IGCSE Buisness Studies: Past Paper Compilation:

1 (a) Identify and explain two disadvantages to Manuel of operating as a sole trader.
Content:
Lack of capital
No one else to help make decisions
Unlimited liability
No continuity
May have limited range of skills
Long working hours / difficult to take holidays
The marks available for this question are as follows: 2 marks for knowledge; 2
marks for
application and 4 marks for explanation/analysis.
Disadvantage: He will have unlimited liability (1 mark for knowledge)
Developed explanation: He will have unlimited liability (1) which means that if the
shop
goes bankrupt he could lose all his personal possessions, (2)
which means he could lose not just the money he put into the shop
but all the other debts of the shop would have to be paid by
Manuel. (3)
Application: The application mark could be achieved as the answer makes
reference to the shop (1 application mark).

2. Manuel has been operating his successful fruit and vegetable shop for 10 years.
He wants
to expand by either opening more shops or becoming a franchisor and selling
franchises
to other people. Consider these two methods of expansion. Recommend which
method he
should choose. Justify your answer.

Opening more shops of his

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Becoming a franchisor and sell franchises to other
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3. Kew Construction is a public limited company. It specialises in building large

houses. Each
house costs $30 000 to build and the company adds 40% to total cost to calculate
the selling
price. Last year sales fell by $90m and dividends were reduced. The Human
Resources
Director is worried: If sales do not improve, I will need to make some workers
redundant.
How can I decide which workers to make redundant?
(a) What is meant by dividends?
Good knowledge [2] e.g. Payment to shareholders [1] from profits of a company
[+1] Return to shareholders for investing in the company [2] Some knowledge [1]
e.g. Payment to shareholders

(B) Identify and explain two disadvantages to a business of being a public limited
company.
Knowledge [2 1] identification of disadvantage [1 mark per disadvantage]
Analysis [2 1] explain how it is a disadvantage to a business Disadvantages
could include: have to disclose accounts [k] so less able to keep financial details

secret from rivals [an] many legal requirements/regulations [k] which is expensive
and time consuming [an] selling shares expensive [k] because shares need to be
listed on the stock market shares are freely traded [k] so there is a greater risk of
takeover/danger that original owners might lose control [an]
4- AM Designs is a private sector business. It makes dresses. It is a successful
business because it adds value. Amira is directly responsible for a team of 12
people. I want to keep a short chain of command but I do need a manager to help
me. I must find someone with the right qualities. All of my team are highly
motivated and someone with the wrong management style might cause problems.
(a) What is meant by the private sector?
When business activities are owned by individuals

5-(e) Consider the advantages and disadvantages for All Active of being converted
to a public limited company. Do you think All Active should become a public limited
company? Justify your
answer. ........................................................................................................................
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6-Alkin is a multinational company. It manufactures breakfast food products

including many leading brands of cereal. Alkin plans to start selling in country Z,
which is a fast-growing market. Alkin plans to form a joint venture with a local
business, based in country Z. Effective communication will be important to our
success but I think there are many advantages in expanding this way said Alkins
Managing Director. The Government of country Z is worried about the effect of
multinational companies like Alkin on consumers.

Identify and explain two advantages to Alkin of using a joint venture to expand into
country Z. Advantage
1: ............................................................................................................................. ...
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Kyle is an entrepreneur. He plans to buy a Frydays franchise. Frydays is a leading

fast food (take-away) business. Each franchise costs $100 000. Frydays would
provide some promotion. I only need to find the right location, hire some people
and raise the finance said Kyle. I am certain to make a profit.

Do you think that owning a franchise would mean Kyle is certain to make a profit?
Justify your
answer. ........................................................................................................................
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Anouk is a sole trader. She designs and makes jewellery at home, using hired
(rented) equipment. Anouk enjoys selling the jewellery at local markets. Last year
her sales revenue increased by $500 to $3000. She plans to use $50 for a marketing
budget. Anouk would like to do some primary market research when she has time.
Anouk thinks she should have a business partner.
Identify and explain two disadvantages to Anouk of having a business partner.
Disadvantage
1: ........................................................................................................................
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Disadvantage
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5 Callow is a large retail business based in country X. Our employees are an

important stakeholder,
said the Managing Director. To make sure we stay profitable we need to motivate
them. Callow
trains all of its shop employees by using off the job training.

Fig. 1: Callow Organisation Structure

Managing Director
HR Director Finance Director
West Region
Manager
South Region
Manager
North Region
Manager
East Region
Manager
Operations Director Marketing Director
Shop Managers 6
Department Managers 4
Supervisors 2
Sales Assistants 8
(a) Identify two stakeholder groups, other than employees.
Stakeholder group
1: .................................................................................................................
Stakeholder group
2: .............................................................................................................[2]
(b) Identify two functions of management that each shop manager will have to
perform.
Function
1: ................................................................................................................................

Function
2: ............................................................................................................................[2]
(c) Identify and explain two features of Callows organisational structure.
Feature
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Feature
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Brakker is a public limited company which specialises in building large boats. Each
boat costs $4m to build and the company adds 30% to the total cost to calculate
the selling price. Last year profits fell but this happens in a recession said the
Finance Director. Yes, I am worried. If we cannot get more orders we will have to
make some of our skilled workers redundant. All Brakker workers are members of a
trade union.
(a) What is meant by a
recession? ..................................................................................................................
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......................................[2]

Identify and explain two advantages to a business of being a public limited

company.

Advantage
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Explanation: .................................................................................................................
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Advantage
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Explanation: .................................................................................................................
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..[4]

Identify two measures a Government could use to control business activity.

Measure
1: .......................................................................................................................
Measure
2: ....................................................................................................................[2]

HTB is a public limited company. It manufactures a range of computers. HTB spends

a lot
of money on advertising as it is in a competitive market. The management believes
that the
product is the most important element in their marketing mix. To meet increasing
demand
HTB is looking to expand their business. It plans to raise extra capital by issuing
more shares.
The Finance Director has been looking at the data in Table 1.
Table 1: Selected financial data from HTB ($m)
2011 2012

Sales 400 520

Net Profit 40 75
Long Term Liabilities 200 220
Capital Employed 400 500
(a) What is meant by public limited company?
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. [2]

(c) Identify and explain two reasons why shareholders might be interested in the
accounts
of HTB.
Reason
1: ........................................................................................................................
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Explanation: .................................................................................................................
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Reason
2: ........................................................................................................................
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. [4]
(d) Identify and explain three factors that HTB should consider before issuing more
shares.

Factor
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Factor
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Factor
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. [6]