0450 Business Studies November 2024 Question paper 12

Avtar owns a car repair business which operates in the private sector. It is a small business with 2 full-time employees. Avtar wants to find out the best way for a business to increase added value. 1 Avtar’s business needs finance for many reasons. Avtar wants to know how an economic recession might affect his business. Identify two features of a private sector business. (a) Feature 1: Feature 2: [2] Identify two reasons why a business might remain small. (b) Reason 1: Reason 2: [2] Outline one reason why Avtar might need each of the following types of finance: (c) Short-term finance: Long-term finance: [4] , , Explain two ways an economic recession might affect Avtar’s business. (d) Way 1: Explanation: Way 2: Explanation: [6] Explain two ways a business can increase added value. Which is likely to be the best way for a business to use? Justify your answer. (e) [6] , ,

SNT is an ethical business. It manufactures a range of soft drinks using batch production. In 2023 SNT produced 300000 bottles of soft drinks each week. There are many factors which affect how 2 much inventory the business should hold. SNT’s directors are planning to expand the business into new markets in other countries by forming a joint venture. They are considering licensing as another way to help overcome the potential problems of entering these new markets. Define ‘licensing’. (a) [2] Identify two factors which might affect how much inventory a business should hold. (b) Factor 1: Factor 2: [2] Outline two benefits to SNT of using batch production. (c) Benefit 1: Benefit 2: [4] , , Explain one advantage and one disadvantage to SNT of forming a joint venture when entering new markets in other countries. (d) Advantage: Explanation: Disadvantage: Explanation: [6] Do you think the advantages to a business of being ethical are greater than the disadvantages? Justify your answer. (e) [6] , ,

HRO manufactures children’s toys. It is a private limited company. The main objective of HRO’s shareholders is to increase profit. This might conflict with the objectives of other stakeholder groups, 3 including its 30 suppliers. HRO’s Managing Director knows that market research can help when making marketing decisions. The Finance Director is preparing HRO’s statement of financial position. An extract is shown in Table 3.1. Table 3.1 Extract from HRO’s statement of financial position at 30 June 2024 ($000s) 480 Non-current assets 250 Current assets 200 Current liabilities 300 Non-current liabilities Define ‘non-current assets’. (a) [2] Calculate HRO’s current ratio. Show your working. (b) Working: Final answer: [2] State whether each of the following would be classified as a current asset or as a current liability. (c) Trade receivables: Trade payables: Overdraft: Inventory: [4] , , Explain one way the objective of HRO’s shareholders to increase profit might conflict with the objectives of each of the following stakeholder groups: (d) Customers: Explanation: Suppliers: Explanation: [6] Do you think the advantages to a business of using primary market research are greater than the disadvantages? Justify your answer. (e) [6] , ,

TLA is a large hotel with 200 rooms and 3000 employees. Many of these employees are members of a trade union. The Managing Director is planning to expand the business but is worried about 4 possible diseconomies of scale as TLA grows. The Human Resources Director has been asked to recruit 2 new managers. She knows it is important that all managers use the most appropriate leadership style. All of TLA’s new employees receive induction training. Identify one advantage and one disadvantage to employees of being members of a trade union. (a) Advantage: Disadvantage: [2] Identify one benefit and one limitation of a business using induction training. (b) Benefit: Limitation: [2] Outline one reason why each of the following stages of recruitment might be important for TLA: (c) Job description: Job advertisement: [4] , , Explain two possible diseconomies of scale as TLA grows. (d) Diseconomy of scale 1: Explanation: Diseconomy of scale 2: Explanation: [6] Do you think the advantages of managers using a democratic leadership style are greater than the disadvantages for a business? Justify your answer. (e) [6] , ,