General Certificate of Education Advanced Level

BUSINESS STUDIES                                                                                                             9198/2

NOVEMBER 2008 SESSION        3 hours

TIME 3 hours


  • Answer all  questions from Section A and any three  from Section B.
  • Write your answers on the separate 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.
  • The businesses described in this paper are entirely fictitious.
  • You are advised to spend no longer than 2 hours on Section A.
  • 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.

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

    Vukani Ltd

    Vukani Ltd is a new business that arose as a result of the indigenisation policy. The firm produces peanut butter for local supermarkets.

    Since its inception, Vukani Ltd has successfully maintained a steady increase of its market share despite the harsh economic environment it has operated in. This increase in market share has prompted the directors to propose the construction of a bigger  and modern factory to facilitate business expansion. The directors have tasked the Finance Director, Rudo Dube, to recommend suitable sources of finance and work out cash flow projections for the proposed factory.

    Basing on the assumption that the factory will be viable for four years, Rudo has produced the following cash flow projection figures:

    Initial investment           $800 000

    Forecast of net annual returns:  Year 1           $100 000

                                                                     2            $200 000

                                                                     3             $350 000

                                                                     4             $300 000

    To minimise risk of production failure, the Operations director has proposed the implementation of a work study program in the proposed new factory. He has argued that this program will also improve efficiency once the firm has expanded.

          a) Define the following terms:

                            i) indigenisation policy     [2]

                           ii) work study            [2]

         b) Using the information provided by the Finance Director, calculate the average rate of return and comment on how it can be used to make investment decisions.  [5]

        c) Giving reasons, advise Rudo on which possible sources of finance to use. [6]

        d) Discuss how Vukani Ltd would implement the work study program and the relevance of such a program to the firm.  [10]

    Section B: Essays [75 Marks]

    Answer any three questions from this section.

    2    a) Discuss the argument for the government’s continued ownership of public enterprises. [10]

          b) Assess the benefits of privatisation in your country.   [15]

    3    a) Discuss the view that informal groups may be favourable to an organisation.  [12]

          b) Critically examine the advantages of decentralisation.   [13]

    4    a) “60% of newly introduced products fail.” Discuss the reasons for this.  [10]

          b) Evaluate the factors that might influence a marketing manager’s choice of a distribution channel.  [15]

    5    a) Discuss the reasons that might influence a firm’s decision to relocate to another country. [12]

           b) Evaluate the methods that might be used by a floor polish manufacturing firm to improve its capacity utilisation. [13]

    6   The directors of Suthani Restaurant are proposing to undertake a major expansion of the restaurant. Evaluate the methods that management might use to motivate its staff to accept the heavier workload.  [25]

    7   a) Discuss the contribution of market research to a newly established tobacco processing firm. [12]

        b) Evaluate the techniques that the firm might use to collect market research data.  [13]

    8   a) Discuss the usefulness of a cash flow forecast to a new farmer.   [10]

          b) Evaluate the possible ways a firm might use to improve its cash flow.   [15]

    9 Evaluate the importance of keeping accurate business accounts.  [25]

    10 Evaluate methods that might be used to present statistical data.  [25]

    To access more exams go to the Business Studies Exam page.