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INTERNATIONAL GCSE
BUSINESS
Paper 2: Influences of Marketing and Finance on Business Activity

Friday 17 May 2019 07:00 GMT Time allowed: 2 hours

Materials
For this paper you must have: For Examiner’s Use
• a calculator, which you are expected to use where appropriate. Question Mark
1
Instructions
• Use black ink or black ball-point pen. 2
• Fill in the boxes at the top of the page. 3
• Answer all questions. 4
• You must answer the questions in the spaces provided. Do not write
outside the box around each page or on blank pages. 5
• If you need extra space for your answer(s), use the lined pages at the end of 6
this book. Write the question number against your answer(s). 7
• All working must be shown.
8
• Do all rough work in this book. Cross through any work you do not
want to be marked. 9
10
Information 11
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 90. TOTAL

Advice
• You may use a bilingual dictionary.

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Answer all questions in the spaces provided.

Only one answer per question is allowed.

For each question completely fill in the circle alongside the appropriate answer.

CORRECT METHOD WRONG METHODS

If you want to change your answer you must cross out your original answer as shown.

If you wish to return to an answer previously crossed out, ring the answer you now wish to select
as shown.

0 1 Which one of the following is an example of secondary research?

[1 mark]

A A survey

B A questionnaire

C Research published in a magazine

D A focus group

0 2 Which one of the following is a description of a public sector business?

[1 mark]

A A restaurant business owned by a family

B A technology company owned by the government

C A manufacturing business owned by shareholders

D An international franchise owned by a limited company

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0 3 Which one of the following terms describes the process a business can use to find out box
what customers may want and expect?
[1 mark]

A Branding

B Fringe benefits

C Management

D Market research

0 4 Which one of the following is not likely to be a business objective?

[1 mark]

A Growth

B Liability

C Market Share

D Profitability

0 5 Which one of the following is likely to happen if levels of employment rise in an

economy?
[1 mark]

A Businesses’ profits fall.

B Employees are made redundant.

C Output of goods falls.

D Wages and prices rise.

Turn over for the next question

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0 6 Which one of the following terms refers to the process of separating a market into box

different groups of customers?

[1 mark]

A Economies of scale

B Market segmentation

C Mass marketing

D Product differentiation

0 7 Identify and explain one benefit to a business of having a cash flow forecast.
[2 marks]

0 8 A business makes 1000 t-shirts with variable costs of $1.50 per t-shirt.

Its fixed costs are $2000.

Calculate the average unit cost of producing 1000 t-shirts. Show your calculations.
[3 marks]

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0 9 Identify and explain two ways an entrepreneur could obtain the money to start a box
business.
[4 marks]

15

Turn over for the next section

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Answer all questions in the spaces provided.

1 0 Item A

A Nike sports shoe with the company “Swoosh” logo.

Nike is a multinational sportswear and fashion company with its headquarters in

the USA. Nike has over 1000 shops worldwide; more than 700 of them are
outside the USA. All Nike products are designed and manufactured by Nike.
The world-famous “Swoosh” logo can be seen on all its stores and on most of its
products.

Nike often has celebrity sports stars in its advertising, using photographs and
videos of them wearing its products.

Nike has been experiencing strong competition from Adidas, Puma and Under
Armour, who regularly introduce new products. This competition reduces Nike’s
market share. Nike realises that it will need to respond to this growing threat
from its competitors.

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1 0 . 1 Identify and explain two ways in which competition affects Nike. box

[4 marks]

Extra space

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1 0 . 2 Identify and explain two benefits to Nike of being a large business.

[4 marks]

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1 0 . 3 Explain two ways in which Nike could promote its brand. box

[6 marks]

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Item B box

Nike has over 500 factories which are spread across more than 40 countries around
the world. Nike also employs over one million people, which enables demand for its
products to be met. Most of Nike’s factories are located in three countries: China,
Vietnam and Indonesia. These countries have a large supply of labour. In addition to
this, the cost of land is relatively inexpensive.

1 0 . 4 Analyse why Nike factories are mostly located outside the USA.
[6 marks]

Extra space

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Table 1

Revenue by year (US$ billions)

2014 2015 2016 2017

27.8 30.7 32.5 34.3

In 2017, Nike’s revenue was more than any other sportswear company in the
world. Nike has many competitors in the sportswear market. Nike’s
shareholders have been pleased with the company’s performance, which has
resulted in the possibility of increased dividends.

Nike has consistently raised the payments to shareholders. Nike pays out
between 20 and 30% of its profits as dividends.

Table 2

Revenue in 2017 (US$ billions)

Nike Adidas Under Armour Puma

34.3 24.6 5.0 4.8

1 0 . 5 Using the information in Table 1, calculate the percentage increase in Nike’s revenue
between 2016 and 2017. Give your answer to one decimal place. Show your working.
[2 marks]

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1 0 . 6 Analyse the benefits to Nike of having a well-known logo to identify its brand. box
[6 marks]

Extra space

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Item D box

During the 1990s, many Western businesses operating in other countries faced
pressure from the public to investigate aspects of their business practices that
were considered to be unethical. These included:

• using child labour

• dangerous working conditions
• low wages
• long working hours.

Nike has been a leader in dealing with these concerns through factory audits that
make sure the factories are behaving ethically. Nike directly forbids the use of
underage employees or poor working conditions in factories that make Nike
products. Nike also has a commitment to sustainability. Nike has promised to
use scarce resources more carefully. These actions have improved Nike’s
reputation.

Nike also has a variety of worldwide community activities, such as ‘Made to Play.’
This is a scheme that encourages young children to live active lives.

1 0 . 7 Recommend whether Nike should be more concerned about:

• being seen as an ethical business

Or

• paying high dividends to its shareholders.

Use Items A, B, C and D to support your answer.

[12 marks]

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Answer all questions in the spaces provided.

1 1 Item E

Electro is a small business located in a city in Malaysia. The business, which is

owned by Lee and Yasmine, sells electrical appliances such as fridges. The
electrical appliances are imported from manufacturers in a nearby country. The
items are purchased in US$ and then sold in Malaysian Ringgits (MYR).

Electro buys the appliances in batches of ten and pays a small monthly fee for
storage at a local warehouse. Electro has gained a good reputation in the local
area and the business has recently made a profit for the first time.

Before forming Electro with Yasmine, Lee had a previous business that sold fruit
and vegetables. The business was doing well but was then forced to shut down
when a supermarket chain owned by a multinational corporation (MNC) opened
nearby.

Figure 1 shows the current costs and revenues for Electro. The business
currently sells 1200 units per year.

Figure 1

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1 1 . 1 What is meant by fixed costs?

[2 marks]

1 1 . 2 Using Item E and Figure 1, state and define Electro’s break-even quantity and its
margin of safety.
[4 marks]

Break-even quantity

Definition

Margin of safety

Definition

Turn over for the next question

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1 1 . 3 Analyse the benefits to Electro of calculating its break-even point. box

[6 marks]

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Item F box

Electro has been making a good profit despite the business being small. Lee and
Yasmine are considering expanding the business by opening a new shop. They
have found a location in a different part of the city where they can rent warehouse
storage.

They agree that it would be best to wait a few more months and then use the
retained profit to open the new shop.

1 1 . 4 Analyse why Electro might choose to use retained profit to fund the growth of the
business.
[6 marks]

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Item G

Electro converts MYR 50 000 into US$ every month in order to import the electrical
appliances. In recent months the exchange rate between the Malaysian Ringgit
and the US$ has changed, which has affected the price that Electro pays for the
appliances.

Table 3 shows the amount in US$ that Electro has received for the previous 6
months.

Table 3

Month Jan Feb Mar Apr May Jun

US$ 12 053 11 800 10 988 11 300 11 500 11 100

As a small local business, Electro does not benefit from economies of scale as
large global companies do. This means that Electro’s costs have to be carefully
managed.

1 1 . 5 What is meant by an exchange rate?

[2 marks]

1 1 . 6 Explain one problem Electro may have if the MYR / US$ exchange rate has a severe
fluctuation.
[3 marks]

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1 1 . 7 Globalisation offers benefits and drawbacks to businesses such as Electro. box

Yasmine sees the benefits of globalisation and would like Electro to expand
internationally. Lee would prefer to expand only within Malaysia.

Recommend whether the business should either

• expand internationally to gain the benefits of globalisation

or

• expand only within Malaysia.

Refer to Items E, F and G in your answer.

[12 marks]

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END OF QUESTIONS

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