BUSINESS 9609/22

Paper 2 Data Response 1 hour 30 minutes

You must answer on the enclosed answer booklet.

You will need: Answer booklet (enclosed)

INSTRUCTIONS

● Answer all questions.

● Follow the instructions on the front cover of the answer booklet. If you need additional answer
paper, ask the invigilator for a continuation booklet.

INFORMATION

● The total mark for this paper is 60.

● The number of marks for each question or part question is shown in brackets [ ].

This document consist of 4 printed pages

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1 Yippy Phones (YP)

YP is a public limited company that manufactures mobile (cell) phones. YP’s phones are sold to large
retailers who then brand them as their own products.

YP uses a capital-intensive flow production process. Computer aided manufacturing (CAM) and mass
customisation allow YP to produce different designs of phone on the same production line.

YP’s managers have differing opinions about the recent success of the company. The Operations
Director, Khan, is pleased with the economies of scale from which YP benefits. However, Jay, the
Finance Director, is worried about the liquidity position.

Table 1: Liquidity indicators

YP has only sold phones to national retailers, but an opportunity has arisen to sell into another
market, country A. A large retailer from country A would like to make regular purchases from YP.
Khan knows that YP can increase production to meet this demand by introducing a new production
line. However, YP would also need to gain more international business to make this new production
line profitable.

Faye, the Marketing Director, has no experience of international markets and is concerned about the
differences between marketing to national retailers compared to retailers in other countries.

(a) (i) Define the term ‘capital intensive’ (line 3). [2]

(ii) Briefly explain the term ‘flow production’ (line 3). [3]

(b) (i) Refer to Table 1. Calculate the value of X. [3]

(ii) Briefly explain the changes in YP’s liquidity position. [3]

(c) Analyse two economies of scale from which YP may benefit. [8]

(d) Discuss the advantages and disadvantages to YP of selling phones to the retailer in country
A. [11]
2 Top Quality Supermarkets (TQ)

TQ is a public limited company. TQ operates a large supermarket chain in its country. TQ’s
main competitor is CC Supermarkets.

TQ aims to provide high quality products. TQ’s supermarkets are spacious and well
designed. Customer service and the focus on the 4Cs is high. TQ’s brand name is strong and
TQ is able to charge premium prices for many products. Some popular products have low
prices to attract new customers into its supermarkets.

Last year CC Supermarkets had a major marketing campaign based on its prices being
guaranteed to be the lowest in the country. Table 3 shows sales and market share data for
TQ, CC and others.

Table 2: Supermarket Sales ($m)

TQ’s main objective has been to maintain market share. However, this has not been
achieved recently. In order to achieve this objective in 2014, TQ proposes the following
changes to its marketing mix:
• reduce prices on key products
• increase the marketing budget and increase TV advertising
• provide increased customer services
• obtain endorsements from famous people.

TQ also thinks that highly motivated employees are essential to its performance. TQ is
renegotiating employment contracts with its employees. This includes:
• more flexible working conditions
• bonus for each year completed with TQ
• staff discounts on purchases
• profit sharing scheme for all employees
• a pay increase that is below average, to save some direct costs.

(a) Explain the following terms:

(i) public limited company [3]

(ii) direct costs . [3]

(b) (i) Using the data in Table 2, calculate TQ’s market share for 2013. [2]
(ii) Explain why maintaining market share might not be a suitable objective for TQ.
[4]

© Analyse the likely impact on TQ’s competitiveness of the proposed changes to its
marketing mix. [8]

(d) Discuss the extent to which the new employment contracts will help TQ improve its
performance. [10]