The Association of Business Executives

QCF
Introduction to Business
30 November 2011, Afternoon
1. Time allowed: 3 hours.
2. Read the instructions at the top of each section carefully.
The number of questions you have to answer is marked clearly at the top of each section.
Do not answer more questions than instructed.
3. The number of marks per question may vary. Marks for subdivisions of questions and the
total marks for each question are shown in brackets after the question.
4. No books, dictionaries, notes or any other written materials are allowed in this
examination.
5. Calculators, including scientic calculators, are allowed providing they are not
programmable and cannot store or recall information. Electronic dictionaries and
personal organisers are NOT allowed.
6. Candidates who break ABE Examination Regulations (Conduct during the Examinations), or
commit any misconduct, will be disqualied from the examinations.
7. Question papers must not be removed from the Examination Hall.
STRUCTURE OF PAPER: Answer BOTH sections
SECTION A: Answer ALL SIX questions
Total marks for Section A:
Q1-Q6 14 marks
each
84 marks
SECTION B: Answer ONE question
Total marks for Section B:
Either Q7 or Q8 16 marks
16 marks
TOTAL MARKS AVAILABLE FOR THE PAPER 100 marks
4IB1211 ABE 2011 J/600/0661
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5
4
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4I B1211
4IB1211 2
SECTION A
You must answer ALL SIX questions in this section.
Each question carries 14 marks.
Section A is worth 84% of the total marks available for the paper.
Q1 Software giant Microsoft is rumoured to be distributing early copies of Windows 8, the
latest version of its computer operating system. Its predecessor, Windows 7, has sold
over 175 million copies worldwide. Businesses such as Microsoft are accountable to their
shareholders and therefore continually develop new products to full their corporate objective
of prot maximisation.
(a) Identify and explain three inputs required by a business when developing new
products. (6 marks)
(b) Dene the term corporate objectives. (2 marks)
(c) Explain the difference between the short, medium and long term objectives of a
business. Give examples to support your answer. (6 marks)
(Total 14 marks)
Q2 After completing their studies, Sarah, Olu and Xiang set up a dental practice. They operated
as a partnership and all three invested equal sums of money. After three successful years,
a disagreement arose when Sarah wanted to focus upon attracting more private clients
as these were more protable for the business. After a period of disagreement, where
communications deteriorated, a partners meeting was held to nd a solution. Sarah,
however, felt that the only way forward was for her to break away from the partnership.
(a) Identify the sector of the economy in which this business operates. Explain your choice.
(2 marks)
(b) Describe three advantages of operating as a partnership for a business such as a
dentist. (6 marks)
(c) Describe three main disadvantages of partnership. (6 marks)
(Total 14 marks)
4IB1211 3 [Turn over
Q3 (a) State and explain two ways in which a company might suffer from diseconomies of
scale. Give examples from an industry of your choice. (6 marks)
(b) Explain two advantages and two disadvantages of ow production. (8 marks)
(Total 14 marks)
Q4 (a) Identify and briey explain the four elements of the marketing mix. (8 marks)
(b) Select any two of these elements and discuss why they are important to the success of
a product or service. (6 marks)
(Total 14 marks)
Q5 Mr and Mrs Chan are the owners of a Chinese restaurant. They have been considering
renovating their restaurant. They want to make it more exclusive and put up prices. They
estimate that improving the restaurant would cost $20,000 and they would need a loan.
Before going to the bank to ask for a loan, the Chans are required to produce a cash ow
forecast and budget including all costs and revenues as part of their business plan.
(a) Dene the terms xed costs, variable costs and revenue as they would appear in a
cash ow forecast. (6 marks)
(b) Identify and explain two advantages and two disadvantages to a business from
producing a budget. (8 marks)
(Total 14 marks)
Q6 (a) Dene the term labour turnover. (2 marks)
(b) Explain three problems of employee demotivation to a business. (6 marks)
(c) Other than increasing wages, identify and explain three other methods by which a
business can motivate its employees. (6 marks)
(Total 14 marks)
END OF SECTION A
MAXIMUM MARKS FOR SECTION A: 84
4IB1211 4 691103
SECTION B
You must answer ONE question in this section. DO NOT answer BOTH Q7 AND Q8.
Each question carries 16 marks.
Section B is worth 16% of the total marks available for the paper.
EITHER:
Q7 (a) Explain what is meant by the term exchange rate and give an example. (4 marks)
(b) Explain how a rise in the value of the Pound Sterling might affect a UK business
that imports and exports goods and services. (6 marks)
(c) The business environment is complex and is made up of many inuences.
Explain three non-economic inuences upon a business of your choice. (6 marks)
(Total 16 marks)
OR:
Q8 (a) Explain what is meant by the term interest rate and give an example. (4 marks)
(b) Explain how changes in interest rates might affect the prots of a business. (6 marks)
(c) Explain how rms can use PESTEL analysis as part of a business strategy. (6 marks)
(Total 16 marks)
END OF SECTION B
MAXIMUM MARKS FOR SECTION B: 16
TOTAL MAXIMUM MARKS: 100
END OF QUESTION PAPER