™

Cambridge IGCSE

BUSINESS STUDIES 0450/21

*0918967897*

Paper 2 Case Study May/June 2022

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. Any blank pages are indicated.

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1 (a) Explain four reasons why governments might support business start-ups.

Reason 1: .........................................................................................................................
By the business supporting start up businesses,the
...........................................................................................................................................
size of the business will get eventually larger due to
expansion so more employees will be hired so it
...........................................................................................................................................
reduces the unemployment rate.
...........................................................................................................................................

Reason 2: .........................................................................................................................
Due to low unemployment rate,the rate of gdp will increase
...........................................................................................................................................
and the economy of the country will be high so it can
attract multinational companies to operate in it’s country
...........................................................................................................................................
which creates more jobs for the employees.
...........................................................................................................................................

To lower the unemployment rate,due to the help of the

Reason 3: .........................................................................................................................
governments to the start up businesses,it will reduce the rate
...........................................................................................................................................
business failure so only fewer employees will get redundact
by the business,
...........................................................................................................................................

...........................................................................................................................................
By supporting the start up businesses,it might lead the
Reason 4: .........................................................................................................................
business to be successful and create competition in the
...........................................................................................................................................
market. Therefore due to having more start up
businesses,customers will have more choice with cheaper
...........................................................................................................................................
costs.
........................................................................................................................................... [8]
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(b) Consider the benefits to Yasin of the two sections of his business plan shown in Appendix 1.
Which section do you think helped him most when starting up his business? Justify your answer.

Market research: Due to market research,Yashin can now add new

...............................................................................................................
recipes and change ingredients for future outputs.
...........................................................................................................................................
According to the questionnaire,85% wants their
products using local suppliers so Yahsin can now start
...........................................................................................................................................
planning of purchasing it’s ingredients from the local
suppliers to fullfil it’s customer want. Moreover Yashin
...........................................................................................................................................
is also planning to add cake Text in it’s menu as well since
...........................................................................................................................................
there is a demand of 70% for cake. Lastly cakes are
eaten by all age group so Yashin can start making more
...........................................................................................................................................
items to add in the menu to attract all age group to
increase the sales revenue.
...........................................................................................................................................

...........................................................................................................................................

Resources: .......................................................................................................................
In order to start up the business,it required $10,000 for ingredients,$3000 for
...........................................................................................................................................

...........................................................................................................................................
start up supplies and rental cost.Due to those resources,Yashin can consider
...........................................................................................................................................
of whether to start up the business or not, due to the amount of saving he
...........................................................................................................................................
has . Moreover due to knowing the cost of the business,Yashin can start
...........................................................................................................................................
planning which fincial method to use such as bank loan and so on.
...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................
By Yashin knowing the resources ,he can consider of whether to start up the business
or ...........................................................................................................................................
not and even if he start up it’s business , he will know which finical source to
use .Therefore it might lead to lower chance of business failure due to having
...........................................................................................................................................
enough resources and a good planning .
On the other hand due to market research,Yashin will know the customer needs or
...........................................................................................................................................
demand , which he can add new items such as cake or using local suppliers to get
customer satisfaction . To conclude, resources helped him the most when starting up
...........................................................................................................................................
the business since he will know how much it will costI to start up the business and
...........................................................................................................................................
without resouces the business might lead to business failure due to insolvency.
10
........................................................................................................................................... [12]
But sample results size was small so

may not be accurate so Yasmin right make

bad decisions when starting the bakery [Turn over
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2 (a) Explain one benefit and one limitation to Yasin of using a break-even chart.

can be used to take reference

Benefit: .............................................................................................................................

shows break even output

...........................................................................................................................................

Explanation: ......................................................................................................................
Due to having a break even chart,Yasin will be able to find the break
...........................................................................................................................................

even point with how much items are required to sell to hit the break
...........................................................................................................................................

...........................................................................................................................................
even point. Due to knowing the amount of items to produce,Yasin
...........................................................................................................................................
can prevent from holding high inventory or low inventory.
...........................................................................................................................................

Limitation:I .........................................................................................................................
am not sure about this,have to read about break even chart again

Fixed and variable cost may change

...........................................................................................................................................

Explanation: ......................................................................................................................

ingredients cost may increase or

...........................................................................................................................................

decrease while the rent or equipment

...........................................................................................................................................

depreciation will change over time

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [8]
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(b) Consider the following two ways MB could achieve lean production. Which is the best way for
Yasin to choose? Justify your answer.
• Kaizen.
• Just-in-time inventory control.

I
By using Kaizen ,employees get involved in the business which
Kaizen: ..............................................................................................................................
they wil be able to put their ideas and suggestion to improve on the
...........................................................................................................................................
production. Moreover using kaizen reduces less errors and mistakes
so it will increase the efficiency of the business and cusomers will
...........................................................................................................................................
be gain satsifaction as well due to good quality products. However
...........................................................................................................................................
if the employees don’t have solution or suggestions,it can delay the
work of the business and lead to low productivity.
...........................................................................................................................................

Define Kaizer
...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Define JIT
Just-in-time inventory control: ...........................................................................................

...........................................................................................................................................
Due to using just in time inventory control,it will reduce the rental cost
of storgae since it doesn’t required to store the inventories. Moreover it
...........................................................................................................................................
prevents its inventories from getting damaged or foul. Therefore
...........................................................................................................................................
buisness will be able to serve freely baked cakes and bread to customers
to increase customer satisfaction. However if the business run out of it’s
...........................................................................................................................................
inventories,it will take time to store back the inventory in which Mb will
lose its loyal customers due to out of stock.
...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................
By using Kaizen,Yashin can eliminate errors and mistakes
Recommendation: ............................................................................................................
for better quality but the best way for Yasin to choose its just
...........................................................................................................................................
in time inventory control,since he wants it’s customer to
serve freshly baked cakes and bread fto gain customer
...........................................................................................................................................
satisfaction.
insufficient justification for Kaizer 2 JI T
...........................................................................................................................................

Kaizer save time between diff tasks

...........................................................................................................................................

performed which speed up bakingleadingto

...........................................................................................................................................

more output of bread This increase revenue

...........................................................................................................................................

and reduce costs

...........................................................................................................................................

Due to limited funds JIT is suitable as

........................................................................................................................................... [12] 6
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fresh each day as small bakery will not have

to
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3 (a) Explain four ways Yasin can advertise MB’s products.

Yashin can advertise it’s product on social media where a

Way 1: ...............................................................................................................................
lot of users are active on there so it will increase customer
...........................................................................................................................................
awarness to the brand.
...........................................................................................................................................

...........................................................................................................................................

Yanshin can advertise by saying ,the business will be using new

Way 2: ...............................................................................................................................
packaging made from sustainable sources. Due to this business will
...........................................................................................................................................
be able to attract customers who are considered of pollution and
business will get a good brand image for following the ethical
...........................................................................................................................................
issue.
...........................................................................................................................................

Since Yashin business is only know for it’s bread,the business can
Way 3: ...............................................................................................................................
start advertising about the new cake which will increase the awarness
c...........................................................................................................................................
of the brand and can attract more customers and increase sales since
method 70% of customers want to purchase cakes as well from a bakery.
...........................................................................................................................................

...........................................................................................................................................
By giving leaflets to the customers which contain
Way 4: ...............................................................................................................................
the information about new cake and packaging
along with the price in to get more customer
...........................................................................................................................................
awarness.
...........................................................................................................................................

........................................................................................................................................... [8] 6
methods ofadvertisement
1 Posters
2 Local newspapers
3 Word of Mouth

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(b) Consider the two options outlined in Appendix 2. Which option should Yasin choose? Justify
your answer using appropriate calculations.

Option 1: By choosing the option one,the sales of the business will be higher
...........................................................................................................................
since the business will have to sell 3900 more items than in option
...........................................................................................................................................
2 .Moreover the variable cost of per unit is $0.5 so it will cost $2000
for all the 4000 cupcakes. The break event point of option one will be
...........................................................................................................................................
$2000,Moreover the cost per cup cake is $2 so if the business sold out
it’s all the cupcakes,business will get sales revenue of
...........................................................................................................................................
$8000 .Therefore business will get $6000 for profit.
...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

By choosing option 2,it will only have to sell 100

Option 2: ...........................................................................................................................
cakes with varibale cost of $10 per unit so it will cost
...........................................................................................................................................
$1000 to make all 100 cakes. Therefore the break even
point will be $1000.In addition the cost per unit cake
...........................................................................................................................................
is $60 per cake so the business will get total revnue of
$6000 and business will get $5ooo for profit.
...........................................................................................................................................

Total cost is 4000 month so profit

...........................................................................................................................................

will be 2000 month

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................
In conclusion,Yasin should use option 1 since it has higher
Recommendation: ............................................................................................................
sales revenue with $1ooo profit than option 2.
as well as higher margin of safety
...........................................................................................................................................

...........................................................................................................................................

Need to compare option 2 as well

...........................................................................................................................................

option 2 have higher predictedgrowth

...........................................................................................................................................

of sales But this is only a forecast and

...........................................................................................................................................

it may not reallyhappen It is better to

...........................................................................................................................................

choose the option with certain higher

........................................................................................................................................... [12]

profit than the possibility of higher sales

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4 (a) Explain one advantage and one disadvantage of Yasin using a democratic leadership style.

It motivate employees
Advantage: .......................................................................................................................

...........................................................................................................................................
Due to using democratic leadership,Yasin employees will be able
Explanation: ...................................................................................................................... to
freely discuss and put their ideas in the business. Therefore since
...........................................................................................................................................
they will feel that they are in part of the business success,it will
motivate them to work more efficiently without making any mistakes
...........................................................................................................................................
or errors. Moreover since the employees can ask unclear questions
about yasin instructions it will reduce errors as well due to effective
...........................................................................................................................................
communication.
...........................................................................................................................................

...........................................................................................................................................

it is very time consuming and takes time to respond the competitors

Disadvantage: ...................................................................................................................

I
...........................................................................................................................................

Explanation: ......................................................................................................................
Due to using democratic leadership,some of the employees might
not want to agree with Yasin instruction and the employees might
...........................................................................................................................................
want to use their ideas instead which might create conflict
between and lengthen the decision making time. Therefore this
...........................................................................................................................................
might unmotivated some of the employees and lead to labour turn
...........................................................................................................................................
over which the productivity of the business will be low.
...........................................................................................................................................

........................................................................................................................................... [8]
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(b) Consider the following three ways Yasin could improve the ethical image of MB. Which way
would be most effective? Justify your answer.
• Buying all ingredients from local suppliers.
• Using only environmentally friendly packaging.
• Increasing wage rates to 20% above the legal minimum wage.

Buying all ingredients from local suppliers: ......................................................................

Due to buying local ingredients from local suppliers,this will be beneficial

...........................................................................................................................................
for both business and customers. According to the market research,85% of
...........................................................................................................................................
customers want the business to use local suppliers so due to Yasin business
using local suppliers,it will give customer satsifcation and lead to higher
...........................................................................................................................................
sales. Moreover due to this,the business will get lower complaints so it’s
yasin will get good brand image.
...........................................................................................................................................

...........................................................................................................................................

Using only environmentally friendly packaging: ...............................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Increasing wage rates to 20% above the legal minimum wage: ......................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Conclusion: .......................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

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© UCLES 2022 06_0450_21_2022_1.13

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