Business Studies P1 M4

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1 Terfil Enterprises organises special events such as concerts and music festivals.

The founder,
Ceri Terfil, converted the business into a private limited company in 2004. ‘We are in a niche
market’ said Ceri ‘and have built a reputation for efficiency and low prices. I would like the
business to continue to grow in the future’.

(a) What is meant by the term ‘niche market’? [2]

(b) Identify two objectives that Ceri might have had for his business when he started it. [2]

Objective 1:

Objective 2:

(c) Identify and explain two advantages to Ceri of converting the business to a private limited
company. [4]

Advantage 1:

Explanation:

Advantage 2:

Explanation:

(d) Identify and explain three potential problems to Terfil Enterprises of continuing to grow in
the future. [6]

Problem 1:

Explanation:

Problem 2:

Explanation:

Problem 3:

Explanation:

(e) How important are low prices in determining the long term success of Terfil Enterprises?

Justify your answer. [6]


2 Telefax is a business that manufactures a range of electronic products. Table 1 shows selected
information from its latest Balance Sheet.

Table 1: Balance Sheet Telefax as at 30 June

$m
2021 2022
Fixed Cost 30 40
Current Assets 16 24
Current Liabilities 16 20
Net Assets 30 44

Financed By:
Long-term Liability 10 20
Shareholders Fund 20 24
Capital Employed 30 44

(a) What is meant by the term ‘fixed assets’? [2]

(b) Identify two examples of Telefax’s current liabilities. [2]

Example 1:

Example 2:

(c) Identify and explain two reasons why most businesses have debtors. [4]

Reason 1:

Explanation:

Reason 2:

Explanation:

(d) Identify and explain three reasons why Telefax’s bank manager might want to see the
accounts of the business. [6]

Reason 1:

Explanation:

Reason 2:

Explanation:
Reason 3:

Explanation:

(e) Do you think that the financial position of Telefax has improved in 2010? Justify your
answer. [6]

3 Kemptown Fried Chicken is a chain of fast food restaurants. The business is unsuccessful
because it is badly managed. There is no organizational structure. Job tasks and roles are unclear.
The workers are demotivated and low paid. Communication in the business is poor and meetings
are rarely held because the management thinks they are ‘a non-productive use of time’.

(a) What is meant by the term ‘organizational structure’? [2]

(b) What is meant by ‘communication in the business is poor’? [2]

(c) Identify and explain two advantages of delegating tasks in an organization. [4]

Advantage 1:

Explanation:

Advantage 2:

Explanation:

(d) Identify and explain three reasons why meetings between managers and workers can benefit
the business. [6]

Reason 1:

Explanation:

Reason 2:

Explanation:

Reason 3:

Explanation:

(e) How effective is money in motivating workers? Justify your answer. [6]
4 Stilvan always wanted to run his own business. When he left school he borrowed money from
his parents to start a gardening business. The business name is Stilvan Grass Cutters. Stilvan
bought some equipment to cut grass and trees. Stilvan delivers leaflets to people’s homes to
promote his business.

Table 1 shows data for a typical week for Stilvan’s business.

Table 1

Average price per customer $15

Variable cost per job $7

Weekly overheads $320

Number of customers 50

Demand for his services is seasonal and this causes problems for Stilvan.

(a) Identify two objectives that Stilvan might have had when he set up his business. [2]

Objective 1:

Objective 2:

(b) Identify two advantages of using leaflets as a method of promotion. [2]

Advantage 1:

Advantage 2:

(c) Using the information given in Table 1 draws a break-even chart for Stilvan’s business. [4]
(d) Identify and explain three problems that seasonal demand can cause for Stilvan’s business.
[6]

Problem 1:

Explanation:

Problem 2:

Explanation:

Problem 3:

Explanation:

(e) Stilvan wants to make his business more profitable. Recommend ways in which this could be
achieved. Justify your answer. [6]

5 Cycles4u make a wide range of bicycles. The business is ‘product orientated’ as it believes that
good products will sell easily. The business does not use any market research to help in decision
making. However, Cycles4u does spend a lot of money on promoting its products to the target
markets.

(a) What is meant by the term ‘product orientated’? [2]

(b) What is meant by the term ‘target market’? [2]

(c) Identify and explain two possible disadvantages to a business of having a wide product range.
[4]

Disadvantage 1:

Explanation:

Disadvantage 2:

Explanation:
(d) Identify and explain three channels of distribution that Cycles4u could use to help launch a
new range of bicycles. [6]

Channel 1:

Explanation:

Channel 2:

Explanation:

Channel 3:

Explanation:

(e) Do you think that Cycles4u should use market research in the future? Justify your answer. [6]

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