™

Cambridge IGCSE

BUSINESS STUDIES 0450/23

*3356926881*

Paper 2 Case Study October/November 2020

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Blank pages are indicated.

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1 (a) Explain two benefits and two limitations to a business of becoming a public limited company.

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Limitation 1:.......................................................................................................................

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Limitation 2:.......................................................................................................................

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(b) Explain the objectives of the following three AD stakeholder groups. Which of these objectives
are most likely to be in conflict with each other? Justify your answer.

• Shareholders
• Employees
• Customers

Shareholders:....................................................................................................................

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Employees:........................................................................................................................

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Customers:........................................................................................................................

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2 (a) Explain four responsibilities of AD’s Operations Director.

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Responsibility 2:................................................................................................................

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Responsibility 3:................................................................................................................

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(b) Using Appendix 3, consider how the changes in profitability and liquidity might affect AD. Which
change is likely to have the most effect on AD’s objective of expansion? Justify your answer.

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Liquidity:............................................................................................................................

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3 (a) Explain one economy of scale and one diseconomy of scale for AD as it grows.

Economy of scale:.............................................................................................................

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Diseconomy of scale:........................................................................................................

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(b) Consider the following three problems for AD when entering new markets in other countries.
Which problem will be the easiest to overcome? Justify your answer.

• Language differences
• Lack of knowledge of the market
• Changes in exchange rates

Language differences:.......................................................................................................

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Lack of knowledge of the market:......................................................................................

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Changes in exchange rates:..............................................................................................

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4 (a) Explain one advantage and one disadvantage to AD of selling to a niche market.

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(b) Consider how the following three changes may affect AD. Which change will have the greatest
effect on AD’s profit? Justify your answer.

• Increase in the rate of inflation

• Increase in government grants to farmers
• Decrease in tariffs on imported food

Increase in the rate of inflation:.........................................................................................

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Increase in government grants to farmers:........................................................................

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Decrease in tariffs on imported food:.................................................................................

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