General Certificate of Education Advanced Level

BUSINESS STUDIES                                               9198/1


June 2015 Session        3 hours

TIME 3 hours


  • Answer all questions.
  • 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 not more than 2 hours on Section A.
  • The businesses described in this paper are entirely fictitious.
  • You are reminded of the need for good English and clear presentation in your answers.
  • Calculators may be used.
  • Section A [70 Marks]

    Answer all questions.

    1    What is meant by the term corporate culture?    [2]

    2    Discuss the role played by the primary sector in the economy of your country.   [4]

    3  a)  Distinguish between economic and political constraints. [4]

         b)  To what extent should the government be concerned about the activities of multinational companies. [5]

    4   a) State any two methods of stock control.            [2]

         b) How might the production manager of a detergent company find benchmarking useful? [4]

    5 How might a saw milling firm benefit from training?          [4]

    6    a) What is the difference between leadership and management? [2]

           b) Evaluate the effectiveness of autocratic leadership.          [4]

    7     a) State any two communication barriers that lie with the sender. [2]

           b) Explain the limitations of vertical communication in a tall organisational structure.  [4]

    8    a) Explain how a manufacturer of soft drinks might find price elasticity of demand useful.  [3]

         b) The following information shows the effect of a price change, from $10 to $15, to a product produced by             Nyakunika Ltd.

    Price ($)Expenditure on Advertising ($)Sales (units)
    105 00020 000
    156 00022 000

    Calculate the promotional elasticity on demand for this product.   [2]

    9    a) Explain the two classes under which products are grouped.   [4]

           b) Why might a clothes manufacturing firm be prepared to sell its product at a price below the total cost of              producing it? [4]

    10  a) List any two factors which might influence the relocation of a shoe manufacturer.   [2]

           b) Evaluate the usefulness of the flow production method.      [4]

    11      a) What are the functions of the stock exchange?                    [3]

              b) For what reasons might a business make provisions for

                    i) Bad debts,                 [2]

                    ii)  Depreciation?   [2]

    12     a) The following ar marks obtained by Business Studies student in a given test:


              From the given set of marks, distinguish between the mode and the mean. [4]

            b) What are the benefits of linear programming?  [3]

    Section B [30 Marks]

    Read the following case study and answer all the questions that follow.

    Fair Deal Furniture

    Conrad and Taurai own a furniture workshop, Fair Deal Furniture (FDF), in partnership. The business produces home furniture using high-technology equipment. For the past 10 years, all the furniture has been sold exclusively to Mambo Dealers under the brand name ” Good Living”. This arrangement has suited both the workshop and the retail chain. It has helped FDF to earn a fair and regular income.

    Recent developments in the business environment have called for quick action from FDF. The demand for home furniture has been falling. The suppliers of timber have changed their discount terms from 20% on goods worth $6 000 or more to 20% on goods worth $8 000 or more. Any purchases less than $8 000 would now attract a discount of only 12 %/

    The partners have the idea to incorporate that is, converting their partnership into a limited company, and then explore the foreign markets. They can start producing and distributing office furniture through agents in neighbouring countries. On the contrary, Excellence Financial Services, FDF’s financier and advisor, has another option of specialising in the provision of school furniture since there has been an increase in demand for school furniture.

    However, the viability of each option has been assessed and the following information on the expected returns for the next 4 years has been made available.

    YearVenturing into the Export MarketSpecialising in school furniture
    0($200 000)($100 000)
    1$80 000$100 000
    2$120 000$150 000
    3$150 000$120 000
    4$150 000$80 000

    13        a) Calculate the Average Rate of Return (ARR) for each of the above options. [4]

                b) Comment on the usefulness of the discounted cash flow method in this case. [6]

    14      Discuss the benefits that Fair Deal Furniture might enjoy by incorporating. [10]

    15      Evaluate the problems that are faced by single product firms.  [10]

    To access more papers go to the A Level Business Studies page.