Cambridge Assessment

International Education

Cambridge O Level

CANDIDATE
NAME

CENTRE CANDIDATE
NUMBER NUMBER

BUSINESS STUDIES 7115/12

Paper 1 Short Answer a~d Data Response October/November 2022
1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

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 I ].

This document has 12 pages . Any blank pages are indicated.

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1 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 $85000. She is also considering ways to increase added value.

(a) Define 'market share'.

I.t . . i.~........a...... p...e.r,tn..r.~-9.e ... .... . .o.f ...... .. ~.'h.J:e.v.e.r. .... tJ.o..Y.......
o.f. . . .,.~ t .......m.~.r.ke.. .... o..r. . . tl.a.~r. ... ..1r.l.d.~t.t~.=·
..OWY.\ .......
For. .. ex~.p.le. ..·, ...£(xR ..... ~.~.b ......t~ ....i.l1.cr.t.i.S?.e ...... 6..%. .......f?..f. ......... .
o.~.~er~h:~..... &?.r. ....l-be.....d.r..i.-0.~s.... '.tY.1.d.~.~1-a.. :................................................ [21

(b) Define 'statement of financial position' .

.:r.:t:.....is. ...... ...... .r.!!:.fPr..'1. ........ o.P ...... .......k.1t.$..cn.f .~$........~.h;..~1:i. ...
.t.e..Lt.?...... ~~·~·~·····'1.~......~.~.s.e.~.... am..d......1..i.~.b.t.lir:,•.er~..:... :Th..e... .
.~.o..;.n ..... d.Q .w.~ . $..~J.~.......o.f .....th.i.s ...... ~.s.......th.4.....i.t.....1.s...... r.e..@r.dJ
O.'n ... .A..... c..e.r.b~in.....d.,J;e. .... ~o. ....i.t.'~.....~.Q.d;b .....c:l.e.~r.e.~s.e..s.....a.r.~J.i.me. [21
(c) Outline two ways EQR could increase added value.

Way 1: .. Q~.e .... W..~j. .......r. ~ . . . .i.t\C..Y.e.~~t .... J~g······~·~·J······V.J.~.e... .

.i.?...k . ..~.v.~ ....f.h~~e.e.r. ... ... ~.~J~r;45. ......w~~lt ....k..t.e.P.ihj ......a..........
.~ .e..(,.~·····o·n····~'···ot·ucJil:0. . .Tu.;.$.....v~.v.tA.....cr.eAte. ..... ....ij..r:~.<tt.f r
.~.rv:f,n.....ir... Jh~.....e.r..i(e. .... l-he.... r~.w... ....~J... ..P.ri.~..e£..µ,e f; "; }~ei.1 p,oJ"'.
Way 2: .M~~.~Y.lJ····tb.e: ... p.r.OlP..~S..... '4..~..... effki.e.n.L...a.~.....(?.Q.~.$.i..k.le...
\~ ... ol~P...im_per™-1t....1\i~....l,cw.l .... b.t..... 6..P..t'.'!.~..... .. ....1.n.v.~l:.~~.
~.,n ....~l.t.~~ ...t~c..hn.o.l.ryj>··ke.tp.in<J-.....1.¥..~C.~ts......m.ri.bv.cJ.tJJ
f..r..o..v.i.~.i.n8·····8a.o.d .... l.us..t.am.e.r. ....se.r..v.ire....t~....c~~r.Q.m.e.-r..s-;.e.-.J: .~:. [41

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(d) Explain two advantages to EQR of selling franchises as a way to grow its business.

Advantage 1: .1 ..t. . . J~ ...... O.......... LP.t:tJ ...... :b.e.r..m.......i.o.v.e.$.t..m.e..r.t1.~.....

·········································· ... ·..·................................................................................... , .... , ..
Explanation: .W.~e.~ ... ..... ~.'!.~~.. f.?..~ ..... .s.,lt.~..... ... .f.r.~~-~.bi.~t.; ...i.r...aa.ii,,5
.~. ....l~r.3.e. ....t>Mt.~.~1.... QJ ....m.~r.t.f(J... .JY.1£>..r.~.r.\J.,. . H?..':Y.~.v.e£;...!he
Per.~.Q..b.... VhQ.....k~.v.oht.... . ;1....~P.~.lJ .... b.o.te ..... t(?. ....P..'1J--··Sro..m~...
$.~.v:t.....o.f ..r.exd:..... V.fQr. ......u.S.\t\j...... ~e.... . br.ON.\d..... n.CMne.., ..~.b~:
Advantage 2: .IJ . .... (~... . . C,.V..~ .......C..Q.S.t.~ ....... o. f ...... ~J.~e.r.ll.~.m.6' nt:,

.k.iL.L..s...... .......rn.w.r/-·····P..Hv.r.:. ...r.b.i.!1J.~.:............................................... ..

Explanation: ..Afl~r. .... ~.~H.•'.\f...... ....tr'41t..h.t:~.~.;....M,i.~.... qr.[J,r.!4 ...bu.~i11es.5

~\$. .... ~.o..r. . ..r.~~.P.P..r.!.~i.b.(e......f.~r... .li.e. ....M-.s....C?.f.....~J....~.{.~i.~e. ...

.o..r......r.he ..... ..l~~t.r.it.i.~....kj_l.l.~.!. :T.h.~.... .....~.i.li. ,. b.Q.~.e.v.e.~
~.1.v.~ .....t.he......bt.~....frfM':l.~.h.t,.e. .... .().,., ....,q,J..~.....af.. . .cf;>.r.i.d¥-.~t ...f.£ .. ..f~lJ.~IJ.(6J
(e) Do you think a business being ethical will always lead to lower profits? Justify your answer.

I.t.. .... ;.~... ..~.r..~~~....t..t?...... l:h.,b..k. ....JhJ: ... . ~Q.r.ki1118. ...e.!11.;,J!-J. . .

.~it~.....le..J... ..t~.....lP..w.g.r.....P.r~.Rb.,. .1h.i~......l~.....b~.@.Y..$.~...... c.o.n.~v..!J?, Ys
:L.,.~. ....h,3-h . .°'J.IIJ.i.tl4......p..r.Pd.vc,.b~ .....rw.J... .... k.~~i.n.e.s.s....
~.i.~····8·"a.d ......Y..e.p..11.J.~i.an,...D.o.in~.....~.m.t.Hii.uJ. ... f.r.A.(..ti.ct.S .... .
~.r1u l~......l.et&.d.....t.Q......l'?8o.l....i.s.s,.v. .e. .~.) .. r.eJ .u ,ed ... bt.M\ J. ... re. p..v..t ~h,
.~ ...~}a.b.i.f'.i.LW'.lt.. ...d.C?Lt.e.~s..e..... in......,11~t.P..tY.1.t.r.... .l.oJ.4.i.l-ctt....~.ll.....
.o..f .....~e.S!t ...• . . p.D.\tlt.~.......C.@. .....r..~.~.~.u:... in.....M~Y.J·····L.~~s.....
..'?..f. ...m.!!.n..e.s . .. f Qt.....r.h.e...... k.v..$.tn.e..s.s.... F.~.r..l:-ht..r.11.1..0..re.> ... th.i.
.~~m.p..i:bh?.rs....w..D.11.U..... ....ha..'l.e. ....'1.... .... ~.Yf..~.r..b. ....C:~n..,.e.... r.P-.
..ku.i LJ . tr.eJ,~tUtJ ....0.ttl .. c.~sbi.me.r.±d·"'Ud··· w.b..i,.~---
. uN. W......r~s.,. t.l: ......i.b...... ..v.n reto..v..~r ......te. . . LP.b.5. ...:fo.r...... ..
..~.e.......k.\).$..\~., .'?..?...:................................................................................................ rs1

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2 ~emala makes high-quality beauty products. Demand for her best-selling hand cream is price
~nelastlc. She advertises her products in specialist beauty magazines. Kemala is analysing her
income statement. An extract is shown in Table 2.1. She said: 'When I started my business, I did )
not understand why cash is important'. 1

Table 21
Extract from Kemala's Income statement 2021 ($000)
Revenue 480
Gross profit 192
Profit for the year 72

(a) Define 'revenue' .

..Re.vt.M..... ....1~-... .t.1:-e ..... f"' bJ ..a yJp.~ .L -~.e .till#.. (.,omp. M!J
.h~. . .f.rQ:l.u.Cfd.......th~A.O.eh. . ...i.tS .......~J~.~l...1hl ... .l.il\,.Y.i.J..it~l··
..C.o..~h.......Ls......deJ.\l.c-.te.J. . . . .f r:o.r.1....... ~;..s . . . .~.acJ.n..b... ..................... .
............ .......... .... .......................... ...... ........... ...................................................................... [2]

~alculate Kemala's profit margin. Show your working .

. . . .~.r.<!..flf. ..)(. . .l.o..O.... .::: .. .f.r.o.f.,.t..... m.1AY9.,.~..¼............................................

reveh ve
: :~:;:2,. ;~; ~{fi: °.J~ :i~ ::~~~;:;:~~~~:..;
.....~.~······ ···............................. ..... .................................................................................. [2]

(c) Outline two reasons why cash is important for Kemala's bysjness.

Reason 1: .lt...i.~ . . .im.p..o..rJa,ttf. ....... ke.(Q..\J..$.l ...... .l(4..d{. . o..f......C.~..

f.l.ow .....m.<ma.8.t-n.e..n..t: .... ,.(N{l ...... .r.es.~..~.t......,.r.i...... ...... ·n.t.8.<d..f.v.e
..C.ob.h .....f.lo.Wt ... 1b.~:?....... co~.u ......:~.r.e.,..~.L.t .... 1.r.t....... ............ .
.n:e,a.o.k~v.e....~pe.1r.ti'.nB .. ···6J.CM:l.ce..i...................................................... ..
Reason 2: .C.o..~h ......!5 ..... ~e. . . . r>'.l.Q.iY.l.......$..0..Uf.ct ..... .tof.......e.V..l'ff ....... .

.b~.,~ne$S>.•. Yo.\J ..... b.\lJ . ···\'n.V.e.hr.1?tie.~,.P.A,J··s·J·QK.i·e..s,; .. ~J--..

... ,.hv.o.1.tt.S, .......0"1.J ........M..u~b .......m.P..re . . .P.oo.( .... ma.f'lA8.111et1.t.......
of...... C<t,sb...... .Cam......b.e . .fJ.J. .. . Go..~. . . b.\Jb.i.h~~s,......................... l41

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(d) Explain two possible reasons why demand for Kemala's best-selling product is price inelastic.

Reason 1: 1\e,. .pt.9.!.!<!l,.~.... wb.k.b ... . .ke.rn.J.g,.~... .$.e.ll~ ... .d.~e.~.~b..

..(&?.r.ne . ...\n ......nee.P.~..) ····i ..t...... c.o.m.R..$....... J.~....... W..ft.O.r.S.t.................... .
Explanation: 1.he,. . . fo.ct . . .c.r.itv.rn. .....•.. w.hic..h ..... 6.t-e .... SI-..U.s..... ls. .

.. .... ,l.\>.xv..rJ··· ... f.roJ'1t.t" . . .?.eo.p.\l......w.ht ...hQ.\f.e..... eYlo.iijh . ..'J/ll.f/ne:}

b?...~ti¼J···· ~ek~ .....h.te.J.~.......klJ.tl .... ~uy... .!bis .. lp.r.aJ..v.~J....... J
!:·:a ~t-· leA-0.!ler..1/:\D!.lfJSE ..pt.ice. ...k~e~.... h.~. h.ijh;.H,."'. .!,IO u LJ
~ - . ~~ Regson 2: .................................... ............................... ,.....................................................

··············· ·············· ···························· ·············· ····································································

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

'
··················· ························································································································

···········································································································································
················ ········· ······ ······················ ················· ····································································· [6]

(e) Do you think advertising in specialist magazines is the best way for a business to promote
high-quality products? Justify your answer.

l'., .....d.!$.ct8.J.e.'.t. ..... v..;Jh.;·••oo•th,~..... f.~U1.t ......p.e.c.a..u.$.e.....r.. . . .......

/ d.o.Y>.'. .t.... . .thi~.k ........t:h&... . . o..d.v.e.rtl~i.h3-.. . ...n1e.H:,.P..J ..... is....
~.ff:et.ti.v.t.......~~.m.o.r::e.•.. ~e ..... J,~.s.) .. na.t. .... mo..n.cY····f.~.Q..f.le
.. Ube. .......~ .A-8.,i,.~j.n.t.~ ..... .. t..9.......e.h.tl..rt.Q.i.n ..... o.r..... fl\;)P.J·····~m.i$~{11U,
.l.t...~ ... b.e..tte.r.....tP. .....\J.i€. .....m.o.re. ..... e..ffe,.H.t.t ......Md ..... .. oJ1n1 ...
.~.e.i.QdS...... o..t......i(,J.v.e..v:r.•S.i.~J····· .fQ.r. .... C.he.~ ....A.t.l.J. .... ..l~KY.ij ........
.i.~e.m.~ ...... s.. v..c.b. ... a..s.:.... S.Q.li.4.....tned.i~.... ~J..v.e.r...H.s..~r.1JJ··e.r1.();.i..i ..
..~~.r. ~b"'J->-·bi1.L.bo.u:d ... . ~J.$... .. .MJ ......r.:i..M?0. . . olh.e.r ........
...~~.i.u.m.5 ....... a.f ........tf\.t1.r..~.e.r.i.n&,~················ ............................................. .
············ ···························································································..................................... .
.............................................................................................................................................

··························· ··· ···································· ········································································· [6]

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3 DBG is a construction company. It builds hospitals, roads and schools. DBG has 2000 employees.
Managers use a democratic leadership style. They know effective Internal communication is
important. DBG plans to change its organisational structure.This will lead to some employees being
made redundant. The Managing Director has to decide how changes in government spending might
affect business activity.

(a) Identify two reasons why effective internal communication is Important for a business.

Reason 1: .. So .....~.J. . .. . . .C.P..r.r~.~i ..... Jn.t.of.~.J.('R.r.i..... .re.~,hls... .

.~e....o..p.p1.opr:i.Je .....f.er,.Q..n, ............................................................................ .
Reason 2: .. :C..b.... s..h.~.u.kJ.....be ..... loY.lC, .......'\,.v.1.d~ .. ....... ....effi,iet1tb
.J~....1r-eJ".ce.......the. ....().(m.f;,.11.t1.b. ..... P.f.......de.t-o/:l····f~r.....dii~......~.. r21
eer b.in ~a.s k.
(b) Define 'organisational structure' .

..O.re/U'.\j.~~.honJ....... ..l::x.~.c..b..re........ re.t.n.~t..nb......../,:ht........,.h.f,t,._.~h

.. o...f..... ~.C.Q.m..tt1.a;..'1...... fraw.1 ......C.E.O,....._.lt ..... ~e.n ......rrJ.v.c.e.5 ..
..i.':L .... r..fMl .. ........ .s..h~~.J.'t).J . . . ~.f.p.r.1?.pr.iA.te..... p..osi.c.iii:i~.... ..ti.l.l.....
.\\tf.f .... P.!.t...... ntlYle. .... \t.f r... ................................................................................... [2]

(c) State four factors a business should consider when deciding which employees to make
redundant.

Factor 1: !.f..... W.O .....e.M.p..lPy.e.e ......h~.~ ......b.ro.k.f.r.L .... .... .rv.J.e..... e.'!.~.VJ.
o.Jh.r.. ....w.o.r.hi.~ .......~.~··· · ·~.t.cJ.~J.......i:o...... ~r.il"<:a.d:.,................................
Factor 2: .. \:tJ?.W...... rn.uc..h ..... e.ff.i.de.Ylt. ....... th~ ......~~p!oJ-AP.......... .
. l~f....H~. ... ..... ~.~p.~.Q~.e~....... ~.~.~.p..l.~h~..... m~ .....bo.n.~s ... ,J~.~.'-~.
Factor 3: WhcJ..... 6 ........th.t.... . . ftv.Y.l .O.!J.l'lb:....1>.f.. ...... s.kj.l.~......<t. .... p.ers.Dn

.h~i. .1~....rhe...elrtf..l.l!Jee... ... m..i,.k.b.-::.s.~.i.ll.J..?. ..............................................

Factor 4: ..W.~.a} ..... l& ... ..J:he. ..... .iM.po.r..t-M.1t..e. .... p,f. . . the.~.r:. ....d.v.~l1·? ....... •-'-A
, '- n th c-nc-l r own
......\:hek... la.'.).k......k.e.....Jo.\'\£ .....b(J .. ..S.~.e.cin.,e....,tl,!,.e....~.r.>.~-8· ..w.L.... [41
Ju~iec,?

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(d) Explain two advantages to DBG of its managers using a democratic leadership style.

Advantage 1: .. :'f ..r,t:\p.l.o~.te..s ...... f ii.l. .....m..a.r..e......J.r~.s..f.ed.,............... .

···········································································································································
Explanation: .A~.r~..c.ra.h,...... .lf.~,rfi..~jf......&~.le ......s.ho.~.l..J..n!.t. ...b.e.
.. Y.~.e.d......~.fh~t:1.f. lt).s.l:e~J.~ .. de,:,:,.P..crJ..~·~.....~.~f.r5.b.i.P.. .....,~ .. .b.8tl--er
.he.C.R.lf.S.l .... .\t. . \AI..Q.~ .u....... rn«.ke. ......&~ .... .e.m.p..lD.~t.e...~fi~.~J. . . JrvsW

a.+?.d..... ....p.a,t. ....Q.f..... ... J~.M.r.!......f.11. l.f.i.lJ,:~J... . ...~.~/."::......~.e.c.iJ olt'e,Js toa,

Advantage 2: .1h.i~ ..... .l.e.aJs.r. ..... s.h.i.p.......~.b.le........(a¥1,...... lt.r1,.J........ .

.b?. ......b.~.~.t~.r..... Je..,,~.s.~o..n..s..~ .................................. . ............................... ...... .

Explanation: l..t:\ ... Je.m.o.cr.at.l·.c......li.«..d«..6hlP.......~.~le., . a..... J.el.l.'.5./()n
Lts. ......CP..r.i.$.~.Jh~J..... ~}.tb... ... tht..... . t.~ . . .m.e.m.b.e..r.s. .....~e..te.r,...... .

Bi
Ae11.tyi \f .. I :l:....'.!h,:s .CR..b. .Je.g,J..... .....Uie cer.r.e.f b\m .cf. ~.
J.«f.i.~1·!!11 ...!.f. J.t.W.~s. .....\!!.,: S. k~J.in.,g..~;g.L '-f.ur.,.b1.1.~in9..... h(!!I.... '."'[s~; ":,,
!Do you think all businesses benefit from an increase in government spending? Justify your
=~
•)

~ answer.

~, ................................................ ............................................................................... ..

···················· ···································· ····················································································

············· ··· ·· ····· ······ ··· ··················· ·· ·· ····· ········· ······ ·· ····· ··············· ···· ······· ············ ·· ··· ··············

············· ······ ··· ········· -' ······. ············· ························· ······························································

······················ ······························································································ ...................... .

······························ ··································· ······························································· ...........

··················· ····································· ······ ·············································································

································· ····••.•···································································································
···················································· ···· ···················································································
[6]
·············· ····· ········································· ················································· ······························

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4 TVA Is a limited company which manufactures 300 000 cars a year. It has 600 employees. TVA
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.'

(a) Define 'globalisation'.

.1he . ..... pro.c.e.$S...... ... P.f. ...... .ha.J.~hc9. . . .o..£. ... .9.o.P..ds....... @.J. ..5.ervilt$
.kb.w.te.n... ,o.u.n.b.dJS.,..1be.....c.o..v..n.tv:.i.P.s . ... ~.or.l().r4f.;y....:hrA.!!e..
•t··b:~j?,"rr.em.ttt!: . ..kt.b., e.'-'1 ......~r.>.1... ....k. . . .!'.f.l~k.....
.~. .k.~t~~ . . .P.~......e.Ah.il.(........................................................................... [2
1

(b) Identify two examples of fixed costs.

Example 1: .T..he ......zje, bt1.e.i'.~ .....f P.~t. . . . P.f ...... . .....~ad,.m. e.Q'. .... .
(!f.....le.A..s.e.dJ ......o..r. ... .fu . . ..t.eh.t .... .f)..f..... . H,.e.......f~.d~Q.'0j..'. . . . . .... . . ... ..
Example 2: .1be. . .... ScJ..a.r.i.e$ .......... O..f .........&.e...... .b..0.0.... t.mp.ltyeJ,S,, ... .

............ ...... ... ..... ... ... ......... ............ ... .. .. .................... ..... .. ... .... ,....... .. ..... ..... ... ..... .. ............... [2)

(c) Outline, with reference to TYA, the difference between a limited company and an unincorporated
business .

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o, ~e i._,~;i,1ess.

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(d) Explain two methods TYA could use to increase efficiency.

Method 1: .! .nvt.$..t. ....:.i.V.\. ...... . .......te.,.h. n.o.l.~8\Y!..... ..... ............ .

Explanation: .Ne.~....}uh.n.o..lD-8J--- . .i.~.p..r.9.Y.~ .....t:\-.e..... p..r.(?.(..~~.~...... ... Serv~~

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.. . ~.~.~Js.;~................................................. ........... ............. . . .............. ....................
Explanation : .~0.'\;~·.,:...i!.>..... ..... ~.~~f.r>.:l-.tJ. . f..~ ..... 1>1 .... .U'.'.C(~4~).'-Zf
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rn.~~ ....t~p.tl.$... o........ p..~.~ .....~.4.Gh ... 4..$..;.JP..~.~th.Dx\,.h.~.~.v.~ .. S.Ch~ts, 1!f ·

(e) Do you think legal controls are the most important factor for a manufacturing business to
consider when deciding which country to locate its operations in? Justify your answer.

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... ..:...ho.w......f.~ .....\:h.e . . ... .r~w. ......m.,d:t.r.i~...~.:ai..~.re
..fr.ei~......~t..... f.«-'-kar:~., ... kk.o. v..r..... .~o.~.t$._, ...~v..,d.l.~~./.,:.ty.......
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.b:CM1.$.f..D.f..:tri.'fo.n.... l .06.'f$. .. ... .e.tc.4 . .......... ....... ......... ............................ ... .. .

..... ....... ........ ...... .. ... ............. .. .... ... ........... .. .... ... ....... ..... ........ .... ...... ... .... ..... .................. ...... [6]

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