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.

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THEORY

2012

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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 3 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 3

7115_s21_qp_11

THEORY

2021

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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 4 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 4

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THEORY

2020

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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.

7115_w14_qp_12

THEORY

2014

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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 2 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 2

7115_w17_qp_11

THEORY

2017

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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 2 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 2

7115_w21_qp_11

THEORY

2021

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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 4 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 4

7115_w19_qp_12

THEORY

2019

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Country A has a mix of private sector and public sector enterprises. Figures 1– 3 give some data about the two sectors. Fig. 1: Average hourly Fig. 2: Average hours Fig. 3: Number of wage worked per week employees in public sector Public Sector Public Sector Private Sector Private Sector millions hours $ Identify two examples of public sector enterprises. Example 1: Example 2: Identify two aims that public sector enterprises often have. Aim 1: Aim 2: Identify and explain two reasons why profits are important to private sector businesses. Reason 1: Explanation: Reason 2: Explanation: Consider each of the Figures 1–3. Identify and explain three changes that are shown by the data in Figures 1– 3. Change in Figure 1: Explanation: Change in Figure 2: Explanation: Change in Figure 3: Explanation: Do you think that a large decrease in the number of employees in the public sector in country A will benefit all workers? Justify your answer.

7115_w13_qp_12

THEORY

2013

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