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THEORY

2020

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BCZ is a multinational company which operates in 12 countries. It manufactures cement, a building material used by construction companies, so quality assurance is important. Making cement creates external costs. One of BCZ’s factories is located in country X. The government of country X plans to introduce new legal controls that will reduce the maximum number of working hours from 45 to 35 hours per week. Define ‘external cost’. State two responsibilities of a director. Responsibility 1: Responsibility 2: Identify four potential benefits to a country’s economy of a multinational company locating there. Benefit 1: Benefit 2: Benefit 3: Benefit 4: [ 1 15 Explain one possible effect on BCZ and one possible effect on its employees of the new legal controls that will reduce the maximum number of working hours. Effect on BCZ: Explanation: Effect on BCZ’s employees: Explanation: Do you think it is better for a large manufacturer to use quality assurance rather than quality control? Justify your answer. 1 15

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THEORY

2022

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NSN is a multinational company. It makes cars. Over the years, technology has changed production methods. NSN uses just-in-time inventory control in all its factories. NSN plans to open a new factory in country Z creating 7000 jobs. Country Z’s Government has offered an $80m grant to NSN. A spokesperson for NSN said: ‘Governments should support business activity. There were also other factors that influenced our decision to build the new factory there including the possible effects of economic growth.’ Define ‘multinational company’. Identify two reasons why a government might support business activity. Reason 1: Reason 2: Outline one advantage and one disadvantage to NSN of using just-in-time inventory control. Advantage: Disadvantage: 1 9 Explain two ways in which an increase in economic growth might affect NSN’s decision to build a new factory in country Z. Way 1: Explanation: Way 2: Explanation: Do you think the ways technology has changed production methods benefits all employees? Justify your answer. [ 1 9

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THEORY

2021

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FXN manufactures mobile phones. It is a multinational company. FXN plans to build a new factory in country Y. One reason for this is the decision by the government of country Y to introduce import quotas. The Managing Director said: ‘The new factory will create 1200 jobs and help lower the level of unemployment in country Y. FXN will start the recruitment process as soon as a decision has been made about a suitable location for the new factory.’ Define ‘import quota’. Identify two advantages to a country of having lower levels of unemployment. Advantage 1: Advantage 2: Identify four possible drawbacks for a country of having a multinational company located there. Drawback 1: Drawback 2: Drawback 3: Drawback 4: [ 1 11 Explain two factors FXN should consider when deciding on a suitable location for the new factory. Factor 1: Explanation: Factor 2: Explanation: Do you think a recruitment website, which advertises jobs, is the best method for a business to use when recruiting a large number of employees? Justify your answer. 1 11

0450_w23_qp_13

THEORY

2023

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The Government of country B plans to build a new airport. A Government spokesperson said: ‘There will be external costs, but I think there will be more benefits for the local community. We have to support businesses such as airlines in the private sector’. RU Air is one of the world’s most profitable airlines. RU has announced plans on its website that it will operate flights to and from country B in the future. RU is a public limited company. What is meant by the ‘private sector’? Identify two ways the Government might support RU Air and other private sector business activity (other than by building a new airport). Way 1: Way 2: Identify and explain two benefits to RU Air of high profits. Benefit 1: Explanation: Benefit 2: Explanation: Identify and explain two benefits for RU Air of having a website. Benefit 1: Explanation: Benefit 2: Explanation: Do you agree that there are likely to be more advantages for the local community from the new airport than disadvantages? Justify your answer.

0450_s14_qp_12

THEORY

2014

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