Paper 1

1.(a) Cost-plus pricing: total cost + markup = selling price.

(b) Marketing mix refers to the set of marketing tools that a business uses to
promote its products or services to its target customers. These tools include
product, price, promotion, and place, also known as the four Ps of marketing. The
marketing mix is designed to meet the needs and wants of customers while also
achieving the business's marketing goals.
(c) Reason 1: Offering a high-quality service is important for Pamela because it can
help her build a good reputation and get more business. If she provides great
photography services that people love, they'll be more likely to recommend her to
others. This can help her get more clients and grow her business over time.
Reason 2: High-quality service sets Pamela apart from competitors, showing she
cares about her work. This attracts new clients and builds loyalty. Consistent quality
establishes trust and reliability, leading to more business opportunities.
(d) Advantage 1: Sole proprietorship offers flexibility in decision-making and
operations.
Explanation: As a sole trader, Pamela can make quick and efficient decisions quickly
and easily without having to go through any complicated processes., which can be
important in a fast-paced industry like photography. Additionally, she can retain all
the profits generated by her business, which can be reinvested into her business or
used to pay herself a higher salary.
Advantage 2: Pamela has complete control over the business and its profits.
Explanation: As a sole trader, Pamela can keep her business structure simple, which
can save her time and reduce costs associated with complicated paperwork and
rules. She can focus on her core business activities, such as taking high-quality
photographs and satisfying her clients, instead of worrying about complex legal and
financial issues.
(e) Operating in a niche market can increase a small business's chances of success
as it allows the business to specialize and meet the unique needs of a specific group
of customers. This can lead to stronger customer loyalty and word-of-mouth
recommendations. Additionally, small businesses can establish themselves as
experts in their niche, which can lead to more business opportunities.
On the other hand, operating in a mass market can be difficult for small businesses
due to intense competition and difficulty in standing out. Small businesses can get
lost among the many competitors, making it challenging to attract new customers.
Consumers in a mass market are also more price-sensitive, making it challenging
for small businesses to compete solely on price. Competing with larger companies
in a mass market can be daunting as they may have more resources and economies
of scale to offer products and services at a lower price.

2.(a) The 'opening balance' is the amount of cash that a business has at the
beginning of a period, such as a month or a quarter, before any cash inflows or
outflows have occurred.
(b) Way 1: Automating processes to reduce manual labor and streamline
operations.
Way 2: providing training and opportunities for employees to improve their skills
and knowledge.
(c) Source 1: Retained earnings, which are profits kept within the business for
reinvestment.
Source 2: Sale of assets, such as selling unused equipment or property owned by
the business.
Source 3: Reducing inventory levels, which frees up cash that can be used
elsewhere in the business.
Source 4: Delaying payment to suppliers, which can improve short-term cash flow.
(d) Effect 1: Reduced labor costs due to the redundancy of 35 workers may result
in increased net cash inflow, improving NPX's cash-flow forecast.
Explanation: Introducing the new technology will increase productivity and reduce
labor costs. This will allow NPX to process orders more efficiently and generate
more cash inflows, potentially improving its cash-flow forecast.
Effect 2: The cost of purchasing the new technology may result in a decrease in
NPX's net cash flow and opening balance.
Explanation: The cost of purchasing the new technology will result in a cash outflow,
reducing NPX's net cash flow and potentially reducing its opening balance. However,
over the long term, the increased productivity and cost savings may offset the initial
cost of the technology.
(e) In my opinion, it is better for a tertiary sector business to use full-time
employees rather than part-time employees. Full-time employees offer several
advantages, such as higher productivity, greater job satisfaction, and better
continuity of service. They have a deeper understanding of the company's values
and culture, which enables them to provide more consistent service to customers.
Furthermore, full-time employees are more likely to develop strong relationships
with customers, which can lead to increased customer loyalty and repeat business.
Although part-time employees can offer flexibility and lower labor costs, they may
not have the same level of commitment and loyalty to the company which could
result in a higher turnover rate. This turnover can be costly for the business in terms
of recruiting and training new employees. Additionally, part-time employees may
not always be available during peak business hours or in the case of unexpected
staff shortages, which could cause disruptions to the business operations. Overall,
investing in full-time employees can yield long-term benefits for a business,
particularly in terms of customer satisfaction and loyalty.

3. (a) Fixed cost refers to the costs that do not vary with changes in the level of
output or sales, such as rent, salaries, insurance, and depreciation.
(b) Total units sold - Break even units = Margin of safety
30,000 - 22,500 = 7,500 units
Therefore, the margin of safety for product X in 2020 is 7,500 units.
(c) Advantage 1: Faster decision making - With a short chain of command, decisions
can be made quickly as there are fewer layers of management to consult. This helps
GHT to respond more efficiently to changing market conditions and customer
needs.
Advantage 2: Improved communication - A short chain of command allows for
better communication between different levels of the organization. This can help
ensure that information is shared quickly and accurately, which can help to prevent
misunderstandings and mistakes. Additionally, it can help to create a more
cohesive and unified company culture.
(d) Advantage: Job rotation provides variety and skill development for employees.
Explanation: By allowing employees to work in different roles, they can gain a
broader perspective of the company and see how different departments operate.
This can lead to more cross-functional collaboration and a better understanding of
how their work impacts the company's overall goals.
Disadvantage: Job rotation may cause decreased productivity and workflow
disruptions.
Explanation: Training employees for new roles can take time and resources, and it
may take them longer to reach the same level of productivity as before.
Additionally, rotating employees too frequently may result in a lack of continuity
and consistency in their work, which can impact quality and customer satisfaction.
(e) While shareholders are important stakeholders in a limited company, I believe
that they are not the most important. Other stakeholder groups, such as customers,
employees, and suppliers, also play crucial roles in the company's success. Without
customers, a company cannot generate revenue, and without employees, a
company cannot produce goods or provide services. Moreover, suppliers are
critical for the procurement of raw materials and other inputs necessary for the
production process. Therefore, a company must balance the interests of all its
stakeholders to ensure its long-term success. In conclusion, while shareholders'
interests are important, they cannot be prioritized over other stakeholders who
also contribute to the company's growth and success.

4.(a) The primary sector is the sector of the economy that is focused on the
extraction or harvesting of raw materials from natural resources. This sector is
primarily concerned with the production of basic goods such as agriculture, forestry,
fishing, and mining.
(b) Two government economic objectives are:
Objective 1: Economic growth, which refers to an increase in a country's production
of goods and services over time, usually measured by an increase in GDP.
Objective 2: Full employment, which means that everyone who is willing and able
to work has a job.

(c) External benefit: Raul's business activity might create is job creation and income
generation for the local community. By operating his farm, Raul provides
employment opportunities for local workers, which can boost the local economy
and contribute to poverty reduction.
External cost: His business activity might create is pollution caused using pesticides
and fertilizers, which can harm the environment and human health. Additionally,
the transportation of his products to the drinks manufacturer in country E may
generate greenhouse gas emissions that contribute to climate change.
(d) Advantage 1: Stable and predictable income with long-term contracts.
Explanation: By having a guaranteed buyer, Raul can avoid the uncertainty and
fluctuations of the open market, which can be particularly challenging for small
farmers. He can also benefit from economies of scale by producing larger quantities
of oranges and negotiating better prices with the manufacturer.
Advantage 2: Reduced marketing and distribution costs by selling directly to the
manufacturer.
Explanation: By eliminating negotiator, Raul can reduce his marketing and
transportation costs, which can have a positive impact on his profitability. He can
also ensure that his oranges are of a consistent quality and meet the
manufacturer's specifications, which can help him maintain a good reputation and
secure repeat business.
(e) In my opinion, the introduction of import tariffs is likely to have a greater effect
than the introduction of import quotas on an exporting business. Import tariffs are
taxes on imported goods, which can increase the cost of the imported goods and
make them less competitive in the domestic market. This can lead to a decrease in
demand for the imported goods, which can in turn lead to a decrease in demand
for the exporting business's products. On the other hand, import quotas limit the
quantity of imported goods, which can limit competition in the domestic market
and create opportunities for the exporting business to increase its sales. However,
the effect of import quotas can be limited if the exporting business is not able to
increase its production capacity to meet the new demand. Therefore, I believe that
the introduction of import tariffs is likely to have a greater effect on an exporting
business than the introduction of import quotas.