Paper 1 STYLE

0450
Business Studies

Student Name:

____________________

Business Studies Department -AGS Page 1

Question 1:

Gowri plans to start her own business using her own savings. She wants to produce fashion
clothes for women. She is a very good clothes designer but she does not like stitching
clothes together. Two friends have offered to help Gowri. Abha is an experienced material
cutter she can cuts lengths of material for clothes with very little wastage. Aditi is quick at
sewing.

a) What is meant by ‘business’? [2]

………………………………………………………………………………………………
………………………………………………………………………………………………

b) Identify two factors of production that Gowri will need for her new business. [2]

Factor 1: ………………………………………………………………………….

Factor 2: …………………………………………………………………………..

c) Identify and explain two possible opportunity costs that Gowri may have from her
decision to start her own business. [4]

Opportunity cost 1:
………………………………………………………………………………………………
………………………………………………………………………………………………

Explanation:
………………………………………………………………………………………………
………………………………………………………………………………………………

Opportunity cost 2:
………………………………………………………………………………………………
………………………………………………………………………………………………

Explanation:
………………………………………………………………………………………………
………………………………………………………………………………………………

Business Studies Department -AGS Page 2

 d) Identify and explain one advantage and one disadvantage to Gowri’s business of using
division of labor in making clothes. [6]

Advantage: ………………………………………………………………………………

Explanation :
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

Disadvantage: ………………………………………………………………………………

Explanation :
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

e) Do you think that Gowri’s business will be able to sell all the clothes that it makes?
Justify your answer. [6]
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

Business Studies Department -AGS Page 3

 Question 2:

Mohammed owns a bakery. He makes bread and cakes. He employs three workers
who help him mix the dough for the bread and cakes put the dough into tins, bake
the bread and cakes and serve customers. Mohammed has calculated that the
‘added value’ of his business is low. His customers complain when he tries to put up
prices. ‘We can buy the same bread and cakes at lower prices’ they tell him.

a) What is meant by ‘added value’? [2]

…………………………………………………………………………………………
…………………………………………………………………………………………
b) Mohammed has just bought a new oven. Explain ‘opportunity cost’ to
Mohammed.[2]
…………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………..

c) Identify and explain two benefits to Mohammed’s business of all of his workers being
able to do all of the jobs in the bakery. [4]
Benefit 1
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Benefit 2
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 4

 d) Identify and explain two ways in which Mohammed could increase the value added
of his bakery business. [6]

Way 1:
…………………………………………………………………………………………
…………………………………………………………………………………………

Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Way 2:
…………………………………………………………………………………………
…………………………………………………………………………………………

Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

e) A friend told Mohammed ‘Your business would be more successful if you only
served in the shop and let your workers make the bread and cakes’. Do you agree?
Justify your answer.
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 5

 Question 3:

1 Ade’s Engineering Company (AEC) makes parts for cars and trucks. These
are sold to car manufacturers in many countries. The parts include metal brake
components and rubber seals to fit around windows. AEC operates in Country
X, which, until a few years ago, had an economy dominated by agriculture and
coal mining. Over the last 20 years the relative importance of the primary sector
has declined. To be successful AEC requires natural resources to make car parts
and the services provided by other businesses. Consumer incomes are rising
rapidly in Country X.

a) What is meant by ‘primary sector’? [2]

……………………………………………………………………………………
……………………………………………………………………………………
b) Identify two examples of services that a business such as AEC requires. [2]

Example 1:
………………………………………………………………………….

Example 2:
…………………………………………………………………….……

c) Identify and explain two reasons why a business such as AEC could not be
successful without other firms providing natural resources (4)

Reason 1:
……………………………………………………………………………………

Explanation :
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

Reason 2:
……………………………………………………………………………………

Explanation :
……………………………………………………………………………………

Business Studies Department -AGS Page 6

 ……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

d) Identify and explain two likely reasons why the relative importance of the
primary sector of Country X’s economy has declined. [6]

Reason 1:
……………………………………………………………………………………

Explanation :
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

Reason 2:
……………………………………………………………………………………
Explanation :
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

e) A Government minister in Country X recently said: ‘The secondary sector of

industry will always be more important than the tertiary sector to our economy.’
Do you agree with this view? Justify your answer. [6]
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

Business Studies Department -AGS Page 7

 Question 4:

The Government of Country Y owns and controls many businesses. ‘The

public sector always produces goods and services more efficiently than
privately owned businesses’, a Government minister recently said. Other
ministers disagree and want to privatize many state-owned businesses. The
private sector businesses in Country Y produce 55 per cent of total output –
mainly in services such as transport, tourism and finance. The secondary
sector of industry produces 35 per cent of total output.

a) What is meant by ‘public sector’? [2]

…………………………………………………………………………………
…………………………………………………………………………………
b) Identify two industries in the secondary sector. [2]
Industry 1:
………………………………………………………………………………

Industry 2:
………………………………………………………………………………
c) Identify and explain two reasons why the tertiary sector of industry is
becoming more important in most economies. [4]
Reason 1:
………………………………………………………………………………
Explanation :
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………

Reason 2:
…………………………………………………………………………………
Explanation :
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
………………………………………………………………………………

Business Studies Department -AGS Page 8

 d) Identify and explain two possible reasons why some ministers want to
privatize some businesses in the public sector. [6]
Reason 1:
……………………………………………………………………………………

Explanation :
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

Reason 2:
……………………………………………………………………………………
Explanation :
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

e) Do you agree with the Government minister’s view that: ‘The public sector
always produces goods and services more efficiently than privately owned
businesses’? Justify your answer. . [6]
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
………………………………………………………………………………...

Business Studies Department -AGS Page 9

 Question 5:
Sabrina was bored with her job in a clothing factory. Her main passion was
fashion and she had always been good at selling since helping her father on his
market stall. She encouraged her parents and some friends to invest in her idea
for opening a shop selling good quality ladies clothes. Sabrina, as the
entrepreneur behind the idea, was prepared to risk her own savings too. She had
some exciting ideas for the shop layout and presentation of clothes.

a) What is meant by ‘entrepreneur’? [2]

………………………………………………………………………………………
………………………………………………………………………………………
b) Identify two benefits to Sabrina of starting her own business. [2]
Benefit 1:
………………………………………………………………………………
Benefit 2:
………………………………………………………………………………

c) Identify and explain two characteristics that Sabrina seems to have that might lead
to success of her business. [4]
Characteristic 1:
………………………………………………………………………………………
Explanation:
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
Characteristic 2:
………………………………………………………………………………………
Explanation:
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
d) Identify and explain two benefits to Sabrina of keeping her business small. [6]
Benefit 1:
………………………………………………………………………………………
Explanation:
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………

Business Studies Department -AGS Page 10

 Benefit 2:
………………………………………………………………………………………
Explanation:
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………

e) ‘I think I should draw up a business plan before I start’, said Sabrina to a friend. ‘I
think it would be best if you set the business up now – you don’t need a plan as
the shop will be so small’, said her friend. Which view do you agree with? Justify
your answer. [6]
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………

Business Studies Department -AGS Page 11

 Question 6:
TelCom owns a phone network and provides phone network services to
many consumers. The business does not manufacture phones and it does not
own retail stores selling them. Senior managers at TelCom are considering a
takeover of either a phone manufacturer or a chain of phone shops. TelCom
employs 4000 workers and, last year, recorded total sales of $300 million. In
contrast, the largest manufacturer of mobile phones, PhonTec, has 450
workers and recorded total sales last year of $1200 million.

a) What is meant by ‘takeover’? [2]

…………………………………………………………………………………
…………………………………………………………………………………

b) Identify two other ways a business might grow apart from takeovers. [2]
Way 1:
…………………………………………………………………………………
…………………………………………………………………………………

Way 2:
…………………………………………………………………………………
…………………………………………………………………………………

c) Identify and explain two reasons why external groups would be interested in
measuring the size of businesses such as TelCom. [4]
Reason 1:
…………………………………………………………………………………

Explanation:
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………

Reason 2:
…………………………………………………………………………………
Explanation:
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………

Business Studies Department -AGS Page 12

 d) Identify and explain two possible reasons why senior managers at TelCom
want to expand the business (6)
Reason 1:
…………………………………………………………………………………
…………………………………………………………………………………
Explanation :
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………

Reason 2:
…………………………………………………………………………………
…………………………………………………………………………………
Explanation :
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………

e) How should TelCom expand –taking over a phone manufacture or a chain of

shops selling mobile phones? Justify your answer. (6)
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………

Business Studies Department -AGS Page 13

 Question 7:

When jameel lost his job with a fruit and vegetable shop that closed down he
decided to open his own store .He had good contacts with suppliers. They
said they would give him one month’s credit before he paid for supplies
.Jameel had $5000 in savings to invest in the shop .He thought this would be
sufficient to start the business. He is an independent man –he never liked
taking the manager’s orders in the food shop! He wanted to operate his new
business as a sole trader

a) What is meant by sole trader ?(2)

………………………………………………………………………………………………
………………………………………………………………………………………………
b) Identify two other types of business organization (2)
………………………………………………………………………………………………
………………………………………………………………………………………………
c) Identify and explain two benefits to jameel of operating his business as a sole trader (4)
Benefit 1:
………………………………………………………………………………………………
………………………………………………………………………………………………

Explanation:
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

Benefit 2:
………………………………………………………………………………………………
………………………………………………………………………………………………

Explanation:
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

Business Studies Department -AGS Page 14

 d) Identify and explain two draw backs to jameel of operating his business as a sole trader
(6)
Drawback 1:
………………………………………………………………………………………………
………………………………………………………………………………………………

Explanation:
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
Drawback 2:
………………………………………………………………………………………………
………………………………………………………………………………………………

Explanation:
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

e) Do you think Jameel should open new branches of his business by selling franchises?
Justify your answer (6)

………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

Business Studies Department -AGS Page 15

 Question 8:
Sunita and her partner Sunil decided to start a business selling flowers called S and
S Blooms. They agreed on the business objectives they would set. There are several
other shops in their town and there is much competition. Sunita and Sunil had very
little cash to start their shop. However, five years after being set up, it is still open.
Business objectives have changed. There are plans to open two or three more shops
– perhaps by taking over some of their competitors. The business now employs five
workers and uses several local flower growers as suppliers.

a) What is meant by ‘business objective’? [2]

………………………………………………………………………………………………
………………………………………………………………………………………………

b) Identify two of S and S Blooms’ stakeholder groups, other than workers and
suppliers. [2]

Stakeholder 1:
…………………………………………………………………………………………
Stakeholder 2:
…………………………………………………………………………………………

c) Identify and explain two likely business objectives for S and S Blooms when the
business was first established. [4]
Objective 1:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………

Objective 2:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 16

 d) Identify and explain two likely reasons why Sunita and Sunil have changed the
business objectives of S and S Blooms. [6]
Reason 1:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Reason 2:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

e) Do you think that setting business objectives for S and S Blooms will make sure that
the business is successful? Justify your answer (6)

…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 17

 Question 9:

Joe owns a business which produces wooden furniture .He employs 20

workers in the operations department and three workers in the offices .Joe
pays all his workers by time rate but he is thinking of changing to piece rate
.he has a high labor turnover from the factory as his workers are not well
motivated.
a) What is meant by piece rate? (2)
…………………………………………………………………………………………
…………………………………………………………………………………………

b) Identify two examples of fringe benefits Joe could give to his employees. (2)
Example 1:
…………………………………………………………………………………………
…………………………………………………………………………………………

Example………………………………………………………………………………
…………………………………………………………………………………………

c) Identify and explain two reasons why employees might leave their job at the
furniture company? (4)

Reason 1:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Reason 2:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 18

 …………………………………………………………………………………………
…………………………………………………………………………………………

d) Identify and explain 2 ways Joe can improve job satisfaction of his employees.
(6)
Way 1:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Way 2:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

e) Do you think piece rate is suitable method of payment for all Joe’s employees?
(6)
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 19

Question 10:

Sasha is a hotel manager She has 30 employees working for her in the following
departments: kitchen; restaurant; hotel reception; housekeeping (rooms) Sasha wants to
increase the motivation of the employees and is thinking of introducing a bonus She thinks
it will make the hotel more profitable. "

a) What is meant by bonus ?(2)

…………………………………………………………………………………………
……………………………………………………………………

b) Identify two reasons why people work ?(2)

Reason 1…………………………………………………………
Reason 2: ………………………………………………………..

c) Identify and explain two levels in Maslow’s hierarchy of needs experienced by the
hotel workers.(4)

Level 1:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
Level 2:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 20

 d) Identify and explain two benefits to Sasha of a having a well-motivated employees
(6)

Benefit 1:
…………………………………………………………………………………………
………………………………………………………………………..………………

Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Benefit 2:
…………………………………………………………………………………………
…………………………………………………………………………………………
Explanation:
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

e) Do you think increasing the wage rate is the best way to increase the motivating of
the employees at the hotel ?Justify your answer (6)
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………….……………
…………………………………………………………………………………………
………………………………………………………………………………..………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Business Studies Department -AGS Page 21