Business Studies I

LYCEUM INTERNATIONAL SCHOOL
SECOND SEMESTER EXAMINATION JULY 2018

BUSINESS STUDIES
PAPER I
9 (Cambridge)..........
Duration : 1 hours and 30 minutes
[Total = 80 marks]
Candidate's name : ........................................................... Admission no : ..........................

1
Paper 1
(1) ABB makes high quality shoes using job production. The production method makes use of
specialisation. ABB operates in a niche market. ABB 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. ABB could either buy cheaper raw materials or
introduce new technology into the production process. The new technology would cost
$30 000 and could reduce the number of employees from 30 to 26.
(a) What is meant by specialization?

(2 marks)
(b) Identify two features of job production.
Feature 1 –

Feature 2 –

(2 marks)
(c) Identify and explain two ways in which ABB could try to protect the environment.
Way 1 –

Explanation –

Way 2 –

Explanation –

(4 marks)
contd.....to page 2
2
Grade 9 Business Studies I contd.....from page 1
(d) Identify and explain two advantages to ABB of operating in a niche market
Advantage 1 –

Explanation –

Advantage 2 –

Explanation –

(6 marks)
(e) Do you think ABB should introduce new technology into the production process? Justify your
answer.

(6 marks)
contd.....to page 3
3
(2) NMBJ makes a range of cookies (biscuits) using batch production. Last year profit increased
by $1.5million. The directors think this is because of an increase in productivity and better
management 2 of working capital. NMBJ has a low level of inventory. NMBJ plans to
increase the wages of all 300 employees by $50 per month from March. The Finance Director
is worried: ‘This decision will add $15 000 to wages each month. Many employees are
leaving. Is paying higher wages the best way to improve motivation?’
(a) What is the production method that can be used to produce similar products in
different groups?

(2 marks)
(b) Identify two features of batch production

(2 marks)
(c) Calculate the following values shown on the cash flow forecast.
w
x
y
z
(4 marks)
contd.....to page 4
4
(d) Identify and explain two disadvantages to NMBJ of having a low level of inventory.
Disadvantage 1 –

Explanation –

Disadvantage 2 –

Explanation –

(6 marks)
(e) Do you think paying higher wages is the best way for NMBJ to improve employee
motivation? Justify your answer.

(6 marks)
contd.....to page 5
5
(3) CAW makes a range of breakfast cereals. One of CAW’s objectives is to act in an ethical way
with all of its stakeholders. The Marketing Director has been looking at CAW’s marketing
strategy for some of its products. CAW uses competitive pricing. She thinks that product A,
one of its popular brands, is in the decline stage of the product life cycle. She cannot decide
what to do with product A.
Table 2 : information about CAW's products
(a) Identify two other stages in product life cycle

Stage 1 –
Stage 2 –
(2 marks)
(b) State two business objectives of CAW
Objective 1 –

Objective 2 –

(2 marks)
(c) Identify and explain two advantages of branding to CAW
Advantage 1 –

Explanation –

Advantage 2 –

Explanation –

(4 marks)
contd.....to page 6
6
(d) Identify and explain two advantages to BBT of using competitive pricing.
Advantage 1 –

Explanation –

Advantage 2 –

Explanation –

(6 marks)
(e) Do you think BBT should stop selling product A? Justify your answer

(6 marks)
contd.....to page 7
7
(4) GDC is a transport delivery business in country Z. It operates in a competitive market. GDC
has 5000 employees and 1000 delivery vehicles. GDC’s organisational structure has many
levels of 3 hierarchy with a long chain of command. The managers use an autocratic
leadership style. Last year GDC delivered 2 billion parcels for businesses. The Managing
Director said: ‘Having a good reputation is important. We have also benefited from
economies of scale’. GDC wants to expand its operations to another country, but cannot
decide the best way to do this.
(a) What is meant by chain of command?

(2 marks)
(b) Identify two advantages of an organizational structure
Advantage 1 –

Advantage 2 –

(2 marks)
(c) Identify four feature of autocratic leadership style
feature 1 –

feature 2 –

feature 3 –

feature 4 –

(4 marks)
contd.....to page 8
8
(d) Identify and explain two reasons why a good reputation might be important to GDC
Reason 1 –

Explanation –

Reason 2 –

Explanation –

(6 marks)
(e) Recommend the most suitable way for GDC to expand its business to another country.
Justify your answer.

(6 marks)
END
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LYCEUM INTERNATIONAL SCHOOL

SECOND SEMESTER EXAMINATION JULY 2018

Duration : 1 hours and 30 minutes

Candidate's name : ........................................................... Admission no : ..........................

Table 2 : information about CAW's products

(a) Identify two other stages in product life cycle

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Business Studies I

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Business Studies I

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Available Formats

LYCEUM INTERNATIONAL SCHOOL

SECOND SEMESTER EXAMINATION ­ JULY 2018

Duration : 1 hours and 30 minutes

Candidate's name : ........................................................... Admission no : ..........................

Table 2 : information about CAW's products

(a) Identify two other stages in product life cycle

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SECOND SEMESTER EXAMINATION JULY 2018