ZIMBABWE SCHOOL EXAMINATIONS COUNCIL

GCE A’ LEVEL

MANAGEMENT OF BUSINESS

PAPER 1

JUNE 2004
Section A – 70 marks

1a). Explain the concept of legal personality as is relates to business. (3)

b). What is the importance of this status in the growth of a business? (3)

2. Outline the benefits of the Just – In – Time technique of stock

management. (4)

3. How might some knowledge of statistical probability enable

managers to perform their functions more efficiently? (4)

4a). What do you understand by the term job evaluation? (2)

b). Explain the importance of a job evaluation programme to a firm. (3)

5. What are the advantages of listing a company on the Stock

Exchange? (5)

6. Discuss the contribution that informal groups might make towards

the overall performance of a business. (5)

7. Should managers always use the payback method in appraising

projects? Explain. (5)

8a). State any two pricing strategies which can be used for used for a
new product. (2)
b). What important issues should be considered when deciding on the
price of a new product? (4)

9a). Explain the term price elasticity of demand. (3)

b). Why might a marketing manager try to influence the price elasticity
of demand for products? (3)

10a). Give two reasons why firms use budgets. (2)

b). Explain any one situation in which a budget might need to be flexible.
(4)

Section B – 30 marks
Read the following case study and answer all the questions.

Footwear for Real Ltd

Dexter and Novan started a partnership for manufacturing and repairing
shoes in the city of Birmingham some twenty years ago. Both partners
were former employees of a large shoe manufacturing firm based in
London in the United Kingdom. They left the firm with lucrative retirement
packages, and decided to take the risk of starting their own business,
Footwear For Real. They actually had all the necessary expertise and
experience in that trade.

The business grew from strength with more workers being employed and
better equipment bought. In five years’ time, the business had captured a
considerable amount of market share. As the future looked bright, the
partners decided to convert their business into a limited company Footwear
For Real Ltd. Since some of their business contacts had agreed to buy
shares in the new company, the conversion promised to be a real success.

The capital raised through the sale of shares was used to upgrade the
plant in Birmingham so as to enhance its production capacity. Two more
plants were installed in Cardiff and Laton. The two founders of the
business became Chief Executive and Production Director, and the business
employed specialists in other functional areas. The firm started enjoying
the economies of scale in all areas and became a real force to reckon with
in the industry.

Having done extremely well in the UK market, the company set its eyes on
the foreign market. After the directors had deliberated on the new venture,
a decision was reached to export products to some foreign markets and
come up with new production units in others. There was strong lobby for
Africa because it was thought that the continent might have the greatest
potential for market growth.
The directors commissioned an agency to assess the potential of putting up
production and sales units in different locations. The major factors to be
researched on were, labour costs, political and economic stability, training
costs and the attitude of national governments to be prospect of multi-
national forms locating in their country.

13. Examine the issues the original partners would have considered
before converting the business to a limited company. (10)

14. Discuss the strengths and weaknesses of your country as a potential

investment destination for the new production unit. (10)

15. Assume Footwear For Real Ltd has decided to expand into your
country. Evaluate the marketing strategy which they might adopt in
order to achieve a successful entry into the shoe market in your
country. (10)