0450 Business Studies March 2025 Question paper 22

1 (a) Explain four reasons why new businesses are at a greater risk of failing than existing businesses. Reason 1: Reason 2: Reason 3: Reason 4: [8] , ,

(b) Consider the following two types of business organisation that Charly could choose for her new business. Which type of business organisation should Charly choose? Justify your answer. • Sole trader • Private limited company Sole trader: Private limited company: Recommendation: [12] , ,

2 (a) Explain two functions of management for Charly when she is operating her new business. Function 1: Explanation: Function 2: Explanation: [8] , ,

(b) Using Appendix 2 and other information, consider the following two possible locations for CR’s new factory. Which location should Charly choose? Justify your answer. • Location A • Location B Location A: Location B: Recommendation: [12] , ,

3 (a) Explain one advantage and one disadvantage of CR holding inventory. Advantage: Explanation: Disadvantage: Explanation: [8] , ,

(b) Consider the advantages and disadvantages of the following three ways CR could use to sell its products. Which way should Charly choose? Justify your answer. • Selling through CR’s own shop • Selling online • Selling to a wholesaler Selling through CR’s own shop: Selling online: Selling to a wholesaler: Recommendation: [12] , ,

4 (a) Explain two cash inflows and two cash outflows that are likely to be included in CR’s cash flow forecast for its first year of trading. Cash inflow 1: Cash inflow 2: Cash outflow 1: Cash outflow 2: [8] , ,

(b) Using Appendix 3 and other information, consider the effects on CR of the decrease in taxes and the increase in interest rates in country P. Which change is likely to have the greatest effect on CR’s profit in its first year? Justify your answer. Decrease in taxes: Increase in interest rates: Conclusion: [12] , ,