MINISTRY OF EDUCATION

NAMIBIA SENIOR SECONDARY CERTIFICATE

BUSINESS STUDIES
SPECIMEN PAPERS 1– 2 AND
MARK SCHEMES
ORDINARY LEVEL
GRADES 11 – 12

THESE PAPERS AND MARK SCHEMES SERVE TO

EXEMPLIFY THE SPECIFICATIONS IN THE LOCALISED
NSSC BUSINESS STUDIES ORDINARY LEVEL SYLLABUS

2006
Ministry of Education
National Institute for Educational Development
Private Bag 2034
Okahandja
Namibia

© Copyright NIED, Ministry of Education, 2005

NSSCO Business Studies Specimen Paper Booklet Grades 11-12

ISBN: 99916-69-90-6

Printed by NIED

Publication date: 2005

 TABLE OF CONTENTS

Paper 1 Specimen Paper...........................................................................................................1

Paper 1 Mark Scheme ............................................................................................................13

Paper 2 Specimen Paper.........................................................................................................23

Paper 2 Mark Scheme ............................................................................................................35

 MINISTRY OF EDUCATION

Namibia Senior Secondary Certificate (NSSC)

BUSINESS STUDIES: ORDINARY LEVEL

PAPER 1
SPECIMEN PAPER

Candidates answer on the question paper.

No additional materials are required.

TIME 1 hour 45 minutes

INSTRUCTIONS TO CANDIDATES

Write your name, Centre number and candidate number in the spaces at the top of this page.
Read the passage and answer all questions
Write your answers in the spaces provided on the questions paper.

INFORMATION FOR CANDIDATES

The number of marks is given in brackets [ ] at the end of each question or part question.
The business described in the case study is entirely fictitious

FOR EXAMINER’S USE

1
2
3
4
5
6
7
TOTAL

This question paper consists of 12 printed pages.

[Turn over
1
Question 1

(a) Sarah set up her own company called Woodcarvers (Pty) Ltd, manufacturing wooden
tables and chairs.

(i) Clearly outline the main reasons for her of becoming an entrepreneur.

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(ii) Do you think that the government should provide financial assistance to people
when setting up their own business?

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(b) (i) What role will market research play as part of the business plan for a manufacturer
of wooden tables and chairs?

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2
 (ii) Identify the production stage in which you would classify a manufacturer of
wooden furniture. Justify your answer.

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(c) The following table shows a summary of financial information from two companies.

Woodcarvers (Pty) Ltd Company A

(000’s) (‘000’s)
Profit 10 5
Capital 50 20
Sales 100 60
Table 1

Using profitability ratios, explain which company, in your view, has the better performance.

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Question 2

The following table shows the cash flow statement of Good Hope Enterprises Ltd for January
to March.

All figures are in N$ January February March

Opening balance (5000) 0 20000

Cash inflow – Sales revenue 35000 60000 45000
Cash outflow:
Wages (i) 10000 10000
General expenses 20000 30000 60000
Net cash flow 0 20000 (5000)

Closing bank balance 0 (ii) (5000)

Table 2

(a) Fill in the gaps shown as (i) and (ii) (in the cash flow forecast in Table 2) above.

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(b) Why should Good Hope Enterprises Ltd be concerned about its cash flow forecast?

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4
(c) Explain two ways in which Good Hope Enterprises Ltd could try and solve this
problem.

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(d) Good Hope Enterprises Ltd has experienced an increase in the cost of its general
expenses. It is planning to invest in new technology to reduce these expenses.
Suggest two sources of finance and explain why these would be suitable for this
investment.

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[20]

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Question 3

(a) The dissatisfaction of workers in the fishing industry in Walvis Bay recently led to the
situation that they went on an illegal strike.

(i) What is meant by an illegal strike?

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(ii) How could worker participation have contributed to avoid the strike?

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(iii) What do you consider to be the main causes of a lack of motivation of workers
(which could have led to the strike)?
Justify your answer.

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(b) (i) Some businesses want to reduce the number of employees.
Explain the difference between dismissal and retrenchment.

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(ii) What role can government play in protecting employees from being dismissed or
retrenched unfairly? Use examples to support your answer.

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[20]

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Question 4

Compu-man Limited, a major computer manufacturer, faces increasing competition.

(a) State and explain two ways by which it could try to maintain its market share.

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(b) Compu-man Limited not only succeeded in maintaining its market share but it also
grew in size and achieved economies of scale.
Explain what is meant with “economies of scale”.

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(c) Compu-man Limited has developed a new computer in response to the results of market
research.
Do you think that it is a market orientated business or a product orientated business?
Justify your answer.

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8
(d) The marketing manager has monitored the sales of the new computer over the past six
months and drawn the product life cycle as shown in Figure 1.
Label the main stages of the product life cycle on Fig 1. [2]

Sales

Time

Fig. 1

(e) Compu-man Limited is planning to open a new manufacturing plant in a park used by
residents who live near by.
What might be the social costs and benefits should this new development go ahead? Do
you think the government should give the development the go ahead?

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[20]

9
Question 5
Key
2000

PRIMARY 2001
Total work force = 1
million in both years

SECONDARY

TERTIARY

0 5 10 15 20 25 30 35 40 45 50 55
% of workforce

Fig. 2

(a) Using the data given in Fig.2,

(i) state the percentage of the workforce employed in primary activities in 2000.

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(ii) calculate the number of people employed in tertiary activities in 2001.

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(b) Explain why, in many countries, the percentage of workforce in tertiary activities is
increasing.

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10
(c) Air Namibia, a public sector business, was privatised in Namibia in 2001. The table
below gives some information about the airline before and after privatisation.

2001 2002
Number of passengers 800 000 600 000
Average fare per flight (N$) 500 650
Number of employees 1 400 800
Profit/Loss (N$8m) N$9m
Table 3

(i) Identify the main changes that have occurred since privatisation.

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(ii) How might the objectives of a private sector business differ from those of a public
sector business?
Explain your answer.

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(d) Welwitchia Caterers supplies the meals to Air Namibia for its international flights.
It is described as a small business.

(i) Suggest how the size of a business can be measured.

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(ii) What problems are there in measuring the size of any business?

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[20]

[100]

12
 MINISTRY OF EDUCATION

Namibia Senior Secondary Certificate (NSSC)

BUSINESS STUDIES: ORDINARY LEVEL

PAPER 1
MARK SCHEME

Question 1

(a) (i)
L3 (5-6 marks) Learner identified a number of reasons with good development

L2 (3-4 marks) Learner identified some reasons with limited development

L1 (1-2 marks) Learner identified one reason with limited or no development

- Create job opportunities for people and decrease the unemployment rate in the country.
- Generate income for people allowing them to make use of goods and services to satisfy
unlimited wants and to uplift the standard of living.
- Promotes social and economical development, as it helps individuals and communities to
become more productive and independent.
- Providing a service by meeting consumer demands, resulting in a better standard of
living for the community as a whole.
- Control of own destiny, leading to freedom of creativity, innovation, talents, skills and
knowledge.

(b) (ii)
L2 (3-4 marks) Learner identified reasons and shown a clear understanding of why the
government should or should not provide financial support

L1 (1-2 marks) Learner identified a reason but shown limited understanding of why the
government should or should not provide financial support

New businesses create job opportunities leading to a lower unemployment rate which might
result in a decrease in the crime rate and social evils.
This will in turn decrease government spending towards people in prison and a better social
and/or economic climate resulting.

More revenue(income) in the hands of entrepreneurs will result in more taxes being paid to
the government – making the government financially stronger to perform important duties.

(b) (i)

L2 (3-4 marks) Learner shows a clear understanding of market research and the role it plays
as part of a business plan with good application to the case

L1 (1-2 marks) Learner has some understanding of the role of market research but with no
application to the case

13
Market research will help to determine who the target market is: where do they live; the type
of people (married/single, young/old); their income(high/low); and the type of furniture they
prefer as well as the price they are prepared to pay.

Therefore, a questionnaire needs to be drawn up and be distributed to a sample of potential

customers.

The response to the questionnaire will give some indication of the size of the target market
and the price they are willing to pay for the furniture.

(c) (ii)
1mark for correctly identifying the production stage
1 mark for the justification

Secondary sector/stage
It is also known as the manufacturing sector which uses raw material from the primary
sector/stage (and covert the wood into tables and chairs).

(c)
L2 (3-4 marks) Learner used the ratios correctly and based the conclusions correctly on the
ratio analysis

L1 (1-2 marks) Learner identified the ratios correctly

Profit for Woodcarvers (Pty) Ltd =10%

Sales for Company A = 25%

Profit for Woodcarvers (Pty) Ltd = 20%

Capital for Company A = 25%

Conclusion : Company A has a better rate of return on capital employed as well as a better
profit margin (performance).
[20]

14
Question 2

(a) (i) N$ 10 000

(ii) N$ 20 000
(1 mark for each correct answer)

(b)
L3 (5-6 marks) Learner shown a clear understanding of why the company should be
concerned about its current cash flow forecast and included some figures to
justify such understanding.

L2 (3-4 marks) Learner shown some understanding of why the company should be
concerned about its current cash flow forecast and included some incorrect
figures to justify such understanding.

L1 (1-2 marks) Learner shown a limited understanding or none at all of why the company
should be concerned about its current cash flow forecast and did not include
any figures.

The cash flow forecast shows that the company started off with a negative bank balance of
N$ 5 000 in the month of January.
This led to the fact that it will experience cash flow problems in the month of March to an
amount of N$ 5 000 and again it will have a negative closing bank balance of N$5 000 in
March.

Thus if proper planning is not done in advance the company will not be able to meet all its
short-term debts.

(c)
L3 (5-6 marks) Learner identified two ways on how the company can try and solve its
current cash flow problem with good development.
L2 (3-4 marks) Learner identified the two ways correctly but with limited development.
L1 (1-2 marks) Learner identified one way with a limited or no development.

The company can employ any two of the following:

- Obtain a bank loan or arrange for an overdraft facility with the bank especially in the
month of March when it is experiencing cash flow problems of N$ 5 000. As the amount
is rather small it would be better to use an overdraft facility which carries less interest
than a bank loan and the amount overdrawn can also be paid back in a shorter time
period.

- Obtain credit especially in March when it seems that the General expenses are at its
highest. This will allow the company to postpone its cash payments which will not place
it in the financial trouble it would experience in March.

- If possible, it should try to reduce its expenses by whatever means. This could include
saving on telephone calls, reduce wages by not letting the employees work overtime, etc.
If it can be accomplished less money will be going out of the company meaning less or
even no cash flow problems.

15
- Sell some unprofitable assets. This should be done only as a last resort and only with
regard to assets which are idle and in which capital is tied up. This will ensure that cash is
available when needed especially in times of financial difficulties.

(d)
L3 (5-6 marks) Learner stated two sources of finance correctly with good development.
L2 (3-4 marks) Learner stated one or two source of finance correctly with limited
development
L1 (1-2 marks) Learner stated one source of finance with little or no development.

Investment in new technology usually involves large sums of money and thus it should be
medium-term or long-term finance which could be obtained within a short time period.

Medium-term sources of finance

Hire-purchase will allow the company to pay for the new technology in not longer than five
year’s time after which it becomes the property of the company.
Leasing will allow the company to use the new technology against monthly payments for the
use of the technology. This might also be cost effective as the company might wish at a later
stage to use the latest technology on the market.
Bank loan the payments to the bank will be made over a fixed period of time which is
decided upon by the company itself.

Long-term sources of finance

The issue of shares will provide permanent capital which does not have to be repaid and there
are no interest payments. However it will take a long time to raise the needed finance and the
owner may wish to have all the control.

Selling of debentures which are long-term loan certificates issued by the company.
This has to be repaid together with interest.
[20]

16
Question 3

(a) (i)
2 marks for a clear explanation
1 mark for a limited explanation

When employees withdraw their labour without the approval of their Trade Union or senior
management.

(a) (ii)
L2 (3-4 marks) Good understanding of worker participation and identified forms of such
participation.
L1 (1-2 marks) Limited understanding and explanation.

Allowing employees to communicate their concerns by participating in decision

making through appointing worker-directors, work councils, quality circles and more
democratic style of leadership.

(a) (iii)
L3 (5-6 marks) Learner identified and developed several causes – showing appreciation for
some causes to be more important than others.
L2 (3-4 marks) Learner identified more than one cause with some explanation.
L1 (1-2 marks) Learner identified one or more causes with little or no development.

- Poor working conditions: some jobs may be unpopular as a result of unpleasant,

dangerous or anti-social working conditions.
- Low pay: some other companies pay employees in similar positions a higher wage/salary.
- Unfair management treatment: leaving employees with a low self-esteem.
- Unfair dismissal of colleagues: leaving the existing employees insecure.
- Lack of fringe benefits: e.g. pension funds, medical aid, housing allowance, etc.
- Lack of motivation: employees are given little or no recognition for good work done.
- Poor communication: no opportunity for feedback from employees.
- No opportunities for promotion: leaving employees with no future prospects.
- Unpleasant working hours: keeping employees away from home for long periods of time.
- Limited training: preventing employees from increasing their skills and knowledge.

(b) (i)
L2 (3-4 marks) Clear explanation of the difference between the terms.
L1 (1-2 marks) Some understanding of the difference between the terms..

Dismissal
Employee is at fault (dishonesty, fraud, etc).
The work still exists (as the employee will be replaced by another (new) employee).
No financial remuneration from employer to employee.

Redundancy
Employee is not at fault.
Job no longer exist, because of financial reasons or changes in technology, and the employee
will not be replaced.
Employer will provide some remuneration to the employee for being made redundant.

17
(f) (ii)
L2 (3-4 marks) Learner identified that government has passed laws to protect employees
from unfair discrimination based on sex, race, religion, being disabled as
well as protection against unscrupulous employers.
L1 (1-2 marks) Limited explanation on the role of government.

Examples include amongst others:

Sex Discrimination Act
Race Relations Act
Disabled Persons (Employment) Act
[20]

18
Question 4

(a)
L3 (5-6 marks) Learner identified two ways with good development thereof.
L2 (3-4 marks) Learner identified two ways with limited development.
L1 (1-2 marks) Learner identified one or two ways with little or no development.

- Major advertising and promotion campaigns could be used to make consumers more
aware of the product and also possibly to persuade them to buy the computers, especially
with the promotion offers (e.g. free printer, free software).
- Aggressive pricing strategy where computers are sold at a very low price for a short
period of time to obtain at least for a short time a larger market for the product.
- Offer specialised services such as installation, guarantees and after sales services which
are better than those of competitors.
(Any two of the above)

(b)
2 marks for a clear explanation
1 mark for a limited explanation
The factors that lead to a reduction in average costs as a business increases in size.

(c)
1 mark for correctly identifying the type of business and 1 mark for the justification.

Market orientated business as market research was undertaken before product development.

(d) 2 marks for correctly stating the stages (in correct order).
1 mark if stages are mixed but correctly identified.

Sales

Into= Growth Maturity Saturation

duction

Time

(e)

L3 ( 6-8 marks) Good explanation of the likely benefits and costs as well as deciding
whether or not the government should allow the development.
L2 (3-5 marks) Explanation of points identified.
L1 (1-2 marks) Limited explanation or stating only one or two benefits/ costs.

19
The local residents will gain from this development in the form of social benefits which are
likely to be:
- Jobs will be created, leading to increased standards of living and also a reduction in the
crime rate.
- Other firms may move into the area to provide services the computer firm, resulting in
more choice in products in better infrastructure in the area.
- Local society and businesses can benefit from the use of computers in their everyday life
and work related issues.

However, the local residents will also pay certain costs (social costs) from this
development, which might be:
- Waste products will cause pollution especially effecting the local residents.
- Parkland cannot now be used by local residents, resulting in less leisure activity.
- Smoke and fumes may damage the health of local residents.

Whether the government will allow this development will depend on whether the benefits
outweigh the costs.
[20]

20
Question 5

(a) (i)
1 mark for correct interpretation of bar chart.
35%

(ii)
1 mark for % plus 1 mark for absolute figure.

55% of 1 million = 550 000

2 marks for clear statement giving reasons that might explain structural change.
1 mark for simple understanding.

Content may include:

- stage of economic development
- reflection of relative advantages of resources within the country
- competition world wide.

(i)
1 mark per change correctly identified.

- Number of passengers carried has fallen.

- Airline fares have risen.
- Number of jobs has fallen.
- A loss has been turned into a profit.

(c) (ii)
L2 (3-5 marks) A clear explanation of the differences between the two sectors.
L1 (1-2 marks) A limited explanation of the difference between the two sectors.

- Most private sector businesses aim to make a profit.

- Creation of self-employment.
- Increased efficiency in product delivery.

- Public sector businesses are established to render services to the general public.
- Protect/develop strategic industries in economy such as telecommunications,
water provision, etc.
- Enhance the welfare of the citizens of the country.

(i)
Any three suggestions below.

- Number of goods and/or services produced.

- Turnover.
- Profit.
- Number of employees.
- Number of outlets.
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- Capital employed.

(d) (ii)
3 marks for a clear understanding.
Maximum of 2 marks for a limited understanding.
Problems arise as it is difficult to compare businesses in different industries.
Different methods in measuring may give different results, e.g. by employees, capital
employed, etc.
[20]

TOTAL [100]

22
 MINISTRY OF EDUCATION

Namibia Senior Secondary Certificate (NSSC)

BUSINESS STUDIES: ORDINARY LEVEL

PAPER 2
SPECIMEN PAPER

Candidates answer on the question paper.

No additional materials are required.

TIME 1 hour 45 minutes

INSTRUCTIONS TO CANDIDATES

Write your name, Centre number and candidate number in the spaces at the top of this page.
Read the passage and answer all questions
Write your answers in the spaces provided on the questions paper.

INFORMATION FOR CANDIDATES

The number of marks is given in brackets [ ] at the end of each question or part question.
The business described in the case study is entirely fictitious

FOR EXAMINER’S USE

1
2
3
4
5
6
7
TOTAL

This question paper consists of 10 printed pages and 2 blank pages.

[Turn over
23
 Kim Yan Fashions (Pty) Ltd

Kim Yan owns and manages a fashion clothing company. The business makes a narrow
range of fashion clothes and by far their best selling lines are ‘made-to-measure’ men’s suits.
These suits are produced in 24 hours. To achieve this the workshops operate a 3 shift day 5
with each shift working for 8 hours. Kim sells most of her suits to foreign visitors to her
country. Most of these visitors only stay for a few nights. The whole business depends upon
an ability to make products quickly. “They buy from me because my suits are made with
high quality materials and my prices are reasonable,” said Kim.

However, her business is not doing very well at the moment. The clothing market in Kim’s
country is very competitive and her sales have been falling recently. This has caused 10
financial problems because her profit margins are low so that she can keep her prices down.
In addition, cash flow problems are starting to occur and her creditors want to be paid.

Kim also has problems in her workshop. Many workers have been leaving the company and
new workers have to be recruited. In addition, the output per worker has been falling. Kim 15
does not know why. She is thinking of introducing a bonus payment system to reward her
staff. She has also considered spending some time and money on providing training for her
new staff. Table 1 provides some data concerning out put per worker and rates of pay.

20
Year Number of employees per shift Total output per shift (number of suits)
2000 60 90
2001 60 60
Wages = $10 per hour per employee in both years
Table 1

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Question 1

(a) What does (Pty) Ltd mean?

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(b) Does Kim Yan’s business fall under the public or private sector of the economy?
Explain your answer.

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(c) (i) State two methods of communication that could be used within a business.

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(ii) When would you advise the management of Kim Yan to use the methods of
communication that you have stated in part (i)?
Explain your answer.

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25
(d) Kim Yan has to produce a profit and loss account at the end of each year.
Identify one other major financial statement and explain what it shows about the
company.

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [5]

[15]

26
Question 2

(a) “The business is not doing very well at the moment” (Line 9).
One way to solve this problem would be to merge with a clothing manufacturer.
What might be the benefits of doing this?

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [4]

(b) Kim Yan Fashions is specialising mainly in men’s clothing.

(i) What is meant by specialisation?

………………………………………………………………………………………

.......……………………………………………………………….…………… [1]

(ii) Explain two advantages of specialisation.

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

.......……………………………………………………………….…………… [4]

27
(c) “Consumers, creditors and workers are some of the stakeholders in the business activity
of Kim Yan Fashions”.
Explain the interests of these stakeholders that the business must seek to promote.

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [6]

[15]

28
Question 3

Kim Yan’s new employees do not have the appropriate skills needed to perform their tasks.
(a) (i) How would you suggest that Kim Yan might deal with this problem?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

.......……………………………………………………………….…………… [5]

(ii) Explain the following term used in the case:

“bonus payment” (lines 16-17)

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

.......……………………………………………………………….…………… [3]

(b) Kim Yan is paying her employees on a time rate system.

Compare Kim Yan’s current payment system with the system where employees will be
paid $75 per suit.

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………
29
…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [7]

[15]

30
Question 4

(a) What method of production is the company using? Justify your answer.

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [3]

(b) The company holds large levels of raw materials. Do you think it should hold only
small amounts of raw materials? Justify your answer.

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

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…........................................………………………………………………………………

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…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [10]

(c) How should the company decide when to re-order stock?

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [2]

[15]

31
Question 5

Kim Yan wants to expand her range of products. She wants to diversify into selling made-to-
measure dresses to young women. However, she wants to find out if there is a market for
these products. She has decided to do some primary market research sending out a
questionnaire to a sample of people.

(a) Would you advise Kim Yan to use primary market research?
Explain your answer.

…........................................………………………………………………………………

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [4]

(b) How would you suggest that the sample of people is selected?

…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [3]

(c) (i) Identify four questions that you think she should have asked in the questionnaire
which she sent out to the sample of people..

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

.......……………………………………………………………….…………… [4]

(ii) Explain why you consider each question should be asked.

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.......……………………………………………………………….…………… [4]

[15]

32
Question 6

(a) Calculate:
(i) The change in output per worker per shift between 2000 and 2001.

………………………………………………………………………………………

………………………………………………………………………………………

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.......……………………………………………………………….…………… [4]

(ii) The wage cost per suit in both 2000 and 2001.

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.......……………………………………………………………….…………… [5]

(b) Explain how this change in wage cost per suit could affect Kim’s business.

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…........................................………………………………………………………………

…........................................………………………………………………………………

.................................................................................................................................... [6]

[15]

33
Question 7

Recently a business friend of Kim’s made an offer to buy the business from her.

What factors should Kim consider before making a decision as to whether to sell?
Explain the importance of these factors.

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....................................................................................................................................... [10]

[10]

TOTAL [100]

34
 MINISTRY OF EDUCATION

Namibia Senior Secondary Certificate (NSSC)

BUSINESS STUDIES: ORDINARY LEVEL

PAPER 2
MARK SCHEME

Question 1

(Pty) Ltd stands for Proprietary Limited which means that it is a private company.

2 marks for a clear explanation.

1 mark for some understanding.
Private sector
The name indicates that it is a private company (a company privately owned and
managed) meaning that it is part of the private sector.

(c) (i) Visual, written, verbal

(Any two – 1 mark each)

(ii) Learner need to consider the method and state when to use it.
1 mark for stating when to use.
1 mark for stating why the method is used.

E.g. Written – communication of new working procedures. It is hard evidence which can be
referred to in the future.

(d)
Balance sheet (1) shows the firm’s assets (1) and liabilities (1) as well as the capital (1) and
thus the financial position (1) at a particular time .

OR

Cash flow forecast (1) shows the opening bank balance (1), revenue (1), payments (1)
And closing bank balance (1) over a period of time. [15]

35
Question 2

(b) 4 marks for 4 advantages identified or

4 marks for two advantages explained.

Possibility of higher profits for the owners.

Larger amount of cash available.
Economies of scale (lower average costs) can be achieved.
Controlling a larger share of the market.

(b) (i)
Specialisation means to concentrate on producing those goods and services in which a
business has an advantage, e.g. specialist skills, abundance of raw materials, etc.

(b) (ii) Any two advantages explained.

- Workers can specialise in doing jobs for which they are best suited resulting in
increased efficiency.
- Jobs can be learned quickly as each worker only performs a small part of the
production process.
- Output increases as more is produced by each worker as a result of using
specialised machinery.
- Production costs are lower as efficiency is improved by the use of machinery.
- Training costs are reduced as fewer skills are required by each worker.

(c)
2 marks for each clear statement.
1 mark per vague statement.

Consumers are interested in the quality of the product and wish to obtain value for their
money.

Creditors (suppliers) want to be paid on time despite the cash flow problems which Kim Yan
experiences.

Workers are interested in good working conditions and remuneration in exchange for their
labour and if they are dissatisfied they negatively influence the business, e.g. strike, low
productivity resignation. [15]

36
Question 3
(a) (i)
3-5 marks for the identification of a number of points which allow logical suggestions to
be made or two training methods well explained (in context).
1-2 marks for a limited range of options identified and consideration lacking in depth.
Induction training
Introduce new workers to fellow employees, explaining company procedures activities and
customs.
On the job training
This will allow new employees to watch a more experienced employee doing the work. This
is suitable for both unskilled and semi-skilled employees.

Off the job training

Send new employees away from the workplace to be trained usually by specialist trainers.
This is suitable for more complex tasks.

(a) (ii)
3 marks for a high level of understanding as demonstrated by accuracy of terminology
applied in context.
2 marks for some understanding as shown by development of the case.
1 mark for a basic statement showing a simple understanding.

An additional amount of payment above the basic pay as a reward for good work.

(b)
6-7 marks: Learner shows a clear understanding of payment systems (definitions);
identifying advantages and disadvantages of both systems in context.
3-5 marks: Learners shows understanding of payment systems with limited explanation
(advantages and disadvantages ) in context.
1-2 marks: Learner shows limited understanding without context.
Currently employees are paid a time rate – for the amount of hours worked. This method of
payment is used when it is difficult to measure output.
A benefit is: wages can be calculated easily and employees know how much they will be
paid for the time they have worked.
Disadvantages are: good and bad employees are paid the same; more control (supervisors)
needed to ensure quality output.

When employees are paid $75 per suit they are paid on a piece rate. This method of payment
is used when output can be measured fairly easy.
Advantage : employees are encouraged to work faster and they can thus produce more
goods.
Disadvantage: trying to increase output might result in poor quality products – damaging the
image of the business.

Employees are $ 10 per hour meaning each employee is paid $80 per day (assuming each
employee has an 8 hour working day).
If employees are paid $75 per suit made such employee will be paid $5 less (assuming
productivity does not increase). [15]

37
Question 4
(a)
3 marks for the correct answer with a well developed justification.
1-2 marks for the correct answer with a limited justification.

Job production occurs where a single product is made at a time.

The information states the company is making “made-to-measure” suits implying the suits are
made according to consumer requirements and thus it is job production.

(b)
7-10 marks: Learner able to explain both advantages and disadvantages and also states
whether holding large levels of stock good or not.

4-6 marks: Learner explain advantages and disadvantages of either small or large stock
levels without referring which is the better.

1-3 marks: Learner only lists advantages and disadvantages without explaining them.
The company should rather opt for holding small amounts of stock as is evident from below.
Advantages of low levels of stock
- Less storage costs as less warehousing space would be needed.
- Less obsolete (out-of-fashion) clothing as suits are made at a time when ordered and not
in advance.
- Less cash is tied up in raw materials leaving the company with more cash to finance
operating costs.

Disadvantages of low levels of stock

- If raw materials are not available when needed it will lead to dissatisfied customers
and ultimately less sales.
- If communication is insufficient, orders of raw materials will arrive late which will
delay production coupled with late delivery of the finished products (suits).

(c)
2 marks for a well explained answer which shows appreciation.
1 mark for an answer which lacks explanation or appreciation.

The company must re-order its (raw) materials before reaching the minimum level (allowing
time for delivery), so that there will be no hold up in production. [15]

Question 5
(a)
2 marks for explaining what primary research is (this can be implicit).
2 further marks for reasons why primary research should or should not be used.

Primary research or field research ) is the collection and collation of original data. It involves
direct contact with potential or existing customers.

Reasons for using primary research

- It provides original information.
- The information obtained would be relevant to the needs of the company.
- The quality of the information would be under the control of the company.
- The information would not be available to the rival firms.
(Any two reasons for using primary research)

38
(b)
3 marks for a good understanding of issues.
1-2 marks for a limited understanding.
Presumably the company needs to identify its target market (consumer base) and then it needs
to focus on a representative group by either using random or quota sampling.

(c) (i)
1 mark for each question asked. To be acceptable the questions have to be clearly
relevant and answerable.

- In which age group do you fall (10-15; 16-20; 21-25; 26-30; etc)?
- Where did you hear about the company’s products?
- What do you like about the features and/or quality of the products?
- Why do you want to use the products?
(c)(ii)
3-4 marks for a clear understanding of why each question should have been asked.
1-2 marks for a limited understanding of why each question should have been asked.
- It will give information on whether the respondent fall in the working population
and thus whether such person will be able to afford the products.
- It will give information on the best media in which to advertise its products.
- It will give information on whether there should be any improvements made to the
products with regard to quality and/or features.
It will information on whether the products might be bought because of fashion or
otherwise. [15]

Question 6

(a) (i)
Here the own figure rule (OFR) applies.
1 mark for the correct formulae used.
2 marks for calculation of output per employee per shift for each year.
1 mark for showing the change in output per employee.
(Calculations must be done correctly according to the year indicated).
(d) Correct answer with no calculations shown = 4 marks.

2000: 90 = 1,5
60

2001: 60 =1
60

Change = Output changed with 0,5 units

39
(a) (ii)
OFR applies.
1 mark for correct formulae used.
2 marks for correct calculation of wage bill each year.
2 marks for wage cost per unit in each year.

2000: Wage bill =$ 4 800 per shift ($10 x 8 hours x 60 employees).

Output per shift = 90
Wage cost per unit = $53,30

2001: Wage bill = $ 4 800

Output per shift = 60
Wage cost per shift = $80

(b)
5-6 marks: evaluate judgement regarding the likely consequences of this impact.
3-4 marks: impact of this on the company.
1-2 marks: understanding the link between wage cost and unit cost.

- The fall in labour productivity meant that the unit wage cost rose.
- This increase in costs means that selling price must rise or profits will fall.
- The impact of this might be that the number of products sold will fall which might
negatively affect the revenue received.
- The above will be problematic for the company as its market is very competitive, profit
margins are low and its selling point is value for money.

[15]

Question 7

9-10 marks: evaluation of the importance of the factors.

5-8 marks: analysis of these factors.
1-4 marks: identification of possible factors to be considered.

Financial factors
The terms of the offer must be compared to the profitability of the company together with the
future prospects of the company.

Personal factors
Does the owner want to continue running the company on her own? Here factors such as the
age of the owner, a possible new role in the company, family commitments, etc. must be
considered.

Position of the employees

Would the current employees remain the workforce or would new employees be recruited? If
the employees are to leave the company certain payments (leave days, pension, etc.) have to
be made.

[10]

[100]

40
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The National Institute for Educational Development
P/Bag 2034
Okahandja
NAMIBIA

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