Business Studies · May / June 2025 · Paper 11 · Question 3

0450

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LFK is a coal-mining business. It has 135 employees who are all provided with training. After the dismissal of one of LFKls employees there is a job vacancy for a new supervisor. External recruitment 3 will be used. The Managing Director is preparing a cash flow forecast for LFK. An extract is shown in Table 3.1. Table 3.1 Extract from LFKls cash flow forecast July - September 2025 $000 September August July 730 400 600 Cash inflow 590 X 720 Cash outflow 140 (100) (120) Net cash flow (180) (80) 40 Opening balance Y (180) (80) Closing balance

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3(a)[2]
Define ‘dismissal’. Award 2 marks for a full definition. Award 1 mark for a partial definition.
When employment is ended against the will of the employee, usually for not working in accordance with the employment contract [2]
Termination by the employer because the employee has broken company rules or not performing work to the required standard [2]
Employee is told to leave the business because of poor performance/behaviour [2]
Partial definition e.g.
when someone/employee is told to leave a business [1]
lose job/let go because of bad behaviour [1]
2 For two marks need to recognise the employee is being told to leave and why. Do not award on own:
Lose job
Let go Accept fired/sacked as alternative to employment ended or against their will
3(b)[2]
Calculate the value of X and Y. Award 1 mark for each correct calculation. X: 500 000 or (500 000) or 500 [1]
Y: (40 000) or (40) or – 40 [1]
2 Y must be shown as a negative number. This could be using brackets/minus sign.
3(c)[4]
Identify four reasons why a cash flow forecast might be useful to a business. Award 1 mark for each relevant reason (max 4). Points might include:
Help support a loan application / attract investors
Can identify (possible causes of) cash flow problems
Help (financial) planning / budgeting / manage cash flow better / help avoid cash flow problems or insolvency
Identify how much a business might need to borrow/size of overdraft
Identify whether the business will be holding too much cash that could be put to better use
Helps with decision making / decide if expansion is possible Other appropriate responses should be credited. 4 Only award the first four responses given.
3(d)[6]
Explain two advantages of LFK training its employees. Award 1 mark for identification of each relevant advantage (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:
To motivate employees [k] to reduce absenteeism / lower labour turnover [an] of its 135 employees [app]
Help retain/keep/attract employees / lower labour turnover [k]
To increase skills/knowledge [k] more workers are suitable for promotion [an] so may not need to use external recruitment [app]
Reduce mistakes/errors / better quality [k]
Reduce number of accidents [k] increasing workers` safety [an]
Increase efficiency/productivity/reduced waste [k] which can help reduce (average) cost [an] which can reduce its cash outflows of $600 000 [app]
Increase output [k]
Can improve competitiveness [k] of the mine [app]
Improve customer service [k]
Management training can help improve business decisions [k] Other appropriate responses should be credited. 6 To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Coal
Mining/mines
135 (employees)
Dismissal
New supervisor
External recruitment
Use of data from Table 3.1. Other appropriate examples can be credited. Advantages can refer to the business or employees. Some points can be awarded as [k] or [an] but only award once e.g. reduce mistakes, accidents, efficiency, waste The following are AN only:
reduce costs
better reputation
increase sales
3(e)[6]
Do you think the advantages of external recruitment for a business are greater than the disadvantages? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to whether the advantages of external recruitment for a business are greater than the disadvantages. Points might include: Advantages:
Brings new skills/ideas [k] improving productivity / efficiency [an]
Wider choice of applicants [k] increases possibility of finding the best person for the job [an]
Can bring valuable knowledge/experience of competition [k] so might gain a competitive advantage [an]
Avoids creating a vacancy which will need to be filled [k]
Avoids risk of upsetting employees when someone internal is promoted [k] which could demotivate/cause others to leave [an] Disadvantages:
Higher recruitment costs [k] increasing cash outflows [an]
No knowledge of how business works / current operations [k] so may need (induction) training [an]
More time spent / takes longer to fill vacancy [k] which could be used for other purposes [an] Other appropriate responses should be credited. 6 This is a general question so there are no marks for application. Award only once: Advantage avoids upsetting employees or Disadvantage demotivates existing employees Guidance Justification might include: External recruitment can bring in new skills [k] improving productivity [an]. However, the new employee will not know how business works [k] so might need induction training [an]. External recruitment is better because the new ideas could lead to lower costs in the long term, [eval] which can more than cover the extra cost of any induction training needed [eval].

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