1

1 Define ‘entrepreneur’.
mean the person who organize and operate the business, this person taking a risk to start a new business.
..................................................................................................................................................................

Entrepreneur is a person who takes the risk of starting and operating a new business.
..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 2]

2 Tom wants to leave his job to become an entrepreneur. He and his sister plan to start a window cleaning
business. Tom has been told that new businesses are at a greater risk of failure than established businesses.
Tom has to decide whether a partnership is a suitable form of business organisation for the new business. He
has calculated the business will need $700 as start-up capital. Tom knows that every decision he makes will
have an opportunity cost.

Do you think a partnership is the best form of business organisation for a new business? Justify your answer.

Có 2 loại cty:
..................................................................................................................................................................
1) Trách nhiệm vô hạn (chủ phải lấy hết tài sản cá nhân để chịu trách nhiệm cho các khoản nợ của cty.
..................................................................................................................................................................
+ Sole trader (quán phở): chỉ 1 chủ.
+ Partnership (VP luật sư, kiểm toán): 2 chủ.
..................................................................................................................................................................
2) Trách nhiệm hữu hạn (chủ ko phải chịu trách nhiệm gì với nợ của cty, chủ chỉ có thể mất hết số tiền đã đầu tư
vào cty thôi.
..................................................................................................................................................................
+ Cty TNHH (LLC: Limited Liability Company) (1 thành viên, nhiều thành viên)
..................................................................................................................................................................
+ Cty cổ phần (Corporation) --> Chỉ loại này mới được lên sàn.

..................................................................................................................................................................
Partnership:
..................................................................................................................................................................

There might be some advantages and also disadvantages of partnership.

..................................................................................................................................................................

..................................................................................................................................................................
The advantages is there will be less task since 2 sharholders and also 2 owner mean that more money
can be invested. Futhermore, If there are any loses, it will divide lose to both 2 owner.
..................................................................................................................................................................
However, if the business fail, .shareholders not only lose what they invested and also need to pay back with
..................................................................................................................................................................
their own money
owners will have to use their private assets (houses, cars...) to pay for the company's debts.
.................................................................................................................................................................. [6]
if one shareholder quits, the business is no longer exist and there can also the disagreement while working
[Total: 6]
between 2 share holders which lead to biasd decision or slow respond to customers demand.
 2

3 Define ‘opportunity cost’.

value must be given up in order to achieve something eles.
..................................................................................................................................................................
for example use money to spend on microwave instead of fridge.
..................................................................................................................................................................
Opp cost is the value of the best alternative forgone.
..................................................................................................................................................................

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

[Total: 2]

4 Identify two reasons why businesses need objectives.

shareholder can now if their business achive their goals or not
Reason 1: .................................................................................................................................................

..................................................................................................................................................................
help to give a better decision
Reason 2: .................................................................................................................................................

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

[Total: 2]

5 Define ‘competitive pricing’.

mean business make a price that similar or below their competitor prices
..................................................................................................................................................................
This pricing strategy can ensure sales but cannot guarantee profit.
..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 2]

6 Identify four reasons why a new business might be at greater risk of failure than an established business.

Reason 1: .................................................................................................................................................
No reputation, not well-known by large population, so harder to get customers.
..................................................................................................................................................................

Reason 2: .................................................................................................................................................
May be bad at management ability.
..................................................................................................................................................................
Lack of operation experiences.
Reason 3: .................................................................................................................................................

..................................................................................................................................................................
Limited resources (capital, human)
Reason 4: .................................................................................................................................................

.................................................................................................................................................................. [4]
 3

[Total: 4]

7 Gareth is planning to start a car washing business using government support. He is analysing market research
data to help him make important decisions about his business. Extracts from this data are shown in Figure
A and Figure B. Gareth said: ‘I will need to set business objectives.’ He plans to keep his business small.
Gareth is worried about the possible effects of higher taxes.

Do you have a car? Average price paid for car wash

23% $6.34
77%

Yes No

Figure A Figure B

Do you think offering financial help, such as grants, is the best way for a government to support business
start-ups? Justify your answer.
Goverment might not the best way goverment
..................................................................................................................................................................
Grant would be very helpful to startups because they are likely to have little access to sources of finance.
..................................................................................................................................................................

Grants will be the first condition for startups to start their business, as they will need to buy assets. Without
..................................................................................................................................................................
grants they might not be able to start operating at all.
..................................................................................................................................................................

However, grants might not be the best way to support startups because other things will be needed such as:
..................................................................................................................................................................
- Expertise advices, information about the market demand
..................................................................................................................................................................
- Mentoring programs
- Lower taxes, or wave the tax.
..................................................................................................................................................................
- Lower the rent.
..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 4

8 Identify two objectives for a business organisation in the public sector.

Provide jobs.
Objective 1: .............................................................................................................................................

..................................................................................................................................................................
provide basic goods in order to meet citizen's demand
Objective 2: .............................................................................................................................................
to provide free goods or services to general population as no other businesses want to provide.
.................................................................................................................................................................. [2]

[Total: 2]

9 VCG manufactures high-quality briefcases and travel bags. VCG has 50 skilled production workers in its
factory. VCG is planning to expand by building a second factory. Different locations are being considered.
The Managing Director is reviewing VCG’s financial statements. An extract is shown in the table below.
Both internal and external stakeholder groups of VCG are interested in this information.

Extract from VCG’s 2021 financial statements ($)

Revenue 2 000 000

Current assets 300 000

Current liabilities 250 000

Shareholders’ equity (funds) 800 000

Identify two financial statements a public limited company is legally required to publish each year.

Balance Sheet, which provides information about the company's assets, liabilities and
Financial statement 1: ..............................................................................................................................
equity.
..................................................................................................................................................................
Income Statement, which provides info about the company's revenues, costs, and profit.
Financial statement 2: ..............................................................................................................................

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

[Total: 2]

10 Identify two possible reasons why an owner might want their business to remain small.

Big companies normally have problems with poor communication.

Reason 1: .................................................................................................................................................

..................................................................................................................................................................

Easier to manage people.

Reason 2: .................................................................................................................................................
Less attracting the attention from competitors.
.................................................................................................................................................................. [2]

[Total: 2]
 5

11 CXN manufactures glass bottles using flow production. The business has a number of stakeholder groups
including its 130 employees. CXN has benefitted from globalisation. Its products are exported to 39 countries.
The Managing Director knows that depreciation of an exchange rate can affect business activity. She thinks
all manufacturing businesses should contribute to sustainable development.

Outline one possible objective for each of the following stakeholder groups of CXN.
collect taxes from CXN company
Government: ............................................................................................................................................
goverment will pay attention to the finance of this company through financal statments in order to know the
..................................................................................................................................................................
amount that have to pay.
..................................................................................................................................................................

..................................................................................................................................................................
have more income
Employees: ..............................................................................................................................................
employess will work as much as their can in order to contribute company to the company to have higher profit
..................................................................................................................................................................
so that they will have higher paid.
..................................................................................................................................................................

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

[Total: 4]
 6

12 GCF is a public limited company. It provides a range of computer services to businesses including designing
websites and creating apps. The Human Resources Director use ideas based on Maslow’s Hierarchy of Needs
to help keep GCF’s 250 employees well-motivated. GCF plans to expand by taking over one of its competitors.
This will cost $50m. To finance the takeover, GCF is considering issuing new shares.

Do you think the number of employees is the best way to measure the size of a tertiary sector business?
Justify your answer.

no, business can measure their size over revenue, profit , etc, not just only the number of employees.
..................................................................................................................................................................
To be more precise,, the more number of employyees, the more profit decrease which mean that it
..................................................................................................................................................................
is directly lead to smaller the size of a business
..................................................................................................................................................................
When we want to measure the size of a business in a tertiary sector, number of employees is not the most
..................................................................................................................................................................
crucial criterion to count.
In this sector, one single person can create as much values (profit) as hundreds or thousands of other people
..................................................................................................................................................................
can. So, one-person company might not be small company at all. It can generate higher profit than a hungreds-
employee companies can.
..................................................................................................................................................................
In this sector, we can use other criteria such as market share, revenues, or profits to measure the size of the
..................................................................................................................................................................
company.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]

13 What is meant by the ‘primary sector’?

sector that Extracts and uses the natural resources from the earth.
..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 2]
 7

14 AHG is an established business as it has been operating for a long time. It sells garden products including
plants and flowers. AHG uses competitive pricing. The business has 4 managers and 30 other employees.
All AHG’s managers use delegation. The Finance Manager is analysing AHG’s statement of financial position
as she is interested in its liquidity. An extract is shown in the table below.

Extract from AHG’s statement of financial position at 30 March 2022 ($000)

Non-current assets 800

Current assets 660

Current liabilities 600

Explain two advantages to AHG of its managers using delegation.

Advantage 1: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Advantage 2: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 8

15 MBH is a business organisation in the public sector. It controls 5 hospitals and has 5600 employees including
440 doctors. External recruitment is used when recruiting skilled employees. The Human Resources Director
uses ideas from Herzberg’s theory to improve employee motivation. He is worried about communication
barriers within MBH. The business has a tall organisational structure and a long chain of command. Most of
MBH’s internal communication is by email and phone calls.

Outline two ways MBH can use ideas from Herzberg’s theory to motivate its employees.

Way 1: ......................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Way 2: ......................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 4]

16 State two responsibilities of a director.

Responsibility 1: ......................................................................................................................................

..................................................................................................................................................................

Responsibility 2: ......................................................................................................................................

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

[Total: 2]
 9

17 MBH is a business organisation in the public sector. It controls 5 hospitals and has 5600 employees including
440 doctors. External recruitment is used when recruiting skilled employees. The Human Resources Director
uses ideas from Herzberg’s theory to improve employee motivation. He is worried about communication
barriers within MBH. The business has a tall organisational structure and a long chain of command. Most of
MBH’s internal communication is by email and phone calls.

Do you think an organisation should always use external recruitment when recruiting skilled employees?
Justify your answer.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 10

18 MBH is a business organisation in the public sector. It controls 5 hospitals and has 5600 employees including
440 doctors. External recruitment is used when recruiting skilled employees. The Human Resources Director
uses ideas from Herzberg’s theory to improve employee motivation. He is worried about communication
barriers within MBH. The business has a tall organisational structure and a long chain of command. Most of
MBH’s internal communication is by email and phone calls.

Explain how MBH might reduce or remove each of the following communication barriers:

Message lost: ...........................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Use of jargon: ..........................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 11

19 RWB manufactures buses. 1200 people work in its factory. All employees receive off-the-job training. RWB
uses financial rewards to motivate its employees. Last year RWB made a $1.7 million loss. The Managing
Director said: ‘There are many external influences affecting our business, including changes in the level of
unemployment and new legal controls over business activities which affect the environment.’

Outline two methods of financial rewards RWB might use to motivate its employees.

Method 1: ................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Method 2: ................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 4]
 12

20 BCZ is a multinational company which operates in 12 countries. It manufactures cement, a building material
used by construction companies, so quality assurance is important. Making cement creates external costs.
One of BCZ’s factories is located in country X. The government of country X plans to introduce new legal
controls that will reduce the maximum number of working hours from 45 to 35 hours per week.

Explain one possible effect on BCZ and one possible effect on its employees of the new legal controls that
will reduce the maximum number of working hours.

Effect on BCZ: ........................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Effect on BCZ’s employees: ....................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]

21 Define ‘off-the-job training’.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 2]
 13

22 BGR is a private limited company. It operates 6 cinemas in different towns. Effective internal communication
is important for BGR. The Finance Director has been analysing BGR’s accounts and an extract is shown in
the table below. BGR plans to open another cinema and will need to recruit 10 new employees. The new
cinema will cost $8m. The Finance Director has to decide whether BGR should issue new shares or use a
bank loan to finance the expansion.

Extract from BGR’s Income statement for year ending 2020 ($000’s)

Revenue X

Cost of sales 180

Gross profit 720

Expenses Y

Profit 400

Explain two reasons why effective communication might be important to BGR.

Reason 1: .................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Reason 2: .................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 14

23 MTD manufactures specialist cleaning products including soap. Batch production is used. The business uses
just-in-time inventory control. MTD took 18 months to develop its latest environmentally friendly cleaning
product. The Marketing Manager has to decide on the packaging and method of promotion for this new
product. She said: ‘All our stakeholders, including pressure groups, are important. MTD wants to contribute
to sustainable development.’

Do you think using social media is the best way for a business to promote a new product? Justify your answer.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 15

24 AHG is an established business as it has been operating for a long time. It sells garden products including
plants and flowers. AHG uses competitive pricing. The business has 4 managers and 30 other employees.
All AHG’s managers use delegation. The Finance Manager is analysing AHG’s statement of financial position
as she is interested in its liquidity. An extract is shown in the table below.

Extract from AHG’s statement of financial position at 30 March 2022 ($000)

Non-current assets 800

Current assets 660

Current liabilities 600

Do you think competitive pricing is the best method for an established business to use? Justify your answer.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]

25 Identify one benefit and one cost to a business of developing new products.

Benefit: ....................................................................................................................................................

..................................................................................................................................................................

Cost: ........................................................................................................................................................

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

[Total: 2]
 16

26 Pamela is a successful entrepreneur. She is the owner of a gift shop selling celebration cards, toys and candy
(sweets). When Pamela started her business 30 years ago she had no help to manage the shop. She now has
5 employees. Pamela knows maintaining customer loyalty is important. She uses competitive pricing. Most
of her marketing budget is spent on sales promotion. Pamela does not use e-commerce.

Outline two possible threats to Pamela’s business of using e-commerce.

Threat 1: ..................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Threat 2: ..................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 4]
 17

27 D2G is a driving school. Mattan started D2G 3 years ago to teach people to drive a car. As the business has
been successful Mattan plans to buy a new vehicle. He has been analysing D2G’s income statement. An
extract is shown in the table below. Mattan wants to understand the difference between profit and cash. He
also wants to know how an increase in competition and changes in the business cycle might affect D2G.

Extract from D2G’s income statement for the year ending 31 December 2021 ($)

Revenue 20 000

Gross profit 12 000

Profit for the year 2000

Explain two ways D2G might respond to an increase in competition.

Way 1: ......................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Way 2: ......................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 18

28 Tom started ALB 5 years ago making trainers (sneakers) out of sustainable materials such as wool. One of
ALB’s objectives is to protect the environment. As part of his research, Tom calculated some costs which
he could use in his break-even analysis. An extract is shown in the Figure below. ALB uses retailers to
distribute its products. Tom thinks a successful entrepreneur has to be a good manager.

Outline two possible advantages to ALB of using retailers to distribute its products.

Advantage 1:.............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Advantage 2:.............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 4]
 19

29 After identifying a gap in the soft drinks market, Jerome developed a low sugar drink. He borrowed $5 000
from family and friends to start-up a business and to provide working capital. Jerome operates as a sole trader.
To promote his product, Jerome handed out free samples in the town centre. In the first year, Jerome’s business
sold 10 000 units. This is 200 units more than his break-even output. Jerome is considering ways to increase
added value.

Do you think giving out free samples is the best method of sales promotion for a business to use when
promoting a new food product? Justify your answer.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 20

30 Pamela is a sole trader. She started her successful photography business 30 years ago. She specialises in
taking pictures of people and places for use in posters, calendars and fashion magazines. It is a niche market.
Pamela uses cost-plus pricing as part of her marketing mix. Offering a high quality service is important to
Pamela and her 2 employees.

Do you think operating in a niche market will help a small business have a better chance of success than
operating in a mass market? Justify your answer.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 21

31 ABA provides short-distance flights between 60 countries. It is a multinational company based in country
X. ABA uses market segmentation when deciding on its pricing method. The marketing department is carrying
out market research to gain feedback on customer experiences. ABA is considering ways in which it can
contribute to sustainable development.

Outline two factors which could affect the accuracy of ABA’s market research.

Factor 1: ...................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Factor 2: ...................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 4]

32 YMG is a private limited company. It is the largest manufacturer of soft drinks in country V. YMG produces
1 billion litres a year using flow production. The Managing Director wants YMG to expand. He said: ‘I plan
to increase production to 3 billion litres over the next 5 years. This will allow us to start selling our products
in new markets in other countries. I know import quotas and lack of local knowledge can cause problems
but there are ways we can overcome them.’ The Managing Director also plans to invest $60m in new
technology to improve efficiency.

Explain how each of the following problems might affect YMG when entering new markets in other countries.

Problem caused by lack of local knowledge: ..........................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Problem caused by import quotas: ..........................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]
 22

[Total: 6]

33 CTF is a public limited company. It manufactures beds using batch production. The Operations Director is
using break-even analysis to calculate the margin of safety for children’s beds. An extract from CTF’s output
data is shown in the table below. The Operations Director wants to know how an increase in inflation might
affect CTF. She knows there are many environmental pressures that a manufacturing business could respond
to.

Extract from CTF’s output data (children’s beds per month)

Break-even output 14 000

Current level of output 18 000

Maximum factory output 25 000

Calculate the margin of safety for CTF’s children’s beds. Show your working.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 2]
 23

34 BCZ is a multinational company which operates in 12 countries. It manufactures cement, a building material
used by construction companies, so quality assurance is important. Making cement creates external costs.
One of BCZ’s factories is located in country X. The government of country X plans to introduce new legal
controls that will reduce the maximum number of working hours from 45 to 35 hours per week.

Do you think it is better for a large manufacturer to use quality assurance rather than quality control? Justify
your answer.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 24

35 CTF is a public limited company. It manufactures beds using batch production. The Operations Director is
using break-even analysis to calculate the margin of safety for children’s beds. An extract from CTF’s output
data is shown in the table below. The Operations Director wants to know how an increase in inflation might
affect CTF. She knows there are many environmental pressures that a manufacturing business could respond
to.

Extract from CTFs output data (children’s beds per month)

Break-even output 14 000

Current level of output 18 000

Maximum factory output 25 000

Explain two possible advantages to CTF of using batch production.

Advantage 1: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Advantage 2: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 25

36 MTD manufactures specialist cleaning products including soap. Batch production is used. The business uses
just-in-time inventory control. MTD took 18 months to develop its latest environmentally friendly cleaning
product. The Marketing Manager has to decide on the packaging and method of promotion for this new
product. She said: ‘All our stakeholders, including pressure groups, are important. MTD wants to contribute
to sustainable development.’

Explain two possible advantages to MTD of using just-in-time inventory control.

Advantage 1: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Advantage 2: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 26

37 VCG manufactures high-quality briefcases and travel bags. VCG has 50 skilled production workers in its
factory. VCG is planning to expand by building a second factory. Different locations are being considered.
The Managing Director is reviewing VCG’s financial statements. An extract is shown in the table below.
Both internal and external stakeholder groups of VCG are interested in this information.

Extract from VCG’s 2021 financial statements ($)

Revenue 2 000 000

Current assets 300 000

Current liabilities 250 000

Shareholders’ equity (funds) 800 000

Do you think access to labour is the most important factor for a manufacturing business to consider when
deciding where to locate a new factory? Justify your answer.

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

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

[Total: 6]
 27

38 Nancy wants to be an entrepreneur. She has analysed market research data and decided to start up a book
shop. Nancy has identified a suitable location and prepared a business plan. Nancy is calculating her total
costs. She will use this information to help her complete a break-even chart as shown in the figure below.
Nancy is also considering using e-commerce.

Identify four factors a service business should consider when deciding on a suitable location.

Factor 1: ...................................................................................................................................................

..................................................................................................................................................................

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[Total: 4]
 28

39 Define ‘total cost’.

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[Total: 2]

40 NSN is a multinational company. It makes cars. Over the years, technology has changed production methods.
NSN uses just-in-time inventory control in all its factories. NSN plans to open a new factory in country Z
creating 7 000 jobs. Country Z’s Government has offered an $80m grant to NSN. A spokesperson for NSN
said: ‘Governments should support business activity. There were also other
factors that influenced our decision to build the new factory there including the possible effects of economic
growth.’

Do you think the ways technology has changed production methods benefits all employees? Justify your
answer.

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[Total: 6]