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 1 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. Define ‘cost-plus pricing’. (a) … … … … [2] Define ‘marketing mix’. (b) … … … … [2] Outline two reasons why offering a high quality service might be important for Pamela’s business. (c) Reason 1: … … … … Reason 2: … … … … [4] Explain two advantages to Pamela of operating as a sole trader. (d) Advantage 1: … … Explanation: … … … … Advantage 2:… … Explanation: … … … … [6] 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. (e) … … … … … … … … … … … … [6]

1(a) Define ‘cost-plus pricing’. Award 2 marks for a full definition. Award 1 mark for a partial definition. The price is based on the cost of making a product and the addition of a fixed percentage for profit [2] OR The cost of manufacturing the product plus a (profit) mark-up [2] OR Formula e.g. [total cost / total number of units] + % mark up [2] Partial definition e.g. profit added to the cost [1] 2 First mark is for explaining what the ‘plus’ is e.g. profit. Second for reference to / description of mark-up. Price is based on / related to cost of product [0] (reordering only). 1(b) Define ‘marketing mix’. Award 2 marks for a full definition. Award 1 mark for a partial definition. All activities that go into the marketing of a product or service. These activities are often summarised as the four P’s – product, promotion, place and price [2] OR Four marketing decisions needed for the effective marketing of a product [2] OR The combination of product, price, promotion and place (distribution) that determines how a firm markets itself to its customers and potential customers [2] Partial definition e.g. (combine) price, product, promotion and place [1] OR Different strategies a business can use to help market / sell its products [1] 2 For 2 marks candidates must understand that it involves four elements AND what it is used for (e.g. help sell products / attract customers / make marketing decisions / market a product). Do not award answers such as 4P’s or 7P’s these do not define the term. 1(c) Outline two reasons why offering a high quality service might be important for Pamela’s business. Award 1 mark for each relevant reason. Award 1 mark for each relevant reference to this business. Points might include: • Increase sales / maintain sales / attract customers [k] of calendars / poster [app] • Helps maintain / increase customer loyalty [k] for this sole trader business [app] • Maintain reputation / improve brand image [k] built up over 30 years [app] • Set/maintain high prices [k] which helps as use cost- plus pricing [app] • Way to add value [k] as operates in a niche market [app] • To reduce complaints [k] for the 2 employees [app] • No need to replace faulty work [k] • Gain competitive advantage [k] which can help her business remain successful [app] Other appropriate responses should also be credited. 4 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question: • Sole trader • 30 years • Photography / posters / calendars / (fashion) magazines / pictures / camera • Niche market • Cost-plus pricing • 2 employees • Successful business Other appropriate examples in context can still be credited. Do not award 2 employees as application where answer refers to sharing profit or using profit to pay wages. 1(d) Explain two advantages to Pamela of operating as a sole trader. Award 1 mark for identification of each relevant advantage (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: • Keeps all the profit [k] from photography business [app] so has an incentive to (continue to) work hard [an] • Has complete control / makes all the decisions / does not need to consult with anyone [k] such as the 2 employees [app] so able to take decisions more quickly [an] • Own boss [k] • Freedom to choose her own holidays / schedule / work time [k] so can choose time off when the business is less busy so does not miss out on sales [an] • Able to keep (financial) information private / do not need to produce annual accounts [k] so competitors cannot use information to take away her customers / market share [an] which can help her stay successful [app] • Has close contact with customers / able to offer a more personal service [k] as it’s a niche market [app] which can help encourage customer loyalty [an] Other appropriate responses should also be credited. 6 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question: • 30 years • Photography / posters / calendars / (fashion) magazines / pictures / camera • Niche market • Cost-plus pricing • 2 employees • High-quality (service) • Successful business Other appropriate examples in context can still be credited. Do not award points about start-up as business has been operating for 30 years e.g. quick/easy to set up [0], requires little capital [0], few legal requirements [tv] 1(e) 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. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to whether operating in a niche market will help a small business have a better chance of success than operating in a mass market. Points might include: Niche market: • Able to focus more closely on customer’s needs [k] leading to customer loyalty / good customer relations [an] • Less competition [k] less pressure to lower prices / easier to attract customers [an] • May be able to set higher prices (for a high status, exclusive product) [k] so able to have high / increase profit margin [an] • Can become expert in the segment [k] • Small size of market means will not benefit from economies of scale [k] leading to higher average costs [an] • Less potential for growth / low potential demand [k] • Over dependence on single product / less able to spread risk / vulnerable to changes in consumer spending patterns [k] • Likely to attract competition if successful [k] 6 This is a general question so there are no marks for application. To access evaluation marks, candidates must identify points for both types of markets. To gain both evaluation marks, answer must clearly relate to a small business. Do not award definitions of terms as this is NAQ. Advantages of operating in one type of market can be presented as disadvantages of the other option but do not award the same point twice as mirror answers are not accepted. 1(e) Mass market • More (potential) customers/sales [k] leading to higher (potential) revenue [an] • Increased / high level of competition [k] so might have high level of customer loyalty [an] Other appropriate responses should also be credited. Justification might include: In a niche market a business can focus more closely on customer’s needs [k] leading to higher levels of customer loyalty [an]. In a mass market, there are more potential customers [k] which could mean higher revenue [an]. However, I do think a small business has a better chance of success in a niche market because it can continue to charge high prices [eval] as large companies will not see the market as worthwhile because of potentially low sales. [eval] (a) To earn marks, you need to define cost-plus pricing as setting a price based on the cost of making a product and then adding a fixed percentage for profit, or by providing a formula showing this calculation. A partial definition, such as 'profit added to the cost,' earns one mark. (b) To earn marks, you need to define the marketing mix as all activities involved in marketing a product or service, often summarized as the four P's (product, promotion, place, price), or as the four marketing decisions needed for effective marketing. A partial definition, such as listing some of the P's, earns one mark.

After identifying a gap in the soft drinks market, Jerome developed a low sugar drink. He borrowed $5000 from family and friends to start-up a business and to provide working capital. Jerome operates 1 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 10000 units. This is 200 units more than his break-even output. Jerome is considering ways to increase added value. Identify two features of a sole trader. (a) Feature 1: … … Feature 2: … … [2] Define ‘working capital’. (b) … … … … [2] Outline two ways that break-even information can help Jerome’s business. (c) Way 1: … … … … Way 2: … … … … [4] Explain how each of the following can help Jerome increase added value: (d) Change the packaging: … … … … … … Use cheaper materials: … … … … … … [6] 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. (e) … … … … … … … … … … … … [6]

1(a) Identify two features of a sole trader. Award 1 mark per feature. Points might include: • Keeps all the profit • Unlimited liability • Unincorporated / no separate legal identity • Takes all decisions / own boss • Has total ownership of business / owned by one person • Few legal requirements Other appropriate responses should also be credited. 2 Do not credit in private sector as this applies to many forms of business organisation. 1(b) Define ‘working capital’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Amount of capital available to a business to pay its day-to-day expenses/costs [2] OR The capital needed to finance the day to day running expenses (and pay the short-term debts of the business) [2] OR Current assets – current liabilities [2] Partial definition e.g. funds used to buy inventory [1] 2 Do not credit examples. 1(c) Outline two ways that break-even information can help Jerome’s business. Award 1 mark for each relevant way. Award 1 mark for each relevant reference to this business. Points might include: • He knows the level of output needed to make a profit / cover costs [k] for his (low sugar) drink [app] • Helps planning/forecasting/decision-making [k] such as how best to increase added value [app] • Help apply for finance [k] as so far only borrowed from friends and family [app] • Can see what will happen if costs/prices change [k] • Helps identify the expected level of profit/loss at different levels of output [k] • Help identify the margin of safety [k] based on the 10 000 units sold [app] Other appropriate responses should also be credited. 4 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question: • (low sugar) drinks • 200 units above break-even • 10 000 / 9800 units sold • Added value • Family and friends Other appropriate examples in context can still be credited. Do not award points such as shows costs/sales/revenue/profit on own as this is too vague. 1(d) Explain how each of the following can help Jerome increase added value: • Change the packaging • Use cheaper materials Award 1 mark for identification of each relevant point (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: Change the packaging: • This will allow Jerome to be able to increase the price [k] of his drink [app] increasing the gap between price and costs [an] • Customers can perceive the product to be worth more [k] so may be prepared to pay more for the same product [an] Use cheaper materials: • This will help lower input costs [k] when making 10 000 units [app] increasing the gap between cost and price [an] • Lower costs [k] can lead to higher profit per unit sold [an] Other appropriate responses should also be credited. 6 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question: • (low sugar) drinks • 200 units above break-even • 10 000 units sold • 9800 (break-even) Other appropriate examples in context can still be credited. 1(e) 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. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to whether free samples are the best method of sales promotion for a business to use when promoting a new (food) product. Points might include: Free samples: • Encourages potential customers to try something [k] which can persuade them to buy [an] • Trying is likely to be more effective than just telling someone about it [k] as the taste is an important part of the buying process [an] • Tempts existing customers to buy more [k] which can increase revenue [an] • Cost of providing samples [k] can decrease profit margin [an] • Way to use up inventory [k] • No guarantee people will buy [k] Other options could include: • Buy one get one free [k] would generate some income [an] • Point of sale displays [k] raise awareness of the product [an] Other appropriate responses should also be credited. Justification might include: • Encourages potential customers to try something new [k] which can persuade them to buy [an]. However, the cost of providing samples [k] can decrease the profit margin. [an] Free samples are the best method despite the cost [eval] as taste is important when buying food [eval]. 6 This is a general question so there are no marks for application. Candidates can discuss other options, but evaluation must focus on whether free samples is the best method of sales promotion to use.

SWB is in the secondary sector. It produces 150000 wooden bookcases each week using batch production. SWB sells all its output to one customer. Quality control is important. SWB has 240 1 employees, of which 100 are part-time workers. SWB’s managers use noticeboards around the factory and meetings with employees every month to help reduce communication barriers. The Operations Manager is considering introducing just-in-time inventory control to reduce the amount of waste. Define ‘secondary sector’. (a) … … … … [2] Identify two factors a business should consider when deciding whether to introduce just-in-time inventory control. (b) Factor 1: … … Factor 2: … … [2] Outline one advantage and one disadvantage to SWB of using quality control. (c) Advantage: … … … … Disadvantage: … … … … [4] Explain two possible communication barriers that might exist at SWB. (d) Communication barrier 1: … … Explanation: … … … … Communication barrier 2: … … Explanation: … … … … [6] Do you think it is a good idea for a business to have only one customer? Justify your answer. (e) … … … … … … … … … … … … [6]

1(a) Define ‘secondary sector’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Firms that process and manufacture goods from natural resources [2] OR Manufacture goods using the raw materials provided by the primary sector [2] OR Uses manufacturing to transform the raw materials generated in the primary sector into a product [2] Partial definition e.g. makes products [1] 2 Do not award examples. 1(b) Identify two factors a business should consider when deciding whether to introduce just-in-time inventory control. Award 1 mark for each factor identified. Points might include: • Reliability of suppliers / time / speed of delivery / availability of inventory at suppliers / distance from suppliers • Whether there is steady production / predictable demand • Efficient system of ordering materials / good communication systems • Whether discounts are available for bulk purchases • Cost/availability of storage space Other appropriate responses should also be credited. 2 Only award the first two responses given. 1(c) Outline one advantage and one disadvantage to SWB of using quality control. Award 1 mark for each relevant advantage/disadvantage. Award 1 mark for each relevant reference to this business. Points might include: Advantages: • Tries to eliminate faults before customer receives products / reduces likelihood that customers get faulty products [k] as only has one customer [app] • Not all workers need to be trained (as inspectors employed to check quality) [k] which is important as has 240 employees [app] Disadvantages: • Cost/need to recruit inspectors/employees to check [k] the bookcases [app] • Does not find out how/where fault occurred [k] in each batch [app] • High cost if products must be scrapped / reworked / service repeated [k] which clashes with its objective to reduce waste [app] Other appropriate responses should also be credited. 4 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words may be appropriate for this question: • 150 000 / bookcases or related words such as wood • Batch production • 240 employees / 100 or part-time employees / 140 full time • Factory • One customer • Just-in-time inventory control • Objective is to reduce waste Other appropriate examples in context can still be credited. 1(d) Explain two possible communication barriers that might exist at SWB. Award 1 mark for identification of each relevant communication barrier (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: • Technical language / jargon / different language spoken [k] so workers do not understand [an] so make wrong number of bookcases [app] • Lack of feedback / no opportunity for feedback [k] so do not know / cannot check if message received / understood (correctly) [an] so not able to help reduce waste [app] • Noise [k] so employees may not hear / mishear orders [an] in the factory [app] • Employees may not be at work [k] as 100 work part-time [app] so not able to obtain the information [an] • Too much information / detail [k] so not possible to absorb / take it all in [an] • Employees may not see/read message [k] on the noticeboard [app] • Not listening / not paying attention [k] in the meeting [app] • Wrong communication method/medium used [k] • Receiver may not trust the sender [k] Other appropriate responses should also be credited. 6 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words may be appropriate for this question: • 150 000 / bookcases or related words such as wood • Batch production • 240 employees / 100 or part-time employees / 140 full-time • Factory • Reducing waste • Meetings (every month) • Noticeboards • Just-in-time inventory control Other appropriate examples in context can still be credited. 1(e) Do you think it is a good idea for a business to have only one customer? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to whether it is a good idea for a business to have only one customer. Points might include: • Only one source of revenue / sales [k] so if the customer does not buy, the business could fail / experience cash flow issues [an] • Can focus / specialise on the needs of that customer [k] increasing customer loyalty [an] • Can help planning / know what need to order [k] reduces amount of wastage [an] • No need to advertise [k] leading to lower marketing costs [an] • Can give customer too much power to influence prices [k] • Less administration (compared to several customers) [k] Other appropriate responses should also be credited. Justification might include: Having a single customer can make it easier to focus on the needs of that customer [k] so more likely to build customer loyalty [an.] However, can spread the risk if more than one customer [k] so if one stops buying they can rely on the other customers [an]. I think having a single customer is too high a risk as the business is totally dependent on one other business for its own success [eval] as it ties its success to the other business over which it has little control. [eval] 6 This is a general question so there are no marks for application. (a) To earn 2 marks, define the secondary sector as firms that process and manufacture goods from natural resources, or use raw materials from the primary sector to make products. A partial definition, like 'makes products,' earns 1 mark. (b) To earn marks, identify two distinct factors a business should consider, such as supplier reliability, demand predictability, communication systems, bulk purchase discounts, or storage costs.

NPX is an online retail business. All orders are sent directly to customers from its warehouse. NPX employs 60 full-time workers. The Operations Manager is analysing NPX’s cash-flow forecast. An 2 extract is shown in Table 2.1. To improve productivity, the manager plans to introduce new technology that can select and pack all the items for each order. This will make 35 workers redundant. The technology will cost $40000. The manager is considering using either internal sources or external sources to finance this technology. Table 2.1 NPX’s cash-flow forecast for the period July – September 2021 ($000) September August July 140 120 100 Cash inflows 110 90 90 Cash outflows 30 30 10 Net cash flow 45 15 5 Opening balance 75 45 15 Closing balance Define ‘opening balance’. (a) … … … [2] State two ways a business can increase productivity. (b) Way 1: … Way 2: … [2] Identify four sources of internal finance a business might use. (c) Source 1: … … Source 2: … … Source 3: … … Source 4: … … [4] Explain two possible effects on NPX’s cash-flow forecast of introducing the new technology. (d) Effect 1: … … Explanation: … … … … Effect 2: … … Explanation: … … … … [6] Do you think it is better for a tertiary sector business to use full-time employees rather than part-time employees? Justify your answer. (e) … … … … … … … … … … … … [6]

2(a) Define ‘opening balance’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Amount of cash held by a business at the start of the month / trading period [2] Partial definition e.g. cash that a business has [1] 2 2(b) State two ways a business can increase productivity. Award 1 mark per way. Points might include: • Improve labour skills / (improve) training • (Increase) motivation (or examples – max 1) • Automation / replace workers with machines • Use more automation • (Introduce) new technology / (use) better machinery • Improve quality of materials / improve quality control / introduce quality assurance • Improve/introduce inventory control / kaizen / JIT / lean production • Reorganise layout of factory / eliminate bottleneck. Other appropriate responses should also be credited. 2 Only award the first two responses given. 2(c) Identify four sources of internal finance a business might use. Award 1 mark per source. Four from: • (Retained) profit • Sale of (existing) non-current assets • Sale of inventories / reduce inventory levels / sell current assets • Owner’s savings • Reduce trade receivables / ask customers to pay more quickly / reduce time given for customers to pay Other appropriate responses should also be credited. 4 Only award the first four responses given. 2(d) Explain two possible effects on NPX’s cash-flow forecast of introducing the new technology. Award 1 mark for identification of each relevant effect (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2.) Points might include: • Higher repayment costs / initial cost to buy machinery [k] which increases cash outflow [an] as need to pay $40 000 [app] • Reduce wage costs [k] as need 35 fewer employees [app] lowering cash outflow [an] • Increased training costs [k] increasing cash outflows [an] • Possible redundancy payments [k] increasing cash- outflow [an] • Sell old machinery / use an external source of finance [k] which would generate a cash inflow [an] Other appropriate responses should also be credited. 6 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question: • $40 000 • 35 / 60 full-time (employees) / redundant • Correct use of data e.g. $110 000 cash outflow in September • Online retailer • Warehouse • Selecting and packing items • To improve productivity • Internal/external source of finance Other appropriate examples in context can still be credited. For analysis answers must focus on the impact on cash outflow or cash inflow. 2(e) Do you think it is better for a tertiary sector business to use full-time employees rather than part-time employees? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to whether it is better for a tertiary sector business to employ full-time workers rather than part-time employees. Points might include: Full-time: • Consistent service / more familiar with business [k] which helps build / maintain customer relationships / better reputation [an] • Workers likely to be loyal / more committed / less likely to leave business [k] reducing recruitment costs [an] • Easy to communicate / update (compared to part-time employees) [k] leading to fewer errors / misunderstandings [an] • Need to recruit / train fewer employees [k] saving time or cost of recruitment / training [an] 6 This is a general question so there are no marks for application. Do not award answers about manufacturing/production as question about tertiary sector Do not award definitions or statements such as full-time employees work longer hours. Do not award vague statements about skills, experience, tiredness. Advantages of one method can be presented as disadvantages of the other method but do not award the same point twice as mirror answers are not accepted. Some points could be awarded as [k] or [an] but do not award same point twice. To gain both evaluation marks, response must clearly relate to a tertiary sector business. 2(e) Part-time: • Able to extend business hours [k] to maximise potential sales [an] • More flexible in hours of work [k] so able to cover absent workers / cover busy times [an] • Reduces labour costs (compared to full time) [k] as only pay employees for hours worked / when needed [an] • Provide different / more skills / increase the experience / more ideas [k] which otherwise may not be able to afford on a full-time basis [an] • (Some employees may not want full-time jobs so) may miss out on possible candidates if not offered part-time option [k] • Can attract well qualified employees who want to return to work but need to have flexible hours [k] Other appropriate responses should also be credited. Justification might include: A business only has to pay part-time employees for the hours worked [k] reducing its wages costs [an]. However, using full-time workers means they can provide a consistent service [k] leading to customer loyalty [an]. Therefore, I think full-time employees are better especially for a tertiary sector business as quality of service is likely to be an important way customers judge the business [eval] and therefore more likely to return, ensuring sales. [eval] Other appropriate responses should also be credited. (a) To earn marks, you must define 'opening balance' as the amount of cash a business has at the start of a month or trading period. A partial definition, such as 'cash that a business has,' earns one mark. (b) To earn marks, you need to state two distinct ways a business can increase productivity, such as improving labour skills, increasing motivation, using automation, introducing new technology, improving material quality, or reorganising the factory layout.

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 2 factory in country Z creating 7000 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.’ Define ‘multinational company’. (a) … … … … [2] Identify two reasons why a government might support business activity. (b) Reason 1: … … Reason 2: … … [2] Outline one advantage and one disadvantage to NSN of using just-in-time inventory control. (c) Advantage: … … … … Disadvantage: … … … … [4] Explain two ways in which an increase in economic growth might affect NSN’s decision to build a new factory in country Z. (d) Way 1: … … Explanation: … … … … Way 2: … … Explanation: … … … … [6] Do you think the ways technology has changed production methods benefits all employees? Justify your answer. (e) … … … … … … … … … … … … [6]

2(a) Define ‘multinational company’. Award 2 marks for a full definition. Award 1 mark for a partial definition. A business with factories, production, or service operations in more than one country [2] OR A business with production or service operation in another country outside its normal area of operation [2] Partial definition e.g. has businesses everywhere [1] OR works/operates in more than one country [1] 2 Do not award ‘sells in other countries’ as this could equally apply to an exporter. 2(b) Identify two reasons why a government might support business activity. Award 1 mark per reason. Points might include: • Create jobs • Increase competition / develop a market • Increase output / economic growth/GDP • Benefit society (small) businesses can grow into large/ important ones in the future • Generate new ideas • Can produce (a future source of) tax revenue Other appropriate responses should also be credited. 2 Only award the first two responses given. 2(c) Outline one advantage and one disadvantage to NSN of using just- in-time inventory control. Award 1 mark for each relevant advantage/disadvantage. Award 1 mark for each relevant reference to this business. Points might include: Advantages: • Less warehouse space [k] needed to store parts for cars [app] • Less inventory held [k] in its factories [app] • Lower storage costs [k] for the multinational company [App] • Improve working capital [k] • Improve cash flow [k] • Lower risk of obsolete/damaged stock [k] Disadvantages: • Very reliant on suppliers to deliver stock when needed / if parts not available / late it will have a major impact on production [k] as technology has changed how production is carried out [app] • May not be able to meet sudden/unexpected order [k] • Little room for mistakes (as minimal stock available for rework) [k] • Less (purchasing) economies of scale [k] Other appropriate responses should also be credited. 4 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question: • Car • Factory • Multinational company • Technology changed production Other appropriate examples in context can still be credited. 2(d) Explain two ways in which an increase in economic growth might affect NSN’s decision to build a new factory in country Z. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: • Could lead to increased demand [k] for cars [app] increasing revenue [an] • Shortage of skilled workers [k] may make it more difficult to recruit workers [an] for the 7000 jobs[app] • Employees may ask for higher wages [k] increasing costs [an] • Increased rent costs / less choice of location [k] increasing fixed costs [an] for the factory[app] • Increased competition [k] so may gain few customers / low market share [an] Other appropriate responses should also be credited. 6 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question: • Car • $80m (grant) • 7000 jobs • Just-in-time inventory control • Multinational company Other appropriate examples in context can still be credited. 2(e) Do you think the ways technology has changed production methods benefits all employees? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to whether the way technology has changed production methods has benefited all employees. Points might include: • Need for retraining / learn new skills [k] leading to opportunities for promotion [an] • Safer conditions [k] so less risk of injury [an] • The job is more repetitive [k] so lower job satisfaction [an] • Fewer workers needed / workers may lose their jobs / redundancy [k] so lower standard of living [an] • More job insecurity / fear of change [k] so could reduce motivation [an] • More skilled workers may be needed [k] leading to higher pay [an] Other appropriate responses should also be credited. Justification might include: • Less job security [k] could reduce workers motivation [an]. However, more skilled workers may be needed [k] leading to higher pay. [an] No, it will not benefit all employees as it depends on the individual worker. Those who lose their jobs will not see the benefit from technology [eval] whereas those who keep their job can benefit from learning new skills. [eval] 6 This is a general question so there are no marks for application. Note: Answer must focus on the benefit or not to the workers so do not accept points such as ‘more efficient’ or ‘better quality/ less mistakes’ unless clearly link issue to employees. Do not award work is easier/less work as this is too vague.

Cambridge O Level Business Studies · 7115

O-Level Business Studies (7115) Operations management past paper questions

Operations questions test methods of production, costs and break-even, and achieving quality, making the break-even calculation and lean-production ideas routine.

54 free questions from 2017–2021, each with its marking scheme. Open the full topical bank to filter by subtopic, paper, and year.