CGM makes high quality shoes using job production. The production method makes use of specialisation. CGM operates in a niche market. CGM managers know that all business activity creates external costs, so they always try to act in ways that protect the environment. The Operations Director wants to increase profit. CGM could either buy cheaper raw materials or introduce new technology into the production process. The new technology would cost $30000 and could reduce the number of employees from 30 to 26. Identify two advantages of specialisation. Advantage 1: Advantage 2: What is meant by ‘external cost’? Identify and explain two ways in which CGM could try to protect the environment. Way 1: Explanation: Way 2: Explanation: 1 3 Identify and explain one advantage and one disadvantage to CGM of using job production. Advantage: Explanation: Disadvantage: Explanation: Do you think CGM should introduce new technology into the production process? Justify your answer. [ 1 3

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THEORY

2017

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SENG manufactures cameras. Last year its market share increased by 2% to 18%. Production is capital intensive. This allows SENG to use lean production methods such as just-in-time. Cameras have a short product life cycle. SENG spends $200m each year on extension strategies. The Marketing manager thinks that an increase in market share will lead to higher profits. What is meant by ‘capital intensive?’ Identify two possible reasons why cameras might have a short product life cycle. Reason 1: Reason 2: Identify and explain two possible advantages to SENG of using lean production. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain two possible extension strategies that SENG could use for one of its types of camera. Strategy 1: Explanation: Strategy 2: Explanation: Do you think that an increase in market share will always lead to higher profits for SENG? Justify your answer.

7115_s14_qp_12

THEORY

2014

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Gabby is the production manager at a factory that manufactures a range of electrical products, including televisions. The company uses batch production methods in its factory. Gabby has been looking at some data produced by the Finance department. This is shown in Table 1. Table 1: Cost and output data $000’s Output per week Fixed costs Variable costs Calculate the cost per unit if the output of the factory is 2000 units per week. Identify two variable costs that the business might incur. Variable cost 1: Variable cost 2: Identify and explain two features of batch production. Feature 1: Feature 2: Gabby is thinking of subcontracting the manufacturing of some of the company’s products to another company. Identify and explain three disadvantages to Gabby’s company of subcontracting the manufacturing of its products. Disadvantage 1: Disadvantage 2: Disadvantage 3: Governments sometimes pass laws to make markets more competitive. Do you think that competition always benefits consumers? Justify your answer.

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THEORY

2010

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Cutter is a family owned private limited company. It manufactures a luxury brand of coats. In 2013 sales revenue increased by $3m and retained profits also increased. ‘The marketing mix is working’ said the Marketing Director. Cutter’s Operations Director thinks that batch production is still the right method of production to use, but he cannot decide whether on the job or off the job training is better for the business. What is meant by ‘retained profit’? Identify two possible advantages to Cutter of being a private limited company. Advantage 1: Advantage 2: Identify and explain two possible advantages to Cutter of using batch production. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain two possible elements of a suitable marketing mix for Cutter’s products. Element 1: Explanation: Element 2: Explanation: Do you think it is better for Cutter to use on the job or off the job training? Justify your answer.

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THEORY

2014

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SOLS makes 5 styles of luxury shoes for men, using job production. SOLS operates in a niche market. Quality assurance is important. All materials, including leather, are imported. SOLS uses cost plus pricing. The shoes are sold directly to customers through its website. The Managing Director said: ‘We can sell our shoes for $100 less a pair than our competitors because we have no shops.’ Demand is increasing and the Managing Director has to decide whether to change to batch production. What is meant by ‘niche market’? Identify two advantages to SOLS (other than lower prices) of using a website to sell its products. Advantage 1: Advantage 2: Explain, with reference to SOLS, the difference between quality assurance and quality control. 1 1 Identify and explain one advantage and one disadvantage to SOLS of using cost plus pricing. Advantage: Explanation: Disadvantage: Explanation: Do you think SOLS should change its method of production? Justify your answer. [ 1 1

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THEORY

2018

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VXH produces a range of soft drinks made from fruit using batch production. VXH uses specialisation in its factory. The business has grown quickly over the last two years. VXH has increased the number of production workers from 40 to 80. This has increased the span of control for each manager. It has been difficult for VXH to keep workers motivated. The Human Resources Manager has to decide whether it is better to use job rotation or financial bonuses to improve employee motivation. What is meant by ‘span of control’? What is meant by ‘uses specialisation’? Identify and explain two possible reasons why VXH has grown quickly. Reason 1: Explanation: Reason 2: Explanation: 1 3 Identify and explain two possible reasons why VXH uses batch production. Reason 1: Explanation: Reason 2: Explanation: Do you think VXH should use job rotation or financial bonuses to increase employee motivation? Justify your answer. 1 3

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THEORY

2019

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Autobrake is a business that manufactures brake systems for cars. Fig. 1 shows its market share in 2005 and 2010. The market for brake systems was worth $70m in 2010. It is likely to become an increasingly competitive market. Autobrake’s management believe that the company needs to develop a wider range of products if it is to be profitable in the future. Fig.1: Market shares for brake systems % market share year = Autobrake = other companies What is meant by an ‘increasingly competitive market’? Calculate the value of Autobrake’s sales in 2010. Autobrake uses flow production in its factories. Identify and explain two benefits of using flow production. Benefit 1: Explanation: Benefit 2: Explanation: Identify and explain three possible reasons why Autobrake’s market share changed between 2005 and 2010. Reason 1: Explanation: Reason 2: Explanation: Reason 3: Explanation: Do you think that investing in a wider range of products will mean that the business will become more profitable in the future? Justify your answer.

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THEORY

2011

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Colour Rack manufactures paint in country Z. It sells its products to customers both nationally and internationally. Colour Rack uses a specialist transport company to deliver its products to customers. The Colour Rack brand is well known. Many of its factory employees are unhappy at work. They are well paid but lack motivation due to the repetitive nature of their work. Paint manufacturing is a secondary sector business activity. Identify two types of business activity in the tertiary sector. Type 1: Type 2: Identify two problems Colour Rack could have when exporting its paint to customers in other countries. Problem 1: Problem 2: Explain how a manufacturing business adds value to its products. Identify and explain three factors Colour Rack should consider in deciding which transport company to use to deliver its products. Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: Recommend two strategies for improving the motivation of Colour Rack’s factory employees. Justify your answer. Strategy 1: Strategy 2:

7115_w12_qp_12

THEORY

2012

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