Business Merged Past Paper

™
Cambridge IGCSE
BUSINESS STUDIES 0450/12

*0444971363*
Paper 1 Short Answer and Data Response February/March 2023

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 [ ].
This document has 12 pages. Any blank pages are indicated.
03_0450_12_2023_1.13
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1 HCB manufactures cars in country X. It has 200 employees working in its factory. The business
has changed its method of production due to new technology. HCB’s Managing Director is
considering ways to become more ethical. She is aware that other businesses in country X have
started to import cars. The interest rate in country X has increased due to rising inflation.
(a) Define ‘inflation’.
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(b) Identify two ways technology could change production methods.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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(c) Outline two ways HCB could become more ethical.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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(d) Explain two ways HCB could be affected by an increase in the interest rate in country X.
Way 1: ...............................................................................................................................
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Explanation: ......................................................................................................................
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Way 2: ...............................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think manufacturing businesses will always benefit from the introduction of import
tariffs? Justify your answer.
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2 WFH produces hats and sells them to a mass market. It holds a high level of inventory. The Managing
Director is concerned about the liquidity of the business and has been analysing WFH’s financial
statements. An extract is shown in Table 2.1. The Managing Director thinks that the business might
fail. Other stakeholder groups might also be interested in WFH’s financial statements.
Table 2.1
Extract from WFH’s financial statements ($000)
2021 2022
Current assets 60 50
Inventory 20 30
Trade receivables 25 10
Cash 15 10
Current liabilities 20 40
Profit/loss 15 (10)
(a) Identify two possible causes of business failure.
Cause 1: ...........................................................................................................................
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Cause 2: ...........................................................................................................................
........................................................................................................................................... [2]
(b) Calculate WFH’s acid test ratio for 2022. Show your working.
Working: ...........................................................................................................................
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Final answer: .................................................................................................................... [2]
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(c) Identify four reasons why businesses hold inventory.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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Reason 3: .........................................................................................................................
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Reason 4: .........................................................................................................................
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(d) Explain why the following two stakeholder groups might be interested in WFH’s financial
statements.
Employees: .......................................................................................................................
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Explanation: ......................................................................................................................
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Suppliers: ..........................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think it is always better for a business to sell to a mass market? Justify your answer.
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3 AH is an insurance business. It operates in a competitive market. AH has 1000 employees including

50 supervisors. The supervisors use an autocratic leadership style. AH currently has a 5% market
share and is planning to take over a competitor. The Managing Director is considering how to
communicate with AH’s employees about the takeover. There are many sources of finance available
to fund business growth.
(a) Identify two responsibilities of supervisors.
Responsibility 1: ...............................................................................................................
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Responsibility 2: ...............................................................................................................
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(b) Identify two methods of written communication.
Method 1: ..........................................................................................................................
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Method 2: ..........................................................................................................................
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(c) Outline two benefits to AH of taking over a competitor.
Benefit 1: ..........................................................................................................................
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Benefit 2: ..........................................................................................................................
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(d) Explain one advantage and one disadvantage to AH of its supervisors using an autocratic
leadership style.
Advantage: .......................................................................................................................
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Explanation: ......................................................................................................................
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Disadvantage: ...................................................................................................................
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Explanation: ......................................................................................................................
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(e) Explain two sources of finance which could be used to fund business growth. Which source
of finance would be the best to use? Justify your answer.
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4 Viktor is starting up a business as a photographer. He will be a sole trader. Quality control will be
important. Viktor plans to use sampling when carrying out market research. There are legal controls
which could affect his marketing strategy. Viktor will employ 5 photographers. He knows there are
many ways to motivate employees.
(a) Identify two ways legal controls could affect marketing strategy.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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(b) Define ‘quality control’.
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(c) Outline two reasons why Viktor might use sampling when carrying out market research.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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(d) Explain two disadvantages to Viktor of operating as a sole trader.
Disadvantage 1: ................................................................................................................
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Explanation: ......................................................................................................................
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Disadvantage 2: ................................................................................................................
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Explanation: ......................................................................................................................
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(e) Explain two ways a service business could motivate its employees. Which would be the best
way to use? Justify your answer.
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© UCLES 2023 03_0450_12_2023_1.13

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Cambridge IGCSE

*2111597861*

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
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2
1 TCH is a small bakery producing pastries and cakes. It operates in the secondary sector. The added
value of TCH’s products has increased since it opened 3 years ago. TCH uses non-financial methods
to motivate its 6 employees. TCH’s business objectives have changed since it started up. One of
its new objectives is to expand. Many businesses use external recruitment when they expand.
(a) Define ‘added value’.
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(b) Define ‘secondary sector’.
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(c) Outline two reasons why TCH’s business objectives might have changed.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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(d) Explain two non-financial methods of motivation TCH could use.
Method 1: ..........................................................................................................................
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Explanation: ......................................................................................................................
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Method 2: ..........................................................................................................................
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Explanation: ......................................................................................................................
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(e) Explain two methods of external recruitment a business could use. Which is likely to be the
best method to use? Justify your answer.
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2 PLY manufactures hats in its factory in country X. The economy of country X is in a recession. PLY
sells its hats online to the mass market. It uses email to communicate with its customers. PLY uses
market research when making decisions. The Managing Director is considering ways for PLY to
become more environmentally friendly as she is aware of new legal controls over business activity.
She is also aware of the role of pressure groups.
(a) Identify two characteristics of a recession.
Characteristic 1: ................................................................................................................
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Characteristic 2: ................................................................................................................
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(b) Define ‘pressure group’.
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(c) Outline two ways PLY could be affected by legal controls over business activity affecting the
environment.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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(d) Explain one advantage and one disadvantage of PLY using email to communicate with its
customers.
Advantage: .......................................................................................................................
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Explanation: ......................................................................................................................
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Disadvantage: ...................................................................................................................
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Explanation: ......................................................................................................................
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(e) Explain two reasons why a business uses market research. Which reason is likely to be the
most important? Justify your answer.
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3 FR is a multinational company. It has hotels in 18 countries. FR wants to expand into a new market
and is planning to build another hotel. FR’s Marketing Director is considering how the market can
be segmented. FR’s Financial Director is considering which source of finance to use to fund the
expansion. He is also constructing a cash-flow forecast for the new hotel’s first year of trading.
(a) Identify one cash inflow and one cash outflow for a business.
Cash inflow: ......................................................................................................................
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Cash outflow: ....................................................................................................................
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(b) Identify two factors which might affect the source of finance a business chooses to use.
Factor 1: ...........................................................................................................................
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Factor 2: ...........................................................................................................................
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(c) Identify four ways a market can be segmented.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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Way 3: ...............................................................................................................................
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Way 4: ...............................................................................................................................
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(d) Explain two advantages to FR of being a multinational company.
Advantage 1: ....................................................................................................................
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Explanation: ......................................................................................................................
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Advantage 2: ....................................................................................................................
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Explanation: ......................................................................................................................
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(e) Explain two ways a cash-flow forecast could be used by a business. Which is likely to be the
most important way? Justify your answer.
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4 Suliman owns a small business which sells t-shirts on its website. He operates as a sole trader.
Suliman is analysing data for his existing business. An extract from this data is shown in Table 4.1.
Suliman wants to open his first shop and needs to decide on a suitable location. He is considering
which type of sales promotion to use for the new shop.
Table 4.1
Extract from Suliman’s data for his existing business
Break-even output 500 t-shirts
Current sales 550 t-shirts
Selling price per t-shirt $3.99
Variable cost per t-shirt $1.99
(a) Define ‘break-even output’.
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(b) Calculate the margin of safety. Show your working.
Working: ...........................................................................................................................
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Final answer: .................................................................................................................... [2]
(c) Outline two methods of sales promotion Suliman could use for the new shop.
Method 1: ..........................................................................................................................
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Method 2: ..........................................................................................................................
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(d) Explain two factors Suliman should consider when deciding on a suitable location for the new
shop.
Factor 1: ...........................................................................................................................
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Explanation: ......................................................................................................................
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Factor 2: ...........................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think operating as a sole trader is the best type of organisation for a small business?
Justify your answer.
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Cambridge IGCSE

*6304921481*
Paper 1 Short Answer and Data Response May/June 2022

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
06_0450_12_2022_1.17
2
1 AHG is an established business as it has been operating for a long time. It sells garden products
including plants and flowers. AHG uses competitive pricing. The business has 4 managers and 30
other employees. All AHG’s managers use delegation. The Finance Manager is analysing AHG’s
statement of financial position as she is interested in its liquidity. An extract is shown in Table 1.1.
Table 1.1
Extract from AHG’s statement of financial position at 30 March 2022 ($000)
Non-current assets 800
Current assets 660
Current liabilities 600
(a) Define ‘current liabilities’.
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(b) Identify two examples of non-current assets.
Example 1: ........................................................................................................................
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Example 2: ........................................................................................................................
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(c) Outline two possible reasons why liquidity is important to AHG.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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(d) Explain two advantages to AHG of its managers using delegation.
Advantage 1: ....................................................................................................................
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Explanation: ......................................................................................................................
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Advantage 2: ....................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think competitive pricing is the best method for an established business to use? Justify
your answer.
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2 RWB manufactures buses.1200 people work in its factory. All employees receive off-the-job training.
RWB uses financial rewards to motivate its employees. Last year RWB made a $1.7 million loss.
The Managing Director said: ‘There are many external influences affecting our business, including
changes in the level of unemployment and new legal controls over business activities which affect
the environment.’
(a) Define ‘off-the-job training’.
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(b) Identify two reasons (other than financial) why people work.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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(c) Outline two methods of financial rewards RWB might use to motivate its employees.
Method 1: ..........................................................................................................................
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Method 2: ..........................................................................................................................
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(d) Explain two ways RWB might be affected by new legal controls over business activities which
affect the environment.
Way 1: ...............................................................................................................................
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Explanation: ......................................................................................................................
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Way 2: ...............................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think a reduction in the level of unemployment always benefits businesses? Justify
your answer.
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3 CHW manufactures electrical products including cameras. The business is developing new products.
The Managing Director knows that the stage of the product life cycle can influence CHW’s marketing
decisions about promotion. He is analysing data for one of its products. An extract is shown in
Table 3.1. The business would also like to introduce flow production into the factory.
Table 3.1
Extract from CHW’s data for one type of camera (2021)
Selling price per unit ($) 120
Variable cost per unit ($) 40
Fixed costs ($) 200 000
Margin of safety (units) 500
(a) Identify one benefit and one cost to a business of developing new products.
Benefit: .............................................................................................................................
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Cost: .................................................................................................................................
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(b) Calculate the break-even level of output for 2021. Show your working.
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(c) Outline two ways CHW could increase its margin of safety.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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(d) Explain two ways in which the stage of the product life cycle might affect CHW’s marketing
decisions about promotion.
Way 1: ...............................................................................................................................
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Explanation: ......................................................................................................................
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Way 2: ...............................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think flow production is the best method of production for a manufacturing business
to use? Justify your answer.
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4 Tom wants to leave his job to become an entrepreneur. He and his sister plan to start a window
cleaning business. Tom has been told that new businesses are at a greater risk of failure than
established businesses. Tom has to decide whether a partnership is a suitable form of business
organisation for the new business. He has calculated the business will need $700 as start-up capital.
Tom knows that every decision he makes will have an opportunity cost.
(a) Define ‘entrepreneur’.
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(b) Define ‘opportunity cost’.
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(c) Identify four reasons why a new business might be at greater risk of failure than an established
business.
Reason 1: .........................................................................................................................
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Reason 2: .........................................................................................................................
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Reason 3: .........................................................................................................................
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Reason 4: .........................................................................................................................
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(d) Explain two suitable sources of start-up capital Tom’s business might use.
Source 1: ..........................................................................................................................
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Explanation: ......................................................................................................................
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Source 2: ..........................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think a partnership is the best form of business organisation for a new business? Justify
your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge Local
Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
© UCLES 2022 06_0450_12_2022_1.17

™
Cambridge IGCSE

*6006910796*
Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
06_0450_12_2023_1.15
2
1 FBW manufactures watches using job production. It employs 5 full-time production employees.
Each worker is offered regular training. Last year FBW sold 600 watches. The Managing Director
plans to use break-even analysis to help decide whether to increase the price of its products. FBW’s
current break-even chart is shown in Fig. 1.1.
Break-even chart for FBW’s watches

120 000
100 000
total revenue
total costs
80 000
costs and
revenue $
60 000
40 000
20 000 fixed costs
0
0 100 200 300 400 500 600 700 800
number of watches
Fig. 1.1
(a) Identify two reasons why a business might offer training to its employees.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the following values using Fig. 1.1:
Break-even output: ...........................................................................................................
Break-even revenue: ........................................................................................................ [2]
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3
(c) Outline two possible effects on FBW’s break-even chart if the prices of its products are
increased.
Effect 1: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Effect 2: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
(d) Explain two benefits to FBW of having full-time employees.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
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(e) Do you think job production is the best method of production for a small business to use?
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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2 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.
(a) Identify two ways a business plan can help a business to reduce risk.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(b) Identify two possible reasons why a business might want to expand.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) Outline one advantage and one disadvantage to Gloria of using telephone calls as a method
of communication with her employees.
Advantage: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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(d) Explain two factors Gloria should consider when deciding whether to take on a business
partner.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Explain two methods of primary market research a business could use to find out the demand
for a new product or service. Which would be the best method to use? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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7
3 VVA is a business based in country X. It manufactures school backpacks (bags). VVA uses retailers
as its channel of distribution. The Managing Director knows there are many factors that can affect
demand including the stage of the business cycle and how competitive the market is. VVA imports
45% of its raw materials. The Managing Director is worried that the introduction of import tariffs
and import quotas, as well as an appreciation in country X’s exchange rate, will affect VVA.
(a) Define ‘import tariff’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two reasons why some markets can become more competitive.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(c) State the four stages of the business cycle.
1: .......................................................................................................................................
...........................................................................................................................................
2: .......................................................................................................................................
...........................................................................................................................................
3: .......................................................................................................................................
...........................................................................................................................................
4: .......................................................................................................................................
........................................................................................................................................... [4]
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(d) Explain one possible effect of the following changes on VVA when importing raw materials:
Introduction of import quotas in country X: .......................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Appreciation of country X’s exchange rate: ......................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think retailers are the best channel of distribution for a manufacturing business to use?
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
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4 CPF is a clothing retailer. It is a private limited company. It has 4 shops and 30 employees. The
Finance Director is concerned about the amount of current assets because working capital is
important. The amount of retained profit is also low. CPF’s directors are planning to expand the
business by opening a new shop. A suitable source of long-term finance will need to be identified.
The plan to expand will affect many of CPF’s stakeholder groups.
(a) Define ‘retained profit’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘current assets’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible reasons why working capital is important for CPF.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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(d) Explain one way each of the following stakeholder groups might be affected by CPF’s plans
to expand its business.
Employees: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Suppliers: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think it is better for a private limited company to use debt (e.g. a loan) or equity (issuing
more shares) as a source of long-term finance? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
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Cambridge IGCSE

*0730270950*
Paper 1 Short Answer and Data Response October/November 2021

1 hour 30 minutes
INSTRUCTIONS
• Answer all questions
INFORMATION
11_0450_12_2021_1.10
2
1 SWB is in the secondary sector. It produces 150 000 wooden bookcases each week using batch
production. SWB sells all its output to one customer. Quality control is important. SWB has 240
employees, of which 100 are part-time workers. SWB’s managers use noticeboards around the
factory and meetings with employees every month to help reduce communication barriers. The
Operations Manager is considering introducing just-in-time inventory control to reduce the amount
of waste.
(a) Define ‘secondary sector’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two factors a business should consider when deciding whether to introduce just-in-time
inventory control.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
........................................................................................................................................... [2]
(c) Outline one advantage and one disadvantage to SWB of using quality control.
Advantage: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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3
(d) Explain two possible communication barriers that might exist at SWB.
Communication barrier 1: .................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Communication barrier 2: .................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think it is a good idea for a business to have only one customer? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
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2 Tom started ALB 5 years ago making trainers (sneakers) out of sustainable materials such as wool.
One of ALB’s objectives is to protect the environment. As part of his research, Tom calculated some
costs which he could use in his break-even analysis. An extract is shown in Figure 2.1. ALB uses
retailers to distribute its products. Tom thinks a successful entrepreneur has to be a good manager.
retailers’ costs 50%
manufacturers’ profit 5%
fixed costs 15%
variable costs 30%
0 10 20 30 40 50 60
percent
Fig. 2.1
(a) Define ‘variable costs’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two limitations of break-even analysis.
Limitation 1: ......................................................................................................................
...........................................................................................................................................
Limitation 2: ......................................................................................................................
........................................................................................................................................... [2]
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5
(c) Outline two possible advantages to ALB of using retailers to distribute its products.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
(d) Explain one advantage and one disadvantage to ALB of trying to protect the environment.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
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(e) Do you think a successful entrepreneur has to be a good manager? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
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3 Aurelie is a sole trader. She started her small hotel 1 year ago using government support. Aurelie
knew it would be important to build good customer relationships. Aurelie wants to analyse her
financial statements using ratio analysis. An extract is shown in Table 3.1. She is worried about
how the Government’s plan to introduce a new tourist tax of $1 per tourist per night might affect
her business.
Table 3.1
Extract of Aurelie’s Income statement for 2020 ($)
Revenue 5 600
Cost of sales 1 800
Gross profit X
Expenses 2 400
Profit Y
(a) Identify two ways a government can support new business start-ups.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(b) Calculate X and Y.
X: ......................................................................................................................................
Y : ....................................................................................................................................... [2]
(c) State four financial ratios a business can use.
Financial ratio 1: ...............................................................................................................
...........................................................................................................................................
Financial ratio 2: ...............................................................................................................
...........................................................................................................................................
Financial ratio 3: ...............................................................................................................
...........................................................................................................................................
Financial ratio 4: ...............................................................................................................
........................................................................................................................................... [4]
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(d) Explain two ways that the introduction of a new tourist tax might affect Aurelie’s business.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think offering good customer service is the best way for a small business to build
customer relationships? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
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4 GCF is a public limited company. It provides a range of computer services to businesses including
designing websites and creating apps. The Human Resources Director use ideas based on Maslow’s
Hierarchy of Needs to help keep GCF’s 250 employees well-motivated. An extract of methods used
is shown in Table 4.1. GCF plans to expand by taking over one of its competitors. This will cost
$50m. To finance the takeover, GCF is considering issuing new shares.
Table 4.1
Extract of methods used at GCF to motivate employees
‘Employee of the month’ award
Organises team building courses
(a) Identify two features of a public limited company.
Feature 1: .........................................................................................................................
...........................................................................................................................................
Feature 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Identify the level of Maslow’s Hierarchy of Needs each of the following methods belongs to.
‘Employee of the month award’:........................................................................................
Organises team building courses: .................................................................................... [2]
(c) Outline two advantages to GCF of having well-motivated employees.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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(d) Explain one advantage and one disadvantage to GCF of issuing new shares as a source of
finance.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think the number of employees is the best way to measure the size of a tertiary sector
business? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021 11_0450_12_2021_1.10

™
Cambridge IGCSE

*0358060406*

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
11_0450_12_2022_1.13
2
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 $85 000. She is also considering ways to increase added value.
(a) Define ‘market share’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘statement of financial position’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two ways EQR could increase added value.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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(d) Explain two advantages to EQR of selling franchises as a way to grow its business.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think a business being ethical will always lead to lower profits? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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2 Kemala makes high-quality beauty products. Demand for her best-selling hand cream is price
inelastic. 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’.
Table 2.1
Extract from Kemala’s income statement 2021 ($000)
Revenue 480
Gross profit 192
Profit for the year 72
(a) Define ‘revenue’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate Kemala’s profit margin. Show your working.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline two reasons why cash is important for Kemala’s business.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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(d) Explain two possible reasons why demand for Kemala’s best-selling product is price inelastic.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 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.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [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: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘organisational structure’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) State four factors a business should consider when deciding which employees to make
redundant.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Factor 3: ...........................................................................................................................
...........................................................................................................................................
Factor 4: ...........................................................................................................................
........................................................................................................................................... [4]
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7
(d) Explain two advantages to DBG of its managers using a democratic leadership style.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think all businesses benefit from an increase in government spending? Justify your
answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
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4 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.’
(a) Define ‘globalisation’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two examples of fixed costs.
Example 1: ........................................................................................................................
...........................................................................................................................................
Example 2: ........................................................................................................................
........................................................................................................................................... [2]
(c) Outline, with reference to TYA, the difference between a limited company and an unincorporated
business.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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9
(d) Explain two methods TYA could use to increase efficiency.
Method 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(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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Cambridge IGCSE

*6639094461*

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
11_0450_12_2023_1.11
2
1 Paolo wants to start up a business making cakes. He plans to sell all of his products to a wholesaler.
Paolo knows the packaging for his products will be important. He has prepared some financial and
sales data. An extract from this data is shown in Table 1.1. Paolo is considering using crowdfunding
as a source of finance. He knows the business will also need working capital.
Table 1.1
Extract from Paolo’s financial and sales data
Average price per cake $6
Average cost per cake $4
Forecast average number of cake sales per day 50
(a) Define ‘working capital’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Calculate the average revenue per day. Show your working.
Working: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Final answer: .................................................................................................................... [2]
(c) Outline two reasons why packaging will be important for Paolo’s business.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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3
(d) Explain one advantage and one disadvantage to Paolo’s business of using crowdfunding as
a source of finance.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think selling to a wholesaler is the best channel of distribution for a start-up business
to use? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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2 TBX manufactures high-quality steel which is used to build railways. The method of production
used allows TBX to benefit from economies of scale. The business holds a high level of inventory
including iron ore. The Managing Director knows business activity could have an impact on the
environment and is considering ways the business can contribute to sustainable development.
(a) Identify two ways business activity could have an impact on the environment.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(b) Identify two ways a business could contribute to sustainable development.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
........................................................................................................................................... [2]
(c) Outline two possible economies of scale TBX might benefit from.
Economy of scale 1: .........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Economy of scale 2: .........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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5
(d) Explain two possible problems for TBX of holding a high level of inventory.
Problem 1: ........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem 2: ........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think quality control is the best method for a manufacturing business to use to achieve
quality production? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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6
3 Country X has a mixed economy with both private and public sector organisations. These
organisations are involved in different sectors of economic activity. In the last 20 years the primary
sector has become less important to country X’s economy. A summary of the changes is shown in
Table 3.1. The government is planning to encourage multinational companies to set up factories
in country X.
Table 3.1
Economic sectors in country X as a percentage of GDP
Year Primary Secondary Tertiary
2000 60% 15% 25%
2020 20% 30% 50%
(a) Define ‘public sector’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘gross domestic product’ (GDP).
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Identify four types of business organisation in the private sector.
Type 1: ..............................................................................................................................
...........................................................................................................................................
Type 2: ..............................................................................................................................
...........................................................................................................................................
Type 3: ..............................................................................................................................
...........................................................................................................................................
Type 4: ..............................................................................................................................
........................................................................................................................................... [4]
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7
(d) Using the data from Table 3.1, explain two possible reasons for the changing importance of
the primary sector in country X.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think the benefits to a country of having a multinational company located there are
always greater than the drawbacks? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2023 11_0450_12_2023_1.11 [Turn over

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4 TFN is a travel business which sells holidays. It has 37 shops and 1000 employees. Last year
TFN’s profit increased to $46 million. The Managing Director knows that good customer service
has helped maintain customer loyalty. He said: ‘TFN’s managers use ideas from Herzberg’s
two-factor theory to help motivate employees. All employees are provided with off-the-job training
and each manager has a wide span of control.’
(a) Identify two advantages to a business of maintaining customer loyalty.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
........................................................................................................................................... [2]
(b) Identify two hygiene factors from Herzberg’s two-factor theory.
Hygiene factor 1: ..............................................................................................................
...........................................................................................................................................
Hygiene factor 2: ..............................................................................................................
........................................................................................................................................... [2]
(c) Outline two reasons why profit might be important to TFN.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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(d) Explain one advantage and one disadvantage to TFN of its managers having a wide span of
control.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think off-the-job training is the best method of training for a service sector business to
use? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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Cambridge IGCSE

*7067409899*

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
03_0450_12_2022_1.19
2
1 CXN manufactures glass bottles using flow production. The business has a number of stakeholder
groups including its 130 employees. CXN has benefitted from globalisation. Its products are exported
to 39 countries. The Managing Director knows that depreciation of an exchange rate can affect
business activity. She thinks all manufacturing businesses should contribute to sustainable
development.
(a) Identify two reasons for globalisation.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
........................................................................................................................................... [2]
(b) Define ‘depreciation of an exchange rate‘.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline one possible objective for each of the following stakeholder groups of CXN.
Government: .....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Employees: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
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3
(d) Explain one advantage and one disadvantage to CXN of using flow production.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think using renewable energy is the best way for a manufacturing business to contribute
to sustainable development? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
© UCLES 2022 03_0450_12_2022_1.19 [Turn over

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2 Nancy wants to be an entrepreneur. She has analysed market research data and decided to start
up a book shop. Nancy has identified a suitable location and prepared a business plan. Nancy is
calculating her total costs. She will use this information to help her complete a break-even chart
as shown in Figure 2.1. Nancy is also considering using e-commerce.
Break-even chart for Nancy’s new business
X
costs and
revenue
$
total costs
break-even current level

output of output
output (units)
Fig. 2.1
(a) Identify X and Y.
X: ......................................................................................................................................
Y: ...................................................................................................................................... [2]
(b) Define ‘total cost’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
© UCLES 2022 03_0450_12_2022_1.19

5
(c) Identify four factors a service business should consider when deciding on a suitable location.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
Factor 3: ...........................................................................................................................
...........................................................................................................................................
Factor 4: ...........................................................................................................................
........................................................................................................................................... [4]
(d) Explain two ways having a business plan could help Nancy.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
© UCLES 2022 03_0450_12_2022_1.19 [Turn over

6
(e) Do you think the threats of e-commerce are greater than the opportunities for a new business?
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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3 D2G is a driving school. Mattan started D2G 3 years ago to teach people to drive a car. As the
business has been successful Mattan plans to buy a new vehicle. He has been analysing D2G’s
income statement. An extract is shown in Table 3.1. Mattan wants to understand the difference
between profit and cash. He also wants to know how an increase in competition and changes in
the business cycle might affect D2G.
Table 3.1
Extract from D2G’s income statement for the year ending 31 December 2021 ($)
Revenue 20 000
Gross profit 12 000
Profit for the year 2000
(a) State two stages of the business cycle.
Stage 1: ............................................................................................................................
...........................................................................................................................................
Stage 2: ............................................................................................................................
........................................................................................................................................... [2]
(b) Calculate D2G’s gross profit margin. Show your working.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(c) Outline, with reference to D2G, the difference between profit and cash.
...........................................................................................................................................
...........................................................................................................................................
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...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 03_0450_12_2022_1.19 [Turn over

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(d) Explain two ways D2G might respond to an increase in competition.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think leasing is the best source of finance for a small business to use for a new vehicle?
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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4 WTB is a private limited company. It manufactures breakfast cereals. WTB has 600 production
workers in its factory. Many of its employees are part-time. All employees receive training and
managers use delegation. The Human Resources Director is interested in using motivational theories
to help improve employee motivation. The directors plan to expand the business and are considering
whether to convert WTB into a public limited company.
(a) Define ‘delegation’.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [2]
(b) Identify two motivational theories.
Theory 1: ..........................................................................................................................
...........................................................................................................................................
Theory 2: ..........................................................................................................................
........................................................................................................................................... [2]
(c) Outline two benefits to WTB of having part-time employees.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [4]
© UCLES 2022 03_0450_12_2022_1.19 [Turn over

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(d) Explain two reasons why training might be important to WTB.
Reason 1: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [6]
(e) Do you think a public limited company is a better form of business organisation for a growing
business than a private limited company? Justify your answer.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [6]
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Cambridge IGCSE

*9136086670*
Paper 2 Case Study February/March 2022

1 hour 30 minutes
You will need: Insert (enclosed)
INSTRUCTIONS
INFORMATION
• The insert contains the case study.
03_0450_22_2022_1.7
2
1 (a) Explain four methods a business could use to communicate with its employees.
Method 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 3: ..........................................................................................................................
...........................................................................................................................................
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Method 4: ..........................................................................................................................
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...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 03_0450_22_2022_1.7

3
(b) Consider the following three ways the internet could be used to improve the promotion of MH.
Which is the best way for Sadiq to choose? Justify your answer.
• Improve its existing website.

• Advertise using social media.
• Email special offers to existing customers.
Improve its existing website: .............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advertise using social media: ...........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Email special offers to existing customers: .......................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
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........................................................................................................................................... [12]
© UCLES 2022 03_0450_22_2022_1.7 [Turn over

4
2 (a) Explain one advantage and one disadvantage to Sadiq of delegating tasks to his employees.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 03_0450_22_2022_1.7

5
(b) Consider the following three ways Sadiq could achieve a high-quality service at MH. Which
is the most effective way? Justify your answer.
• Only buying food ingredients from suppliers that guarantee good quality.
• The room cleaners made responsible for checking their own work.
• Chefs regularly sampling food before it is served to guests.
Only buying food ingredients from suppliers that guarantee good quality: .......................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
The room cleaners made responsible for checking their own work: ................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Chefs regularly sampling food before it is served to guests: ............................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2022 03_0450_22_2022_1.7 [Turn over

6
3 (a) Explain four advantages to Sadiq of changing his business to a partnership.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 3: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 4: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 03_0450_22_2022_1.7

7
(b) Consider the two options for Sadiq to increase MH’s revenue. Which option should he choose?
Justify your answer using suitable calculations.
Option 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Option 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2022 03_0450_22_2022_1.7 [Turn over

8
4 (a) Refering to Appendix 2 and other information, explain how the following two new legal controls
could affect MH.
• Restaurant menus must list all ingredients in the food served.

• Single-use plastic bottles cannot be used.
Restaurant menus must list all ingredients in the food served: ........................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Single-use plastic bottles cannot be used: .......................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 03_0450_22_2022_1.7

9
(b) Consider the following three ways Sadiq could improve MH’s cash flow.
• Arrange a bank loan.

• Ask customers to pay a deposit of 20% when they book a room.
• Ask for trade credit from food suppliers.
Which would be the most effective way for MH to improve its cash flow? Justify your answer.
Arrange a bank loan: ........................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Ask customers to pay a deposit of 20% when they book a room: ....................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Ask for trade credit from food suppliers: ...........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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Cambridge IGCSE

INSERT 1 hour 30 minutes
INFORMATION
• This insert contains the case study.
*8359598807-I*
• You may annotate this insert and use the blank spaces for planning. Do not write your answers on the
insert.
03_0450_22_2023_1.15
2
Romesh Woodpaints (RW)
RW was set up 15 years ago in country X. It is a public limited company. RW produces paint which is
used for all types of wood products, including wooden furniture.
All RW’s customers are located in Main City where consumer incomes have been increasing in recent
years. RW’s paint is sold through specialist shops for customers to improve their own houses. It also
sells direct to businesses that make wooden furniture.
RW has one factory in Main City. It uses flow production to produce the paint. There are 100 skilled
employees working in the production area of the factory who help to maintain the machinery used in the
production line. These employees are protected by legal controls that RW must follow. RW imports 75%
of the raw materials it uses. Waste from the production of paint is put into local rivers and pollutes the
water.
RW is producing 1 million tins of paint a year, which is the maximum output possible at its existing factory.
It is planning to expand by building an additional factory so it can increase production to 2 million tins
of paint a year. The new factory will cost $50 million and will be financed by a bank loan. The Managing
Director knows there may be problems when growing the business as there will be two factories instead
of one. He also knows there are external costs and benefits from producing paint.
The new factory will need 100 production employees. RW may move some of its employees from the
existing factory to help train the newly recruited employees, to ensure they have the skills they need.
RW has to decide which of the three suitable locations, shown in Appendix 2, to choose for the new
factory.
Appendix 1
Newspaper article from Main City News, January 2023
Businesses that make wooden furniture operate in a competitive market and need to keep prices similar
to those of other businesses.
There have been changes in consumer tastes and fashions. More people are buying wooden outdoor
furniture as they are now spending more time in their gardens. Customers are choosing to buy their
outdoor furniture in bright colours, such as yellow, rather than darker colours, such as brown.
© UCLES 2023 03_0450_22_2023_1.15

3
Appendix 2
The three possible locations for RW’s new factory
Location A
High cost land
Skilled labour
Existing factory located here
City
Village Port
Location C
Location B
Government grants available
High unemployment
Low cost land
No skilled workers
Frequent power cuts
Paint tins produced here
Appendix 3
RW’s financial information for one year before and one year after the new factory has been built
Existing factory (actual) Both factories (forecast)

$m $m
Revenue 10 20
Cost of sales 3 6
Expenses including interest paid 6 12
Profit 1 2
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4
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© UCLES 2023 03_0450_22_2023_1.15

™
Cambridge IGCSE

*8359598807*

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
03_0450_22_2023_1.15
2
1 (a) Explain one advantage and one disadvantage to RW of using flow production.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 03_0450_22_2023_1.15

3
(b) Consider how the following three changes may affect RW. Which change is likely to have the
most effect on RW’s revenue? Justify your answer.
• Changes in consumer tastes and fashions

• Increase in consumer incomes
• Decrease in the price of competitors’ products
Changes in consumer tastes and fashions: .....................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Increase in consumer incomes: ........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Decrease in the price of competitors’ products: ...............................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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4
2 (a) Explain two possible problems for RW of the business growing.
Problem 1: ........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem 2: ........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 03_0450_22_2023_1.15

5
(b) Using Appendix 2 and other information, consider the three possible locations for RW’s new
factory. Which location should RW choose? Justify your answer.
Location A: ........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Location B: ........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Location C: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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3 (a) Explain four legal controls that may benefit employees.
Legal control 1: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Legal control 2: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Legal control 3: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Legal control 4: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
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7
(b) Consider the advantages and disadvantages of two methods of training, other than induction
training, which RW could use for the employees in the new factory. Which of these two methods
should RW choose? Justify your answer.
Method 1: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Method 2: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 03_0450_22_2023_1.15 [Turn over

8
4 (a) Explain two external benefits and two external costs from RW’s factories.
External benefit 1: .............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
External benefit 2: .............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
External cost 1: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
External cost 2: .................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 03_0450_22_2023_1.15

9
(b) Using Appendix 3 and other information, consider whether the following forecasts are likely to
be accurate after the new factory has been built. Do you think RW will achieve its forecast
profit? Justify your answer.
Revenue forecast $20 million: ..........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Cost of sales forecast $6 million: ......................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Expenses forecast, including interest paid, $12 million: ...................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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™
Cambridge IGCSE

INFORMATION
*3654570393-I*
insert.
03_0450_22_2024_1.16
2
Authentic Foods (AF)
Sam started up his own business, AF, 6 years ago in country X. He received government support. Sam
used to live in country A. When he moved to country X he could not find meals from his original country.
Sam decided to use recipes from country A to make meals in his kitchen and sell them to people in the
local area.
As demand increased Sam set up 5 street market stalls across Main City. Many customers buy his
meals because they are traditional and of high quality. There are no other businesses in country X that
produce these meals.
Two years ago Sam formed a business partnership with his brother. They used retained profit from the
business to invest in a factory to produce meals on a larger scale. AF now has 10 skilled production
employees to make the meals in the factory.
AF imports 90% of the ingredients for its meals from country A. AF could buy some of the ingredients
locally at a cheaper price but this may change the taste of the meals. Food production businesses in
country X usually buy their ingredients locally. However, most manufactured consumer products in
country X are imported. Changes in the exchange rate will affect the prices of all imported products.
AF’s factory has operated profitably since it opened. There is a high demand for AF’s meals especially
in Main City where there are many workers who used to live in country A. Sam wants to expand the
factory. He needs to decide whether to increase output by:
• investing in new technology at a cost of $50 000

• buying more of their existing equipment at a cost of $25 000.
As part of the expansion Sam is also considering introducing a new meal to the AF range. There are
two possible options to choose between. Financial details for each meal can be found in Appendix 3.
Appendix 1
Information about three legal controls being introduced in country X
• Increase in the minimum wage that must be paid to all employees - AF already pays above the
existing minimum wage.
• Additional health and safety regulations - this will require additional training and more safety
equipment in AF’s factory.
• Employees can only work a maximum of 50 hours each week - AF’s production employees currently
work 40 hours each week but often work up to 60 hours each week when AF is busy.
© UCLES 2024 03_0450_22_2024_1.16

3
Appendix 2
Email from Sam to his brother about the new meal
To: Sam’s brother
From: Sam
Date: 6 January 2024
There are 100 000 people from country A currently employed in country X. 60% of these employees
earn a high income.
Our traditional meals make customers feel like they are back in country A. This should ensure the market
segment we are aiming at will keep buying our food.
I suggest the following marketing mix for our new traditional meal:
• Price - using penetration pricing

• Place - selling to food retailers in Main City
• Advertising - using social media.
Do you think this is a suitable marketing mix for the new meal?
Appendix 3
Cost and revenue data for the two new meals AF could produce
Meal 1 Meal 2
Cost of ingredients per meal $4 $3
Additional fixed costs per month $6000 $2000
Price per meal $10 $5
Forecast sales per month 2000 5000
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4
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© UCLES 2024 03_0450_22_2024_1.16

™
Cambridge IGCSE

*3654570393*

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
03_0450_22_2024_1.16
2
1 (a) Explain four reasons why governments support the start-up of new businesses.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 3: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 03_0450_22_2024_1.16

3
(b) Using Appendix 1 and other information, consider how AF may be affected by the following
three changes in legal controls over employment issues in country X. Which legal control will
have the most effect on AF? Justify your answer.
• Increase in the legal minimum wage

• Additional health and safety regulations
• Employees can only work a maximum of 50 hours each week
Increase in the legal minimum wage: ...............................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Additional health and safety regulations: ..........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Employees can only work a maximum of 50 hours each week: .......................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2024 03_0450_22_2024_1.16 [Turn over

4
2 (a) Explain two benefits to AF of segmenting its market.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 03_0450_22_2024_1.16

5
(b) Using Appendix 2 and other information, consider each of the following elements of the
marketing mix for AF’s new meal. Would this be a suitable marketing mix for the new meal?
• Price - using penetration pricing

• Place - selling to food retailers in Main City
• Advertising - using social media
Price - using penetration pricing: ......................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Place - selling to food retailers in Main City: ....................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advertising - using social media: ......................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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6
3 (a) Explain two ways an appreciation in the exchange rate of country X might affect AF.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 03_0450_22_2024_1.16

7
(b) Consider the following two ways AF could increase output in its factory. Which would be the
best way to use? Justify your answer.
• Investing in new technology

• Buying more of their existing equipment
Investing in new technology: ............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Buying more of their existing equipment: .........................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2024 03_0450_22_2024_1.16 [Turn over

8
4 (a) Explain two advantages and two disadvantages for AF of using retained profit as a source of
finance for the investment in the factory.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2024 03_0450_22_2024_1.16

9
(b) Using Appendix 3 and other information, consider the advantages and disadvantages of the
two new meals AF could choose to produce. Which meal should AF choose? Justify your
answer using suitable calculations.
Meal 1: ..............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Meal 2: ..............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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™
Cambridge IGCSE

Paper 2 Case study May/June 2022
INFORMATION
*3842737973-I*
insert.
This document has 4 pages.
06_0450_22_2022_1.14
2
Titantic Toys (TT)
TT is a large manufacturer of toys based in country Y. It is a public limited company and has been
trading for 20 years. TT’s products are designed for children up to the age of 5.
TT has benefited from economies of scale as it has grown. The company has been able to buy
specialist new equipment for the flow production line in its factory. TT’s factory uses lean production
methods, such as Kaizen and just-in-time inventory control. All of its employees are well-motivated
and few leave each year. The company provides training for employees in all departments of the
business whenever there are any changes such as introducing new equipment or new products.
Currently, TT only sells its products in country Y but it plans to expand into country Z and become
a multinational company. TT could buy a toy manufacturer located in country Z or build its own
factory there. The government of country Z will need to give permission for TT to build a new factory.
Either option will cost $10 million. The directors are worried about liquidity as TT expands.
TT has developed a new toy for children under 5. The toy is a soft, easy to hold doll which speaks
4 different languages. The Marketing Director thinks this new toy will help TT expand into country
Z, as there are no other products like it in that country. TT is recruiting a new Marketing Manager
for country Z. Details of the shortlisted applicants are in Appendix 3.
The marketing department has already carried out research in country Z and some results are
shown in Appendix 1.
© UCLES 2022 06_0450_22_2022_1.14

3
Appendix 1
Market research results for country Z
© UCLES 2022 06_0450_22_2022_1.14 [Turn over

4
Appendix 2
Extract from TT’s statement of financial position, 2021 and 2022 (at 31 March)
2021 ($m) 2022 ($m)
Inventories 5 5
Accounts receivable (debtors) 5 8
Cash 0 2
Accounts payable (creditors) 4 5
Bank overdraft 1 0
Long-term bank loans 5 10
Total Shareholder’s equity 40 50
Current ratio 2 ?
Acid test ratio 1 ?
Appendix 3
Three applicants for Marketing Manager for country Z
Labiba Shahin Samihah
5 IGCSEs and 2 A levels

10 IGCSEs and 3 A levels 8 IGCSEs
Qualifications/Skills Degree in Business
Speaks 2 languages Speaks 6 languages
Management
10 years as the
5 years working for TT as 2 years as the Marketing
Marketing Manager of a
Experience the Assistant Marketing Manager of a small food
large toy company in
Manager in country Y company in country Z
country Y
© UCLES 2022 06_0450_22_2022_1.14

™
Cambridge IGCSE

*3842737973*
Paper 2 Case study May/June 2022

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
06_0450_22_2022_1.14
2
1 (a) Explain two ways TT could grow.
Way 1: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 06_0450_22_2022_1.14

3
(b) Consider how TT might benefit from the following three economies of scale as it continues to
grow. Which is likely to have the greatest effect on TT’s profit? Justify your answer.
• Purchasing
• Technical
• Financial
Purchasing: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Technical: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Financial: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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4
2 (a) Explain two benefits to TT of using lean production methods.
Benefit 1: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Benefit 2: ..........................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 06_0450_22_2022_1.14

5
(b) Using Appendix 2 and other information, consider TT’s financial position. Do you think TT is
in a good financial position to expand? Justify your answer using suitable calculations.
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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6
3 (a) Explain one way the information in each chart in Appendix 1 might be useful to TT.
Chart 1: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Chart 2: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Chart 3: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Chart 4: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 06_0450_22_2022_1.14

7
(b) Using Appendix 3 and other information, consider the three applicants for the job of Marketing
Manager for country Z. Who is the best applicant for the job? Justify your answer.
Labiba: ..............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Shahin: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Samihah: ..........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2022 06_0450_22_2022_1.14 [Turn over

8
4 (a) Explain four effects of training on a business.
Effect 1: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Effect 2: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Effect 3: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Effect 4: .............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2022 06_0450_22_2022_1.14

9
(b) Consider the benefits and drawbacks for country Z if TT builds a factory there. Do you think
the government of country Z should allow TT to build this factory? Justify your answer.
Benefits for country Z: ......................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Drawbacks for country Z: ..................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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Cambridge IGCSE

Paper 2 Case Study May/June 2023
INFORMATION
*2035001524-I*
insert.
06_0450_22_2023_1.14
2
Everyone Theatre (ET)
Zane and Zaara are both actors. They plan to start up a theatre in a low-income area of Main City. Zane
and Zaara believe that helping the community is as important as being successful entrepreneurs.
The theatre will be a private sector business and Zane and Zaara have to decide whether to start up as
an unincorporated business (partnership) or as a limited company. Zane is planning to prepare a cash-flow
forecast for the first year. Zaara knows they will need to set business objectives for the theatre and also
decide on a leadership style to use when managing employees. ET will have 24 part-time employees
as shown in the organisational chart in Appendix 1.
Zane and Zaara plan to put on performances in the evenings for local people and tourists. There will be
100 seats in the theatre but not all the seats will be sold if the price is too high. The Marketing Manager,
Zaara, will need to decide which performances to put on, what price to charge and which refreshments
to sell. Zaara will also need to decide between the two possible options for the first performance when
the theatre opens. Information on the two options is shown in Appendix 2.
In the daytime the theatre building will be used by Daycare, a local social enterprise. Daycare takes care
of young children up to the age of 5 so that low-income family members can go out to work. It also
provides education for the children which helps their development and progress before they start school.
Some of Daycare’s objectives are different to those of ET.
Appendix 1
Proposed organisational chart for the theatre
Marketing Manager (Zaara) Finance and Administration

Manager (Zane)
Backstage e.g. Actors Promotion Cleaners Ticket office

costumes and (10) (2) (3) (3)
scenery
(6)
Note: The numbers in brackets are the number of part-time employees who work in each department.
© UCLES 2023 06_0450_22_2023_1.14

3
Appendix 2
Forecast data for the two possible options for ET’s first performance at the theatre
For each performance Option 1 Option 2
Number of actors/employees 7 24
Average wage cost per actor/employee $30 $10
All other costs including scenery, costumes and

$1000 $2000
promotion
Forecast revenue assuming all 100 seats are sold $1000 $2500
Appendix 3
Email from Zane to Zaara
To: Zaara
From: Zane
Date: 1 April 2023
We want to support the local community and we need to make decisions about the following.
Should we:
• Pay fair wages even though they may be higher than those paid by competing theatres?
• Only buy costumes produced in the local community?
• Purchase all refreshments from suppliers that do not pollute the environment?
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Cambridge IGCSE

*2035001524*
Paper 2 Case Study May/June 2023

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
06_0450_22_2023_1.14
2
1 (a) Explain four characteristics needed for an entrepreneur to be successful.
Characteristic 1: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 2: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 3: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Characteristic 4: ................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0450_22_2023_1.14

3
(b) 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.
Unincorporated business: .................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Limited company: .............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0450_22_2023_1.14 [Turn over

4
2 (a) Explain one business objective for ET and one other objective that a social enterprise like
Daycare might have.
Business objective for ET: ................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Objective for a social enterprise like Daycare: .................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0450_22_2023_1.14

5
(b) Using Appendix 2 and other information, consider the two options for the first performance at
the theatre. Which is the best option for Zaara to choose? Justify your answer using suitable
calculations.
Option 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Option 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0450_22_2023_1.14 [Turn over

6
3 (a) Explain four reasons why it is important that Zane prepares a cash-flow forecast before starting
ET.
Reason 1: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 2: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 3: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Reason 4: .........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0450_22_2023_1.14

7
(b) Consider the following three roles of marketing for ET. Which role will be the most important
for ET to be successful? Justify your answer.
• Identifying customer needs

• Satisfying customer needs
• Maintaining customer loyalty
Identifying customer needs: ..............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Satisfying customer needs: ..............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Maintaining customer loyalty: ...........................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 06_0450_22_2023_1.14 [Turn over

8
4 (a) Explain two leadership styles that Zane and Zaara could use when managing ET’s employees.
Leadership style 1: ...........................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Leadership style 2: ...........................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 06_0450_22_2023_1.14

9
(b) Consider the following three ethical issues for the theatre. Which ethical issue is likely to have
the biggest effect on ET? Justify your answer.
• Paying fair wages to employees

• Only buying costumes produced in the local community
• Purchasing all refreshments from suppliers that do not pollute the environment
Paying fair wages to employees: ......................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Only buying costumes produced in the local community: ................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Purchasing all refreshments from suppliers that do not pollute the environment: ............
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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Cambridge IGCSE

Paper 2 Case Study October/November 2023
INFORMATION
*6632990112-I*
insert.
11_0450_22_2023_1.13
2
Sports Safety Equipment (SSE)

SSE manufactures sports safety equipment in country Z. It is a public limited company which has been
successful for over 30 years. The main product SSE manufactures is safety helmets for different sports,
such as bicycle riding, cricket and skateboarding. SSE has one large factory making the safety helmets.
The factory uses flow production. The production workers each specialise in one task on the production
line. SSE’s raw materials are imported.
SSE sells its helmets in several other countries and is planning to expand into many more. It will need
to carry out market research before entering new markets in other countries. Each country has different
sports that are popular and the style of helmets varies from country to country.
SSE plans to build its own factories in its most important markets in other countries and will need to
choose a suitable source of finance. The Human Resources Director has decided to use internal
recruitment for the managers of the new factories. There will need to be effective communication between
the managers of the new factories and SSE’s head office in country Z.
Most of SSE’s sales in country Z are through sports equipment shops. Customers like to try on the
helmets to check they fit correctly. SSE currently sells its helmets in other countries through its website.
SSE is also increasing its product range. The latest new product being developed is a children’s cricket
helmet. A break-even chart for this new product is shown in Appendix 3.
Appendix 1
Extract from SSE’s website
If you want the best protection when playing sport then buy an SSE safety helmet!
We supply a wide range of safety helmets for you when playing sport.
Whatever the sport - SSE produces a helmet for you.
You can order directly from this website by entering your head measurements below.
Get the perfect fit for you!
© UCLES 2023 11_0450_22_2023_1.13

3
Appendix 2
Email from SSE’s Managing Director to SSE’s Finance Director
To: Finance Director
From: Managing Director
Date: 1 September 2023
Re: Demand for SSE’s products
Demand for SSE’s products in country Z is forecast to increase. Our government has imposed import
tariffs on safety helmets. We may be able to increase our prices.
The exchange rate in country Z is expected to fall. However, other countries have introduced import
quotas on safety helmets.
We will have to consider all the likely effects of these changes.
Appendix 3
Projected weekly break-even chart for SSE’s new children’s cricket helmet
50 000 total revenue
45 000 total costs
40 000
35 000
30 000
costs and
25 000
revenue $
20 000
15 000 fixed costs
10 000
5000
0
0 100 200 300 400 500 600 700 800 900 1000
output in units
The maximum output and sales for this product is 1000 units per week.
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Cambridge IGCSE

*6632990112*
Paper 2 Case Study October/November 2023

1 hour 30 minutes
INSTRUCTIONS
INFORMATION
11_0450_22_2023_1.13
2
1 (a) Explain two advantages of using specialisation when producing SSE’s products.
Advantage 1: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Advantage 2: ....................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0450_22_2023_1.13

3
(b) Consider the advantages and disadvantages of the following two methods of market research
SSE could use when entering new markets in other countries. Which method of market research
should SSE use? Justify your answer.
• Primary market research
• Secondary market research
Primary market research: .................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Secondary market research: ............................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 11_0450_22_2023_1.13 [Turn over

4
2 (a) Explain four factors a business should consider when choosing which source of finance to
use for expansion.
Factor 1: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 2: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 3: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Factor 4: ...........................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0450_22_2023_1.13

5
(b) Consider the advantages and disadvantages of the following two options for SSE to distribute
its products in the new markets in other countries. Which option should SSE choose? Justify
your answer.
• Sell direct to customers using SSE’s website
• Sell to large sports retailers in other countries
Sell direct to customers using SSE’s website: ..................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Sell to large sports retailers in other countries: ................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Recommendation: ............................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 11_0450_22_2023_1.13 [Turn over

6
3 (a) Explain one advantage and one disadvantage to SSE of using internal recruitment for its new
managers.
Advantage: .......................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Disadvantage: ...................................................................................................................
...........................................................................................................................................
Explanation: ......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0450_22_2023_1.13

7
(b) Consider how the following three barriers could make communication less effective between
SSE’s head office in country Z and its new factories in other countries. Which barrier would
be the easiest to overcome? Justify your choice.
• Problem with the medium used
• Problem with the sender
• Problem with the receiver
Problem with the medium used: .......................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem with the sender: ..................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Problem with the receiver: ................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
© UCLES 2023 11_0450_22_2023_1.13 [Turn over

8
4 (a) Explain four ways the break-even chart in Appendix 3 might be helpful to SSE.
Way 1: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 2: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 3: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Way 4: ...............................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [8]
© UCLES 2023 11_0450_22_2023_1.13

9
(b) Consider how each of the following three changes may affect SSE. Which change is likely to
have the greatest effect on SSE’s profit? Justify your answer.
• A depreciation in the currency of country Z
• An import tariff introduced on sports helmets imported into country Z
• Quotas introduced on sports helmets in countries where SSE sells its products
A depreciation in the currency of country Z: .....................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
An import tariff introduced on sports helmets imported into country Z: ............................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Quotas introduced on sports helmets in countries where SSE sells its products: ............
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
Conclusion: .......................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
........................................................................................................................................... [12]
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Cambridge IGCSE

INFORMATION
*9136086670-I*
insert.
03_0450_22_2022_1.7
2
Mainstreet Hotel (MH)
MH is a hotel owned and managed by Sadiq. He is currently a sole trader but is considering changing
the business to a partnership. The hotel has 80 rooms. On average, 50 of the rooms are occupied
each night. The total revenue from these 50 rooms is $3000 per night.
MH has 40 employees as shown in the organisational chart in Appendix 1. Most of them have
worked for MH for many years. Sadiq works between 60-90 hours a week and currently does not
delegate any management tasks. He is experienced at making marketing decisions but he has few
financial skills. Sadiq communicates with all MH employees every morning to give them their jobs
for that day.
Sadiq wants to improve the quality of customer service in all parts of the hotel. He knows that he
could use quality control or quality assurance. He is considering how he could use these methods
in his hotel.
Sadiq also wants to increase MH’s revenue and is considering the following two options:
Option 1
The price of the rooms could be reduced to $50 per night. He thinks that if the price per room is
reduced MH will have 75 hotel rooms occupied each night. The target market, consumers who
want low-price hotel accommodation, would not change. Many hotel guests return each year to
stay at MH.
Option 2
Redecorate the hotel rooms and upgrade them to a much higher standard. Sadiq thinks that the
price per room could be increased by 50%. The target market would be high-income tourists. He
estimates 50 rooms per night are still likely to be occupied. The estimated cost of upgrading each
hotel room is $10 000.
Appendix 1
Organisational chart for MH
Hotel Owner (Sadiq)
Room cleaning Restaurant Reception Finance

supervisors (2) supervisor (1) supervisor (1) supervisor (1)
Chefs (4) Receptionists (5) Office employees (2)
Room cleaners (10) Serving staff (14)
NB The number in brackets is how many employees are in each role
© UCLES 2022 03_0450_22_2022_1.7

3
Appendix 2
Reviews on MH from a tourist hotel website
Quite good but not perfect 3 out of 5 stars
The restaurant was excellent but my partner cannot eat certain types of food. The menus did not
give a list of the ingredients in the food.
Our room was not cleaned well and the bed was uncomfortable so we didn’t sleep well. However,
the hotel employees were all very friendly and helpful.
Boring website – room ok 2 out of 5 stars
There were very few photographs of the hotel on the website and there was limited information
about the facilities. I was unable to book a restaurant table in advance on the website. The hotel
rooms were basic and prices were slightly high for this standard.
Drinking water in plastic bottles was provided in our room each day. The plastic bottles were thrown
away. I would have preferred glass bottles that can be recycled.
Appendix 3
Email from the Finance Supervisor to Sadiq
To: Sadiq
From: Finance Supervisor
Subject: Improvements to cash flow
I have identified the following three problems:
• We do not have any savings.

• We do not ask for a deposit when hotel rooms are booked. Other hotels in the area require a
30% deposit.
• We do not have trade credit from our food suppliers.
Can we meet to discuss how to improve cash flow?
© UCLES 2022 03_0450_22_2022_1.7

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BUSINESS STUDIES 0450/12

Paper 1 Short Answer and Data Response February/March 2023

You must answer on the question paper.

No additional materials are needed.

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

(a) Define ‘inflation’.

(b) Identify two ways technology could change production methods.

(c) Outline two ways HCB could become more ethical.

© UCLES 2023 03_0450_12_2023_1.13

© UCLES 2023 03_0450_12_2023_1.13 [Turn over

(a) Identify two possible causes of business failure.

Final answer: .................................................................................................................... [2]

© UCLES 2023 03_0450_12_2023_1.13

(c) Identify four reasons why businesses hold inventory.

© UCLES 2023 03_0450_12_2023_1.13 [Turn over

© UCLES 2023 03_0450_12_2023_1.13

3 AH is an insurance business. It operates in a competitive market. AH has 1000 employees including

(a) Identify two responsibilities of supervisors.

(b) Identify two methods of written communication.

(c) Outline two benefits to AH of taking over a competitor.

© UCLES 2023 03_0450_12_2023_1.13 [Turn over

© UCLES 2023 03_0450_12_2023_1.13

(b) Define ‘quality control’.

© UCLES 2023 03_0450_12_2023_1.13 [Turn over

(d) Explain two disadvantages to Viktor of operating as a sole trader.

© UCLES 2023 03_0450_12_2023_1.13

© UCLES 2023 03_0450_12_2023_1.13

© UCLES 2023 03_0450_12_2023_1.13

BUSINESS STUDIES 0450/12

Paper 1 Short Answer and Data Response February/March 2024

You must answer on the question paper.

No additional materials are needed.

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

(a) Define ‘added value’.

(b) Define ‘secondary sector’.

© UCLES 2024 03_0450_12_2024_1.14

(d) Explain two non-financial methods of motivation TCH could use.

© UCLES 2024 03_0450_12_2024_1.14 [Turn over

(a) Identify two characteristics of a recession.

(b) Define ‘pressure group’.

© UCLES 2024 03_0450_12_2024_1.14

© UCLES 2024 03_0450_12_2024_1.14 [Turn over

Cash inflow: ......................................................................................................................

Cash outflow: ....................................................................................................................

(c) Identify four ways a market can be segmented.

© UCLES 2024 03_0450_12_2024_1.14

(d) Explain two advantages to FR of being a multinational company.

© UCLES 2024 03_0450_12_2024_1.14 [Turn over

Break-even output 500 t-shirts

Current sales 550 t-shirts

Selling price per t-shirt $3.99

Variable cost per t-shirt $1.99

(a) Define ‘break-even output’.

(b) Calculate the margin of safety. Show your working.

Final answer: .................................................................................................................... [2]

© UCLES 2024 03_0450_12_2024_1.14

© UCLES 2024 03_0450_12_2024_1.14

© UCLES 2024 03_0450_12_2024_1.14