Business Studies · May / June 2020 · Paper 11 · Question 4

0450

As printed in the paper

The question as text

BMT is a business partnership owned by 2 brothers. The brothers received government support when they started BMT 6 years ago. BMT now has 30 employees who make high quality watches. 4 The business tries to achieve lean production. Demand has increased each year and in 2019 BMT sold 8000 watches. BMT makes some parts for watches and all the other parts are imported. BMT had to consider a number of factors, including exchange rates, when deciding whether to import parts for watches.

Read automatically from the paper; the printed page above is exact.

Show the answer and mark scheme

4(a)[2]
Identify two reasons why a government might support business start- ups. Award 1 mark per reason. Points might include:
reduce unemployment
increase competition
increase output
benefit society
small businesses can grow Other appropriate responses should also be credited. 2
4(b)[2]
State two types of business organisation (other than partnership). Award 1 mark for each type of business organisation. Points might include:
sole trader
private limited company
public limited company
franchise
social enterprise
charity
public corporation Other appropriate responses should also be credited. 2
4(c)[4]
Outline two disadvantages of BMT being a business partnership. Award 1 mark for each relevant disadvantage. Award 1 mark for each relevant reference to this business. Points might include:
Unlimited liability/ each responsible for debts of other [k] so if business cannot pay its debts there is risk to the personal assets of each brother [app]
Fewer sources of finance (than limited company) [k] restricting plans to expand the watch business [app]
Possible disagreements/slower decision making [k] such as whether to import parts [app]
Have to share profits [k] Other appropriate responses should also be credited.
4(d)[6]
Explain two ways BMT could achieve lean production. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:
Just in Time [k] ordering parts as and when needed for the watches [app] which reduces storage costs [an]
Kaizen [k] helps to eliminate mistakes and errors [an] when making these high-quality products [app]
Cell production/team working [k] of its 30 employees [app]
Kanban [k] Other appropriate responses should also be credited. 6
4(e)[6]
Do you think the exchange rate is the most important factor for a business to consider when deciding whether to import parts for a high quality product? Justify your answer. Award up to 2 marks for identification of relevant issues. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to whether the exchange rate is the most important factor for a business when deciding whether to import parts for a high quality product. Points might include: Exchange rates
Appreciation in own exchange rates would mean have to pay less to import materials [k] which lowers costs [an] so may be able to lower prices or improve profit margin [an]
Changing rates are difficult to plan for [k] may result in having much higher costs than budget [an]
Exchange rate depreciate [k] lead to higher cost of imported materials [an] could mean have to increase prices which could lower sales [an] Other factors might include:
The quality of parts/materials [k] as it may not be possible to obtain the resources locally [an]
Import tariffs [k] this would increase the price [an]
Import quotas [k] this could limit the amount of parts that can be brought into the country [an] Justification might include:
As it is for a high-quality product, exchange rate is not as important as the materials because customers may be willing to pay the higher price to get the right quality which could cover the financial impact of any changes in the exchange rate. [eval] [eval] Other appropriate responses should also be credited. 6

Practise this paper →

Make a free account to save your answers and see your weak topics and ask the AI why a wrong answer is wrong.