12 marks
Define ‘sole trader’.
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Types of Businesses (Cambridge (CIE) IGCSE Business)
Exam Questions
2 hours23 questions22 marks
Define ‘public sector’.
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32 marks
Identify two features of a sole trader.
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42 marks
Identify two features of a public limited company.
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52 marks
Define ‘public limited company’.
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64 marks
Case Study
DNG provides electricity to 16 million customers. It is a limited company which means DNG’s shareholders benefit from limited liability. DNG is planning to stop using coal to produce its electricity. Pressure groups had an influence on this decision. The Managing Director knows there will be an opportunity cost to making this change. She is considering the best way to communicate this important information to DNG’s 6500 employees.
Outline how having limited liability might benefit DNG’s shareholders.
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74 marks
Case Study
TYA is a limited company which manufactures 300 000 cars a year. It has 600 employees. TYA has high fixed costs. The Managing Director wants to improve efficiency in the factory. He said: ‘Globalisation is changing how businesses operate. Many manufacturing businesses are considering whether to relocate their operations to other countries.’
Outline, with reference to TYA, the difference between a limited company and an unincorporated business.
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82 marks
Define ‘unincorporated business’.
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94 marks
Case Study
DSY is a private limited company. It produces washing machines and cleaning equipment. The Managing Director wants DSY to expand into a different market. He plans to spend $2bn on developing electric cars. There is a lot of competition in the electric car market. This market is growing rapidly. A leading pressure group has identified the environmental problems of non-electric cars. The Managing Director knows that important decisions about the method of production and the new car’s brand image still have to be made.
Outline two advantages to DSY of being a private limited company.
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16 marks
Do you think a joint venture is the best way for a business to enter a new market in another country? Justify your answer.
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26 marks
Case Study
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 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.
Explain two advantages to Pamela of operating as a sole trader.
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36 marks
Do you think a partnership is the best form of business organisation for a new business? Justify your answer.
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46 marks
Case Study
EQR owns 150 cafes. It sells a range of drinks including coffee. Being ethical is important to EQR. The Managing Director has been analysing EQR’s statement of financial position. The business has the objective to increase its 6% market share. The Managing Director plans to grow the business by selling franchises for $85 000. She is also considering ways to increase added value.
Explain two advantages to EQR of selling franchises as a way to grow its business.
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56 marks
Case Study
Following the end of a recession in country X, Beena wants to start up a hairdressing business. One option is to purchase a franchise from an established hairdressing business. Beena has $800 in savings and knows having enough working capital will be important for her business. She plans to use market research to help her decision-making. Beena knows there are many ways to segment a market.
Explain two possible advantages to Beena of buying a franchise.
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68 marks
Explain one advantage and one disadvantage to Tokumbo of being a sole trader.
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76 marks
Case Study
Gloria is a sole trader. Her business provides house-cleaning services. Gloria uses telephone calls to communicate with her 4 employees. She wants to expand the business by offering a repair service. Gloria plans to carry out some market research. She has been told producing a business plan can help to reduce risk. Gloria would also like to reduce her workload and is considering taking on a business partner.
Explain two factors Gloria should consider when deciding whether to take on a business partner.
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86 marks
Case Study
LMA is a family-owned restaurant. The business was started 20 years ago and has remained small. LMA is a partnership. The partners are considering whether LMA should become a private limited company. The Finance Manager is analysing LMA’s cash-flow forecast. An extract is shown below.
Extract from LMA’s cash-flow forecast 2023 ($000) | |||
July | August | September | |
Cash inflow | 420 | 300 | 330 |
Cash outflow | 410 | 320 | 360 |
Net cash flow | X | (20) | (30) |
Opening balance | 60 | 70 | 50 |
Closing balance | 70 | 50 | Y |
Explain one advantage and one disadvantage to LMA of becoming a private limited company.
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98 marks
Explain two advantages and two disadvantages of PH being a public limited company.
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108 marks
Explain two possible reasons why Aisha set up CC as a business partnership.
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112 marks
Consider the advantages and disadvantages of buying the Beautywise franchise. Do you think Gemma was right to buy the franchise? Justify your answer.
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212 marks
Consider the advantages and disadvantages of two suitable types of business organisation for PPE. Which do you think is the best one if PPE grows? Justify your answer.
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312 marks
Consider the advantages and disadvantages of starting up ET as either an unincorporated business or as a limited company. Which should Zane and Zaara choose? Justify your answer.
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412 marks
Explain why the following three factors are important to Bethany when choosing a business partner:
Knowledge of new technology
Experience in managing a health spa
Capital to invest.
Refer to the following insert when answering the question
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