General Auto is a large global business. The management of General Auto are looking for a country where they might open a factory. What is meant by a ‘global business’? Identify two factors that might influence General Auto’s choice of country in which to locate the factory. Factor 1: Factor 2: Multinational companies are not always welcome in a country because they might misuse their power. Explain how pressure groups might try and influence the behaviour of such companies. Movements in exchange rates can cause problems for any business that trades globally. General Auto’ s home country is the United States. Identify and explain three consequences for General Auto of a rise in the exchange rate of the United States dollar. Consequence 1: Explanation: Consequence 2: Explanation: Consequence 3: Explanation: By examining the advantages and disadvantages that multinational companies create, do you think that a Government should seek to attract these companies to their country? Justify your recommendation.

7115_s10_qp_11

THEORY

2010

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AVC is a private limited company that makes fashion clothing. At the moment it sells all its products to customers in its own country. However, the management of AVC is thinking of exporting goods, although it knows there are problems of entering new markets. All the workers at AVC are members of a trade union. What is meant by a ‘private limited company’? Identify two advantages to AVC of exporting its clothing. Advantage 1: Advantage 2: Identify and explain two methods that the trade union could use to encourage the management of AVC to increase the wages of its workers. Method 1: Explanation: Method 2: Explanation: Identify and explain three problems that AVC might face if it exported its clothing to other countries. Problem 1: Explanation: Problem 2: Explanation: Problem 3: Explanation: AVC has recently received a takeover bid from a multinational clothing manufacturer. Do you think that the stakeholders in AVC would benefit if the takeover went ahead? Justify your answer.

7115_s10_qp_12

THEORY

2010

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Zalpha is a multinational company. It manufactures agricultural machinery and employs a large number of people. Figure 1 shows a simplified organisation chart for the business. The business decision making is centralised and some employees complain of poor communications within the company. Figure 1 Board of Directors Managing Director Europe Division Managing Director Africa Division Managing Director Asia Division Factory A manager Warehouse manager Stock control manager Quality manager Factory B manager What is meant by a ‘multinational company’? Using only the information in Figure 1: Identify the span of control of the Managing Director of the Asia division. How many levels are there in the chain of command? Identify and explain two possible reasons why Zalpha has poor internal communications. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two advantages to Zalpha of using centralised decision making. Advantage 1: Explanation: Advantage 2: Explanation: Do you think that multinational companies such as Zalpha benefit the countries in which they operate? Justify your answer.

7115_w14_qp_11

THEORY

2014

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AHP is a multinational company. It makes mobile phones in Europe in country X. 80% of its sales are in Europe. Some people are concerned about AHP’s impact on the environment. The Operations Director said: ‘AHP always tries to ensure it meets all legal controls. Globalisation has created many opportunities for AHP and its stakeholders. The Operations Director is planning to relocate its factories to a low-cost country in Asia. Raw materials would need to be transported an extra 4000kms. Interest rates are likely to increase across Europe. What is meant by ‘multinational company’? Identify two advantages to AHP of being a multinational company. Advantage 1: Advantage 2: Identify and explain two ways in which AHP might have an impact on the environment. Way 1: Explanation: Way 2: Explanation: 1 1 Identify and explain two ways in which an increase in interest rates might affect AHP. Way 1: Explanation: Way 2: Explanation: Do you think AHP should relocate its factories to a low-cost country in Asia? Justify your answer. 1 1

7115_w18_qp_11

THEORY

2018

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Raul owns a small farm that grows oranges. His farm is based in country Z. Like all primary sector activities, farming creates external costs and external benefits. Raul sells all 600 tonnes of his oranges direct to a drinks manufacturer in country E. The Government of country E plan to introduce either import tariffs or quotas. Raul said: ‘This might help country E’s Government achieve one of its economic objectives but how will it affect companies that export to country E?’ Define ‘primary sector’. Identify two government economic objectives. Objective 1: Objective 2: Outline one external benefit and one external cost that Raul’s business activity might create. External benefit: External cost: [ 1 2 Explain two advantages to Raul’s business of selling direct to a manufacturer. Advantage 1: Explanation: Advantage 2: Explanation: Do you think the introduction of import tariffs is likely to have a greater effect than the introduction of import quotas on an exporting business? Justify your answer. 1 2

7115_s21_qp_12

THEORY

2021

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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 3 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 3

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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.

7115_s11_qp_12

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.

7115_s14_qp_11

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.

7115_s15_qp_12

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 4 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 4

7115_s20_qp_11

THEORY

2020

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