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Business Studies · Oct / Nov 2024 · Paper 22 · Question 1

0450

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  • 1(a)[8]

    Explain two advantages and two disadvantages of BB being a public limited company. Award 1 mark for each relevant advantage/disadvantage (max 4). Award 1 additional mark for each explanation of the advantage/disadvantage applied to this context. Relevant advantages might include:

    Able to sell shares to the public – so additional capital can be raised to finance the new factory
    Rapid expansion possible by raising large sums of capital – to become a multinational company
    Limited liability would encourage more people to invest in the public limited company
    Continuity Relevant disadvantages might include:
    Accounts available to the public – competing bike manufacturers can see the accounts
    Pressure to pay large dividends to shareholders – this restricts the planned expansion for the children’s bike
    Risk of takeover/original owners may lose control – and use its flow production line to produce competitors’ products
    Divorce between ownership and control
    More complex accounting and reporting requirements/more legal formalities For example: Able to sell shares to the public (1)

    so additional capital can be raised to finance the new factory (app). Application could include: new factory;

    bikes;

    flow production;

    wants to become a multinational company;

    bike manufacturer;

    exports 30%;

    target market of adults and young children;

    components of bikes e.g. gears;

    100 production workers;

    sells through specialist bike shops;

    high labour turnover;

    sales have increased every year since set up.

  • 1(b)[12]

    Consider the advantages and disadvantages of the following three methods BB could use to motivate its production workers. Which method should BB use? Justify your answer.

    Piece rate
    Teamworking
    Job rotation Level Description Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more methods. Well-justified recommendation. Candidates discussing all three methods, in context and with a well-justified recommendation, including why the alternative methods were rejected, should be rewarded with the top marks in the band. 9–12 Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one method. Judgement with some justification/some evaluation of choice made. Candidates discussing two or more methods in detail and applying these to the case should be rewarded with the top marks in the band. 5–8 Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the methods with little/no explanation. Simple judgement with limited justification/limited evaluation of choice made. Candidates outlining the three methods in context should be rewarded with the top marks in the band. 1–4 No creditable response. Relevant points might include: Piece rate
    Employees would receive payment for each product/task they carry out – encourages them to work harder/carry out more tasks – produce more output – possibly increased sales from higher output of bikes
    Taylor – increased pay leads to employees being more motivated and may reduce the high labour turnover
    May be unfair if some tasks take longer than other tasks – so some employees gain more than others in higher payment – may demotivate some employees
    If machinery breaks down, then the employees will earn less total pay
    The 100 skilled production employees may work quickly to earn higher wages and hence may make more mistakes/reduce quality
    May not be able to sell the increased output – increasing storage costs
    May be difficult to measure the output of each of the 100 production employees – so difficult to calculate piece–rate and easier to stick to paying $10 per hour Teamworking
    Production employees become more involved with the decision–making when working together in a team – makes them feel more valued as have more responsibility in the production process manufacturing bicycles
    Feel have more control over tasks – more loyal to BB – less likely to leave so may reduce recruitment costs
    Some parts of the flow production process may not easily be divided so a team of employees can work together/may not be easy to apply to the flow production process Job rotation
    Makes the employees’ job more interesting/less boring
    Change tasks around from one product to another on the flow production line – and may need different skills to complete this work
    May keep working with different employees from the 100 production workers which employees prefer
    May increase training requirements as each worker may only be able to perform one task – so may need additional training to carry out different tasks – increases costs for BB
    Quality of bikes may be lower if employees are less specialised in different tasks
    May mean sometimes a worker does a job that is not liked – may reduce motivation
    May only be motivating in the short term until the worker gets used to the new tasks
    Does not make the individual tasks themselves more interesting Recommendation Justification might include:
    Introducing piece–rate should be chosen as it will motivate the 100 production employees to increase output to increase their wages. BB will earn a higher revenue if all output is sold, and employees are less likely to leave. Teamworking may make employees feel more motivated but may not lead to a higher output just happier production employees. Job rotation may not increase motivation if the different tasks are all equally boring on the production line.
    Introducing teamworking should be chosen as this will make employees feel some control over the tasks they carry out on the flow production line and will give them chance to work together leading to higher motivation and they are less likely to leave.
    Introducing job rotation between tasks producing bikes is the best method to choose because it will not cost BB any money if no training is required. It will give variety to the employees’ jobs and will encourage them to stay at BB instead of leaving.
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