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General Certificate of Education Advanced Level

MANAGEMENT OF BUSINESS                                                                     9198/2


JUNE 2007 SESSION                        3 hours

TIME 3 hours


  • Answer all questions in Section A and any three  in Section B
  • Write your answers on a separate answer paper provided.
  • If you use more than one sheet of paper fasten the sheets together.


  • The number of marks is given in brackets
[] at the end of each question or part question.
  • You are advised to spend no longer than 2 hours on Section A.
  • The business described in this paper is entirely fictitious.
  • You are reminded of the need for good English and clear presentation in your answers.
  • Calculators may be used.
  • Section A Data Response[25 Marks]

    Answer all questions

    Read the passage below and answer all the questions that follow.


    Quick Clean Manufacturing Ltd produces a range of brooms and mops. The brooms and mops are sold through wholesalers, retailers as well as directly to a variety of customers such as hospitals, schools and households. The marketing strategy is based on mass marketing. The business was only established five years ago by an industrious young entrepreneur called Joseph. Since its establishment, the business has experienced rapid growth.

    The following information for the year ended 31 December 2002 was given:

    Sales for the year     20 000 units

    Direct Costs per unit:

    Materials     $100

    Labour         $150

    Fixed Costs     $1 000 000

    Selling price per unit  $500

    Joseph has always believed in employing qualitative techniques of forecasting to predict the future of the business. The following changes were predicted for the year 2003.

    Sales to increase by 10%

    Material costs to increase by 25%

    Labour costs to increase by 30%

    Selling price to fall by 10%

    To come up with the above forecasts, a group of experts submitted their individual predictions to Joseph, who in turn consolidated the predictions. Extensive market research was also carried out to support the predictions.

    1    a) Define the following terms as they are used in the passage.

    i) mass marketing  [3]

    ii)  qualitative techniques of forecasting,   [3]

    b)   i) Sketch a break-even chart to show the break-even quantity in 2002.   [4]

    ii) Calculate the break-even quantity in 2003  [5]

    c) Calculate the estimated change in profit between 2002 and 2003 and comment on the reliability of he estimate. [10]

    Section B: Essays [75 Marks]

    Answer any three questions from this section

    2 “Company directors are ultimately responsible to one group alone- the shareholders.” Critically evaluate this statement.   [25]

    3    a) Explain the benefits to a sole trader of forming a public limited company. [10]

    b) Discuss factors that might limit the size of a firm withing an industry. [15]

    4 With the aid of an appropriate illustration, evaluate the usefulness of critical path analysis in a house building industry. [25]

    5 To what extent would ration analysis be useful in drawing meaningful conclusions about the performance of public companies? [25]

    6    a) Distinguish between batch and job production systems. [5]

    b) How might a biscuit manufacturer benefit from changing production processes from batch to flow? [10]

    c) Discuss the potential problems that might arise from such a change. [10]

    7    a) Discuss the factors that might influence the choice between desk and field research. [10]

    b) Evaluate the usefulness of the results of market research to the marketing and production departments. [15]

    8    a) Explain the conditions necessary for a company to successfully charge different prices to various types of                        customers for the same product.   [10]

    b) Evaluate other pricing methods that might be employed by firms and consider when each might be used. [15]

    9    Outline the possible organisation problems  presented to management as a result of growing large. Comment on the ways in which these problems my be minimised. [25]

    10   Change is a critical element in an organisation’s ability to survive and grow.

    a) Why, then, is change often resisted?   [10]

    b) Evaluate the measures management may take to reduce resistance to change. [15]


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