Unit 2

People in Business Categorised Past Papers

(Marking Scheme & Example Developed Answers)

5. (a) What is meant by the term ‘internal communication’? [2]

Process of exchanging information between one group and another inside a business [2].
Flow of messages from source to recipient [1] within a business [1].
Do not accept examples of communication – the question requires a definition.

(b) Identify two features of the organisational structure of ABC as shown in Fig. 2. [2]
1 mark per feature identified:
● narrow span of control
● tall (structure)
● 4/large number of levels/hierarchy
Do not accept only 2 subordinates as this is unknown.

(c) Identify and explain two reasons why managers may be reluctant to delegate tasks
to employees in their organisation. [4]
Knowledge [2 x 1]:
● may lack confidence in employees
● want to maintain total control/manager feels threatened
● think they know best/know the task will be done/fear of errors
● employees lack training/skills
● managers not capable of explaining the task.
Analysis [2 x 1]: explanation shows why these reasons result in a lack of delegation.

Example answer:
Reason 1: Fear of losing control of decision-making
Explanation: Managers may feel threatened by subordinates who can complete a task to a
better standard than the manager. They are scared of losing their job because of this.
Reason 2: Managers think they know best
Explanation: Some managers believe that “if you want it done right, you have to do it yourself”.
This makes them not trust subordinates to do a task for them.

(d) Identify and explain three advantages to ABC of recruiting senior managers from
within the business. [6]
Knowledge [3 x 1]:
● acts as a motivator for employees
● individual knows the business
● business knows the individual
● avoids costs of external recruitment.
Do not accept ‘time’ or ‘money’ unless explained. Training must clearly be related to induction to
be rewarded. ‘Experienced’ is not a valid answer.
Analysis [3 x 1]: explanation as to why ABC benefits.
Example answer:
Advantage 1: Avoids costs of external recruitment
Explanation: ABC doesn’t have to use valuable time to recruit senior managers for the business
using internal recruitment.
Advantage 2: Individual knows the business
Explanation: Employees within ABC don’t have to train and understand how the job works
because they are already working in the business.
Advantage 3: Business knows the individual
Explanation: ABC doesn’t have to interview and make background checks for the applicants
because they are already working in the business.

(e) Recommend two ways in which communication could be improved in a large

organisation. Justify your recommendations. [6]
Knowledge [2]:
Could include:
● telephone/cell phone
● email
● meetings/video-conferencing
● shorten span of control
● delayering
Analysis [2]: explanation of how communication would be improved.
Evaluation [2]: justification of why this is suitable for a large organisation. This can be implicit.

Example answer:
Way 1: Give clear messages
By giving clear messages to the receiver, communication can be improved in a large
organisation. It avoids any form of miscommunication and misunderstanding between the
sender and receiver thus achieving less mistakes while doing tasks leading to more tasks done
correctly and efficiently.
Way 2: Receive feedback
By receiving feedback from the receiver, communication can be improved in a large
organisation. It shows that the message has been received and understood. This can assist in
doing tasks which involve messages and feedback sent back to back leading to tasks done
faster and correctly.

4. (a) What is meant by the term ‘productivity’? [2]

Clear understanding [2]:
e.g. a measure of the output of a business in relation to its inputs [2] or effective utilisation of
resources.
Some understanding [1]: e.g. output per worker/measure of efficiency.

(b) Identify two reasons why communication within a large business is often difficult.
[2]
Knowledge [2 × 1]: 1 mark per reason.
● No direct contact/opportunity for feedback
● limited/long chain
● too many people to inform
● people might work at different times (shift workers)

(c) Identify and explain two possible reasons why Wesso uses bonuses as a means of
paying staff. [4]
Knowledge [2 × 1].
Reasons include:
● industry norm
● incentive to work hard/motivation/productivity
● performance-related pay/hit targets/recognition
● can help increase output
● retention of workers/loyalty.
Analysis [2 × 1]: explain how this method works. E.g wages linked closely to performance so
only pay out more if hit target.

Example answer:
Reason 1: Performance-related pay
Explanation: Workers are only awarded a bonus if they achieve the set target set by Wesso.
Bonuses help motivated employees to work harder.
Reason 2: Increase productivity
Explanation: Workers are only awarded a bonus if they increase their productivity. An increase
in productivity will reduce average costs.

(d) Identify and explain three non-financial ways of motivating staff in a business. [6]
Knowledge [3 × 1].
Ways include:
● job enlargement
● job enrichment
● job rotation
● direct management interest in performance
● encouragement
Analysis [3 × 1]. Analysis must show how the method impacts on motivation. Note: only allow
one example of fringe benefits.

Example answer:
Way 1: Job rotation
Explanation: Instead of doing the same task, workers switch from one job to another. This
makes the work more interesting and helps prevent boredom. Workers become multi-skilled,
which helps create a more flexible workforce
Way 2: Job enlargement
Explanation: Workers are given a greater variety of similar-level tasks to do. Their jobs become
more interesting and, as with job rotation, this reduces boredom.
Way 3: Job enrichment
Explanation: Work is organised so that workers are able to use more of their skills and abilities .
Workers feel more valued by their employer and this increases their job satisfaction, efficiency
and motivation.

(e) How can the management at Wesso persuade the trade union to accept the
proposed changes in working practices? Justify your answer. [6]
Identification of ways [2].
Ways could include:
● meeting
● negotiation
● practical strategies such as offer better pay/conditions
Analysis of issues [2]: explain why or how it would work.
Evaluation of approach [2]: justified decision as to why it is suitable.

Example answer:
The management at Wesso can arrange a meeting with the trade union to negotiate whether
their proposal of introducing new working practices be accepted. This can help both sides to
agree on the same thing without causing conflicts among them. The management at Weeso
could offer practical strategies such as offering better pay and better working conditions. This
can try persuading the trade union to accept their proposal of introducing new working practices
to achieve their aim of improving productivity and cutting costs. These are some ways I
recommend Weeso’s management to use to persuade the trade union to accept their proposal.

3. (a) What is meant by the term ‘organisational structure’? [2]

Clear understanding of term [2] e.g. refers to level of management and division of
responsibilities within an organisation/shows the roles of people in an organisation and the
relationship between them.
Some understanding [1] e.g. ‘how a business is organised’.

(b) What is meant by ‘communication in the business is poor’? [2]

Clear understanding [2]: communication refers to the process by which information is
exchanged between one group and another [1]. If it is poor this process is not functioning
effectively [+ 1].
A one-mark answer will refer only to communication or the concept of ‘poor’, e.g. message is
not getting through [1].

(c) Identify and explain two advantages of delegating tasks in an organisation. [4]
Knowledge [2 × 1]:
● work-load spread more evenly
● give responsibility to lower rank employees
● management can focus on more important matters
 ● motivational factor for employees
● improved efficiency
Note: advantages can be for employee, manager or business. Do not accept ‘faster’ and
‘effective’ alone as knowledge points. These can be used as part of an explanation.
Analysis [2 × 1]: show how or why the point identified creates an advantage

e.g. gives responsibility to lower rank employees [k] which may increase motivation and job
satisfaction [an].

(d) Identify and explain three reasons why meetings between managers and workers
can benefit the business. [6]
Knowledge [3 × 1]:
Benefits might include:
● interchange of ideas
● better understanding of other people’s points of view/opinions
● improves communications
● increases sense of unity of purpose and motivation
● better decision-making
● problem-solving
Analysis [3 × 1]: explains how or why it is a benefit to the business.

E.g. workers can put forward ideas [k] which help the business cut costs [an].

(e) How effective is money in motivating workers? Justify your answer. [6]
Knowledge of motivational factors [2]:
● money
● personal satisfaction
● social needs, etc.
Analysis of issues [2]: explain how money may or may not motivate workers. Do not accept
benefits for the business.
Evaluation [2]: justified decision as to effectiveness of money to motivate workers based on
points raised,

e.g. motivation refers to the attitude that people have towards their work. [k] Money clearly can
help motivation by increasing the financial rewards [k] and hence making work more attractive
[an]. However money alone cannot motivate if other factors are lacking [e].

4. (a) What is meant by ‘organisational structure’? [2]

Clear understanding [2] e.g. the number of levels of management and division of
responsibility/authority within a business [2] staff and their positions in relation to each other [2].
Some understanding [1] e.g. how many levels in a business/Shows how business is
organised/shows who reports to whom/hierarchy.
Some understanding plus example can gain full marks.

(b) What is meant by ‘chain of command’? [2]

Clear understanding [2]: structure within an organisation through which orders are passed down
from senior management to the lower levels of management/pass messages up and down the
hierarchy.
Some understanding [1]: ‘shows who gives orders’.
For 2 marks you must have an idea of ‘messages passed/communication’ AND ‘who between’.

(c) Identify and explain two possible disadvantages for a business of having a wide
span of control. [4]
Knowledge [2 × 1]:
● difficult to control so many people
● communication problems as too many subordinates to inform/ask
● workers might not have enough skills to cope with extra responsibility
● supervisors might not have the right skills to manage so many people
award 1 mark per relevant disadvantage.
Analysis [2 × 1]: award 1 mark per relevant explanation (i.e. explain why might be disadvantage
for a business).
Points might include:
● difficult to control so many people [k] so less work is done [an]
● communication problems as too many subordinates to inform/ask [k] so harder to get
feedback about the work [an]/messages lost [an]
● workers might not have enough skills to cope with extra responsibility [k] so more
mistakes are made [an]
● supervisors might not have the right skills to manage so many people [k]
● fall in productivity [k] as hard to motivate so many people [an].
Note: disadvantages must clearly relate to business not employees to be credited

(d) Identify and explain three reasons why effective communication within a business
is important to the management. [6]
Knowledge [3 × 1]:
award 1 mark per relevant reason.
Analysis [3 × 1]:
award 1 mark per relevant explanation (i.e. explain why it is important to management).
Reasons might include:
improves efficiency [k]
as workers as feel involved in the business decisions [k] so more productive [an]
ensures the right orders are passed to the right people [k] so orders are completed properly or
on time [an]
avoids confusion or misunderstanding [k] so less mistakes [an]
avoids duplication of work [k] which can waste time and resources
less mistakes as know what to do [k] so prevents faults [an].
Note: reasons must clearly relate to management/business not employees or customers. Do not
allow ‘workers motivated’ unless linked to idea of effective communication.

(e) The management of Cole Brokers think that the disadvantages of e-commerce are
greater than the advantages to their business. Do you agree? Justify your answer. [6]
Knowledge [2 × 1]: identification of relevant issues.
vulnerability to viruses/technical breakdown/security issues
government restrictions/laws concerning what and how sell insurance in other countries
loss of personal contact with customers
need for system support/security/training costs for staff
threat of increased competition

access new markets as not restricted to existing locations

possible cost savings can lead to lower prices and more business
opportunity for 24 hour business
Analysis [2]: explain how or why might affect business.
Evaluation [2]: reasoned judgement made as to whether disadvantages are greater or not for
CB Brokers. For two evaluation marks, the answer must be clearly in the context of this
business. Either viewpoint is possible depending on points discussed.
Disadvantages include:
vulnerability to viruses/technical breakdown/security issues [k]
government restrictions/laws concerning what and how sell insurance in other countries [k]
loss of personal contact with customers [k]
need for system support/security/training costs for staff [k] which will increase costs [an]
threat of increased competition [k].
Advantages include:
access new markets as not restricted to existing locations [k] which could lead to more sales
[an]
possible cost savings can lead to lower prices and more business
opportunity for 24 hour business [k].
1 sided argument maximum 4 marks.
Context could include: medium sized, customers around the world, highly competitive market,
many insurance businesses using the internet.

5. (a) What is meant by a ‘job description’? [2]

Clear understanding [2] outlines the responsibilities and duties [1] expected to be done by
someone employed to do a specific job [+1].
Some understanding [1] e.g. what have to do for a job.
Some understanding plus example can gain 2 marks.

(b) Identify two possible features of a person specification. [2]

Knowledge [2 × 1]: one mark per feature.
Features include:
 ● knowledge of various elements such as qualifications, experience, skills, personal
qualities
OR
● practical examples such as able to manage people
● age and/or gender (allow only 1 mark).
Allow any reasonable feature.
Do not accept examples which clearly relate to details of a CV e.g. where went to school,
previous employer.

(c) Identify and explain two suitable places where Manuel could advertise the
vacancies. [4]
Knowledge [2 × 1]: award 1 mark per suitable place.
Application [2 × 1]: award 1 mark for each relevant explanation (i.e. say why suitable place).
Places include:
● internal – notice board/staff publication.
● external – job centre/advertising in local paper or local radio/specialist trade magazines/
recruitment agency/internet or jobs website or online.
Do not accept ‘shop’, in the street, internal or external or in the business unless explained.
Award relevant examples of either two internal or two external or one example of each.
Do not award analysis/application marks for points which clearly cannot be applied to role of
supervisor e.g. Television, national radio, national newspaper and magazines.

(d) Identify and explain three factors that Sachs-Tech should consider when deciding
where to locate a new factory. [6]
Knowledge [3 × 1]: award 1 mark per relevant factor.
Analysis/application [3 × 1]: award 1 mark for each relevant explanation (i.e. explain how/ why
factor is important to Sachs-Tech).
Factors include:
● available space [k]
● cost of site [k] can they afford the rent [an]
● utilities e.g. power, water, internet [k]
● transport links/infrastructure [k] so it is cheaper/easier to distribute the parts [an]
● access to market/access to (necessary) materials [k]
● government rules [k]
● availability of grants/incentives [k]
● access to (suitable) labour [k]
● cost of labour [k] e.g. cheap labour could reduce their variable costs [an]
● personal preference of owner as to where they want to live/work [k]
● environmental issues e.g. waste disposal or pollution [k]
● local opposition to plans/pressure groups [k].
Do not award analysis/application marks for points which clearly cannot be applied to a mobile
phone manufacturer e.g. ‘near retailers’.
(e) The Finance manager is worried that the business might be growing too quickly. Do
you think he is right to be worried? Justify your answer. [6]
Knowledge [2 × 1]: identification of relevant issues.
Analysis [2]: explain how or why issue needs to be considered.
Evaluation [2]: reasoned judgement made as to whether business might be growing too quickly.
For two evaluation marks, the answer must be clearly in the context of this business.
Either viewpoint is possible depending on points discussed.
Possible issues include:
● demand for the product is growing [k] so need to expand to meet customer requirements
[an]
● growth can bring many advantages e.g. economies of scale [k]
● depends on objectives of the business/attitude to risk [k]
● costs of expansion e.g. more equipment [k]/extra factory space needed [k] can the
business afford to pay [an]
● management issues e.g. do they have sufficient skilled managers to oversee the
expansion [k]
● recruitment problems e.g. are they able to recruit enough workers or the right people? [k]
● finance issues e.g. access to necessary sources of finance [k]
● diseconomies of scale [k]
● quality may suffer in rush to meet demand [k]
● sales could fall as quickly as sales have risen [k]
● problems of excess stock [k]
Context could include: mobile phone industry, sales are rising quickly, meet demand, new
production supervisors, makes parts, new factory.

1. (a) What is meant by ‘productivity’? [2]

Clear understanding [2] e.g. a measure of the output of a business in relation to its inputs [2] or
effective utilisation of resources/in a time period.
Some understanding [1] e.g. output per worker/measure of efficiency/rate at which they produce
goods.

(b) What is meant by ‘on-the-job training’? [2]

Clear understanding [2] e.g. Training which involves watching a more experienced worker doing
the job in the work place.
Some understanding [1] e.g. get training whilst still working/at the work place/learning from
another worker.

(c) Identify and explain one advantage and one disadvantage of off-the-job training for
IRKAM. [4]
Knowledge [2 × 1]: award 1 mark for the advantage and 1 mark for the disadvantage.
Application/analysis [2 × 1]: award 1 mark for each development of a relevant point.
Advantages include:
 ● experienced worker’s production is not affected as training happens away from work
place
● learner has access to trainers who are skilled in the task
● workers will not learn bad habits of on-the-job trainer
● quality of product maintained as all work completed by experienced workers
● less impact on output as current workers do not have to spend time training new people.
Disadvantages include:
● more expensive than on the job which increases costs for the business. For example
transport costs/paid trainer
● loss of first hand experience/not necessarily tailored to individual company
● no output produced by learner whilst training taking place.
Do not accept points that apply to both methods of training.

(d) Identify and explain two reasons why quality control might be important to IRKAM.
[6]
Knowledge [2 × 1]: award 1 mark per relevant reason.
Analysis [2 × 1]: award 1 mark for each relevant explanation.
Application [2 × 1]: award 1 mark for explaining why it is important to IRKAM.
Reasons might include:
● reduce errors (k) so saves time and money (an)
● protect reputation (k) as makes high quality doors (ap)
● save money (k) on cost of remaking items (an)/reduce wastage (an)
● saves time (k) so could help increase production (an) therefore increasing productivity
(ap)

(e) Over the past three years there has been a large increase in demand for IRKAM’s
doors. Do you think job production is still the best method of production for IRKAM?
Justify your answer. [6]
Knowledge [2]: outlines methods of production/identification of issues concerning job
production.
Analysis [2]: develop or explain point to show why it is an issue.
Evaluation [2]: reasoned judgement made as to whether ‘job’ is still best method for IRKAM to
use.
For two evaluation marks, the answer must be clearly in the context of this business.
Either viewpoint is possible depending on points discussed.
Points might include:
● nature of product – are doors standard or one off orders
● can he meet demand if continue to use job production?
● costs of changing process
● training required for workers
● possible financial costs of purchasing new equipment
● frequency of orders
● number of doors made
5. (a) What is meant by ‘autocratic management style’? [2]
Clear understanding [2] e.g. an autocratic style implies that decisions are made by the
management [1] without consultation and discussion [+1]
Some understanding [1] e.g. a manager who tells others what to do Accept two features for 2
marks

(b) What is meant by ‘span of control’? [2]

Clear understanding [2] e.g. span of control refers to the number of subordinates who are
directly managed by an individual [manager]
Some understanding [1] e.g. for whom responsible

(c) Identify and explain two disadvantages of one-way communication for K & P’s
management team. [4]
Knowledge [2 × 1] – award 1 mark per disadvantage
Analysis [2 × 1] – award 1 mark for each relevant explanation i.e. show why it represents a
disadvantage
Disadvantages include: •
No feedback [k] so unsure whether message has been understood/received [an] •
No generation of ideas internally within business [k] as employees are not encouraged to give
any [an] •
Gap between management and employees becomes greater [k] and this can produce tension
and mistrust [an]

(d) Identify and explain three methods that K & P could use to improve worker
motivation. [6]
Knowledge [3 × 1] – award 1 mark per relevant method
Analysis [3 × 1] – award 1 mark for each relevant explanation i.e. must focus on how the
method has a positive impact on improving motivation of employees
Methods include:
● change leadership style OR use democratic leadership style [k] so workers feel less
alienated [an]
● delegation [k] as workers feel trusted [an]
● consultation e.g. kaizen or focus groups as employees have greater involvement in
decisions
● improved internal communications [k] so that workers feel informed [an]
● job rotation [k] not bored doing same job all the time
● job enrichment [k] given more responsibility for managing your own work [an]
● flexible working hours [k] so better work life balance [an]
● promotion prospects [k] encourages loyalty/opportunity to rise up the hierarchy [an]
● improved working conditions [k] so more pleasant environment [an]
● offer training [k] have opportunity to develop new skills [an]
● change methods of remuneration e.g. bonuses, commission, increased pay [k] as able to
earn more to meet needs/wants [an]
Do not accept piece rate as not appropriate for a shop.

(e) Should K & P try to reduce the number of workers leaving each year? Justify your
answer. [6]
Knowledge/Application [2 × 1] – identification of relevant issues in context [2]
Analysis [2] – explain how or why it might be an issue
Evaluation [2] – reasoned judgement made as to whether K & P should try to reduce number of
employees leaving.
Points could include:
● recruitment costs [k] which would increase expenses [an]
● training costs [k] as workers might not have the necessary experience/skills needed [an]
● reduced morale of work force [k] so give poor customer service [an] which could damage
company reputation [an]
● new people bring new ideas and skills [k] so able to improve customer service [an]
● depends on who is leaving/why they are leaving [k] as poor performing workers would
not be missed [an]
● loss of expertise/knowledge of business [k] as they might not be easy to replace [an]
Developed example:
If more people leave, they will have to spend more on recruiting new workers [k] which would
increase their costs [an]. These new workers might need training [k] otherwise level of customer
service will fall [an] leading to a fall in sales [an]. However new employees may bring in new
ideas about how to sell [k] which could improve the reputation of K & P. whether it is good or
bad, will depend on who leaves. As if they are poor workers, there is likely to be no bad effect
on the business [eval], and the chance to replace them might actually be more beneficial
especially if the new employee’s ideas help increase sales. [eval]

3. (a) What is meant by ‘internal communication’? [2]

Good knowledge [2] – messages between people [1] working in the same organisation [1]
Some knowledge [1] – e.g. communication inside a business

(b) Identify two suitable methods of communication Emir could use to tell the
overseas suppliers of his decision to stop importing raw materials. [2]
Application [2] – 1 mark per method
Methods include:
email/letter/telephone/meeting/video conference
Accept any reasonable answer.
Do not accept ‘verbal or written’ as these are categories rather than specific methods.

(c) Identify and explain two payment methods for workers that this business could use
(other than time rate). [4]
Knowledge/application [2 × 1] – award 1 mark for identification of relevant method
Analysis [2 × 1] – 1 mark for each relevant explanation (i.e. show how the method would work)
Points might include:
● piece rate [k] workers paid for the number of items produced [an]
 ● performance related pay [k]
● bonuses [k]
● profit sharing [k]
● share ownership [k]
● rewards based on demands of job e.g. salary [k] which is fixed amount regardless of how
much they do [an]
Note 1: do not accept answers which could not be related to this type of business, e.g.
commission/sales based methods
Note 2: do not accept wages as they are an example of time rate

(d) Identify and explain two possible problems of importing raw materials for this food
production business. [6]
Knowledge [2 × 1] – award 1 mark for each problem identified
Application [2 × 1] – award 1 mark if relevant reference made to food manufacturer
Analysis [2 × 1] – award 1 mark for each relevant explanation (e.g. show how or why it could be
a problem
Points might include:
● depreciation in exchange rates of country where Emir’s business is based [k] so the cost
rises which if passed onto customers could mean higher food prices [app] so demand
drops [an]
● delays in delivery might delay production [k] so other ingredients might have to be
wasted [app]
● cost of returning any faulty products [k]
● higher cost of transport [k] as travelling long distance likely to mean greater cost [an]/ as
perishable goods might need specialist storage containers [app]
● quality issues/speed of delivery is important [k] as food likely to be perishable/easily
damaged/not as fresh [app]
● tariffs [k] which increases the cost of importing ingredients [app] so lowering the profit
margin [an]
● quotas [k] might only be able to import an certain amount of materials so cannot produce
a full range/enough finished products [app] to meet demand [an]
● language barriers [k]
● different quality standards between countries [k]

(e) Explain two ways in which the Production manager could reduce average cost.
Recommend which one should be used. Justify your answer. [6]
Knowledge [2 × 1] – award 1 mark for identification of way
Application/analysis [2 × 1] – award 1 mark for each relevant explanation (i.e. show how the way
would help reduce costs)
Evaluation [2] – justified decision as to which method the Production manager should use
Note: For 6 marks must explain why chosen way is the better option
Ways might include:
● improve stock control/JIT [k] so only order materials needed to reduce wastage [an]
 ● increase efficiency and/or productivity [k] by changing way the work is organised, e.g.
introducing lean production/kaizen
● find cheaper raw materials [k] so reduce variable costs [an]
● reduce number of workers or cut wages paid [k] to reduce total variable costs [an]
● renegotiate rent [k] so reduce amount of fixed costs [an]
● buy in bulk/purchasing economies of scale [k] this will lower their cost per unit [an]
● better machinery [k] which could improve productivity [an]/OR replace workers with
machinery [k] which would lower labour costs [an]

4. (a) Identify two features of a ‘tall and hierarchical’ organisation structure. [2]
Knowledge [2 × 1] one mark per feature
Points might include:
● Many layers (of management);
● Decision making takes longer
● Narrow span of control
● Little delegation
● Opportunities for promotion
● Communication can take a long time
● Clear lines of authority
● Long chain of command

(b) Use Figure 2 to explain what is meant by ‘chain of command’. [2]

Clear application [2]: e.g. structure in an organisation which allows instructions to be passed
down [1] from board of directors through middle managers to other employees [+1]
Some understanding [1] e.g. way power and authority are passed down in an organisation
For 2 marks must refer to figure 2.

(c) Identify and explain two appropriate ways that the directors of Granada can use to
communicate with its employees. [4]
Knowledge [2 × 1] – award 1 mark for each way identified
Analysis [2 × 1] – award 1 mark for each relevant explanation
Points might include:
● Letter [k] can contain a lot of information [an]
● Meeting [k] allows opportunity for discussion / feedback [an]
● Video conferencing [k] so less need to travel between different countries [an]
● Phone / mobile [k] as can contact person straightaway [an]
● Email / text [k] as able to send same message to everyone at same time [an]
● Noticeboard [k].
Do not accept visual / written which are categories and not specific ways.

(d) Identify and explain two disadvantages to Grenada of operating in a number of

different countries. [6]
Knowledge [2 × 1] – award 1 mark for each disadvantage identified
Application [2 × 1] – award 1 mark if relevant reference made to this business
Analysis [2 × 1] – award 1 mark for each relevant explanation (show how or why it might be a
disadvantage to a business)
Points might include:
● Communication / language problems [k] as many timezones [app] which could lead to
delays or mistakes in decisions [an]
● Different Legal controls [k] e.g. different food laws [app] so hard to organise the
production process [an] OR Different employment laws / work practices [k] so not able to
have same rules in all its factories [app]
● Different market conditions [k] people have different tastes / traditions [app] so it is might
be difficult to sell / market the same products everywhere [an]
● Impact of exchange rates [k] which may make it difficult to set budgets [an]
● Difficulty in ensuring quality / standard [k] for meals made in each location [app] which
could damage image / reputation [an]
● Problems with control / management [k]
● Long distances involved [k] as difficult to use same supplier [an] to provide all the
ingredients [app].
Do not accept ‘countries’ as application as stated in question.

(e) Do you think that Grenada would benefit from greater delegation in its decision
making? Justify your answer. [6]
Knowledge [2 × 1] award 1 mark for each issue identified
Application [1] – award 1 mark if relevant reference made to this business
Analysis [1] – award 1 mark for relevant development of point(s)
Evaluation [2] – justified decision made as to whether Grenada would benefit from greater
delegation in its decision making
Advantages of delegation include: •
● Decision making closer to ‘the ground’ [k] as likely to understand the laws / traditions
[app] to have better idea what customers want [an]
● Quicker decisions [k] as don’t have to wait for response [an] which could take time due to
being in different countries [app]
● Increased motivation/involvement [k] as if able to make important decisions [app] might
be more productive/efficient [an]
● Lighten workload for senior managers [k] so Directors have more time [app] to focus on
strategic decisions [an]
● New ideas [k].
Disadvantages might include:
● Loss of control at the top [k] so could lead to duplication of work [an]
● Disagreements/different decisions made [k] as middle managers can now make
important decisions [app] so no consistency of approach [an]
● Skills of managers [k] middle managers can’t cope with extra responsibility [app] leading
to mistakes [an].
Application might include: pies, ready meals, burgers (food), taste, many countries, different
laws and traditions, narrow spans of control, little delegation, cannot make important decisions,
want to improve communications.
Developed answer:
Workers will feel more motivated [k] as they can make important decisions [app]. Better
decisions could be made [k] as managers in each country are likely to know what their
customers want [an] so more delegation could be very beneficial leading to higher sales and
profits [eval].

4. (a) What is meant by ‘autocratic management style’? [2]

Clear understanding [2] e.g. an autocratic style implies that decisions are made by the
management [1] without consultation and discussion [+1]
Some understanding [1] e.g. a manager who tells others what to do Accept two features for 2
marks

(b) Identify two possible reasons why Genel ignores health and safety in its factory. [2]
Application [2 × 1] award 1 mark per reason.
Reasons might include:
● Legislation incurs costs / they don’t have to spend money
● Management doesn’t care about employee welfare
● Laws not enforced
● Cheaper to pay fines
● To increase production
● Workers can be easily replaced
Some countries do not have laws for health and safety.

(c) Identify and explain two ways in which Genel would benefit from a more motivated
work force. [4]
Knowledge [2 × 1] – award 1 mark for each relevant way.
Application [2 × 1] – award 1 mark for each relevant explanation in context (show why these
points matter to this type of business).
Points might include:
● More output [k] so able to meet demand for its clothes [app]
● Workers work harder [k] which leads to an increase in productivity [app]
● Lower wage costs [k] as might not need to employ as many workers [app]
● More flexible [k] as workers will be able to respond to changing tastes [app]
● Lower levels of absenteeism [k]
● Lower training / recruitment costs [k] because of lower levels of staff turnover[app]
● Loyal staff [k] which will reduce staff turnover
● Less mistakes [k] so better quality clothes made [app]
● Improved image / better reputation [k].

(d) Identify and explain two ways that Genel could use to improve employee
productivity in its factories. [6]
Knowledge [2 × 1] – award 1 mark for each reason identified.
Application [2 × 1] – award 1 mark if relevant reference made to this business/manufacturer.
Analysis [2 × 1] – award 1 mark for each relevant explanation (show how it will help increase
output per employee).
Points might include:
● Switch to piece rate [k] rather than pay low wages [app] as workers might produce more
in order to gain more money [an]
● Increase pay [k] which improves motivation [app] so workers produce more per hour [an]
● Better working conditions to improve morale [k] as they are currently poor [app]
● New and better machinery
● Training [k] improves motivation [app]
● Reduce working hours
● Implement health and safety laws [k] which are currently ignored [app]
● Change management style [k] to democratic rather than autocratic [app] so that workers
feel involved and more willing to work [an].

(e) Do you think Governments should introduce laws to protect employees’ interests
in businesses such as Genel? Justify your answer. [6]
Knowledge [2 × 1] award 1 mark for each relevant issue identified.
Application [1] – award 1 mark if relevant reference made to this type of business.
Analysis [1] – award 1 mark for relevant development of point(s).
Evaluation [2] – justified decision made as to whether the Government should introduce laws to
protect employees’ interests.
Points to include: •
● Laws are needed to ensure safety [k] which the company does not follow employee
protection [app] so there is no guarantee that Genel would abide by the laws [eval] •
● Discourage businesses from setting up in a country [k] because it would increase costs
[an] •
● Higher business costs [k] could see workers lose their jobs [an] •
● Could help retain workers leading to lower recruitment costs?
Note – the candidate may address the question from the viewpoint of either the employee,
business or the Government.
Developed answer:
Laws are needed to ensure safety [k] and a fair wage for workers[k] which this company does
not follow[app] because it increases their costs[an] therefore introducing laws may have no
effect [ev] unless they are monitored [ev].

5. (a) What is meant by a ‘multinational company’? [2]

Clear Understanding [2] – a business with factories, production or service operations in more
than one country
OR
a business with production or service in another country outside its normal area of operation.
Some Understanding [1] – e.g. has businesses everywhere / works in more than one country /
operates in more than one country.
Note – do not accept examples.

(b) (i) Identify the span of control of the Managing Director of the Asia division. [1]
Application [1]: 2 (factory managers) OR factory A manager and factory B manager.
(ii) How many levels are there in the chain of command? [1]
Application [1]: 4 (levels).

(c) Identify and explain two possible reasons why Zalpha has poor internal
communications. [4]
Knowledge [2 × 1] – award 1 mark for each relevant reason.
Application [2 × 1] – award 1 mark for each relevant explanation in context (show why they
might create poor communication for Zalpha).
Reasons might include:
● Tall hierarchy / long chain of command/ distance from top to bottom of organisation [k] as
there are at least 4 levels [app]
● Choosing the wrong method of communication [k] for a business is split across 3
continents [app] / for such a large number of people [app]
● Barriers to effective communication exist e.g. language issues [k] for different countries /
multinational [app]

(d) Identify and explain two advantages to Zalpha of using centralised decision
making. [6]
Knowledge [2 × 1] – award 1 mark for each advantage identified.
Application [2 × 1] – award 1 mark if relevant reference made to this business/manufacturer.
Analysis [2 × 1] – award 1 mark for each relevant explanation (showing how the point create an
advantage).
Advantages might include:
● Speed of decision making increased [k] because not many people are involved [an]
● Save money/lower cost [k]
● Decrease level of conflict [k]
● Power retained by senior management / control maintained [k] between the board and 3
directors [app]
● Easier to ensure consistency / reduce inconsistency [k] across all divisions [app]
● Economies of scale more achievable [k] as head office are able to order parts [app] in
bulk to get larger discounts [an]
● Easier to co-ordinate and control budgets [k]
● Greater use of specialisation possible [k]

(e) Do you think that multinational companies such as Zalpha benefit the countries in
which they operate? Justify your answer. [6]
Knowledge [2 × 1] award 1 mark for each relevant issue identified.
Application [1] – award 1 mark if relevant reference made to this type of business.
Analysis [1] – award 1 mark for relevant development of point(s).
Evaluation [2] – justified decision made as to whether Multinationals benefit the countries in
which they operate.
Points might include:
● Create jobs / provides income [k] because Zalpha employs a large number of people
[app] so improving living standards [an]
● Technical knowhow increased [k] Zalpha makes agricultural machinery [app] and
improves production [an]
● Possible orders for local suppliers [k] to provide parts for machines [app] therefore
increasing local incomes [an]
● Competition [k] for local businesses [k] who manufacturer goods [app] leading to lower
prices [an]
● Improve international reputation of country [k]
● Inward investment / infrastructure development [k]
● More goods available [k]
● Companies pay taxes [k] therefore increasing income for the government [an]
● Profits are often repatriated [k] limiting the countries growth [an]
● Resources are depleted [k] so there is less available for other businesses [an]
manufacturing in the country needs raw materials [app]
● Local businesses close [k] due to increased competition [app]
● Exploitation can occur [k]

1. (a) What is meant by ‘paid by time rate’? [2]

Good knowledge [2]: e.g. receive a set amount of pay for every hour worked
Some knowledge [1]: e.g. by the hour

(b) Calculate the following:

Application [2 × 1] – one mark per feature [2]
(i) Span of control for the managing director is 4
(ii) Levels in the hierarchy is 3

(c) Identify and explain two advantages to TPW of Tim’s democratic management
style.[4]
Knowledge [2 × 1] – award 1 mark for each relevant advantage
Application [2 × 1] – award 1 mark for each relevant explanation in context
Relevant points might include: •
● Creates time to do other jobs [k] as clerks/managers can perform some tasks [app] •
● Less mistakes/better quality work [k] as it would be difficult to oversee the different
departments/help TPW remain successful [app] •
● Retention of workers [k] as clerks/managers feel part of decision making process [app] •
● Better decision making possible [k] as individual managers/clerks are able to contribute
ideas [app] •
● Better communication [k] as managers/clerks know that they can ask questions [app] •
● Improves manager/worker relationship [k]
Note: benefits must be for business not employee

(d) Identify and explain two methods (other than time rate) that TPW could use to
reward its employees. [6]
Knowledge [2 × 1] – award 1 mark for each relevant method identified
Application [2 × 1] – award 1 mark if relevant reference made to TPW
Analysis [2 × 1] – award 1 mark for each relevant explanation
Relevant ways might include:
● Bonuses for all workers [k] office workers/clerks would want to work harder [app] to get
extra money [an];
● Commission to office team [k] as would want to attract more clients [app] to get
additional payment [an]
● Performance related pay [k] as workers are paid in relation to how well they have done
[an]
● Profit sharing [k] as TPW believe in democratic management style [app] so everyone to
share equally in business success [an];
● Fringe benefits [k] (only once) such as company car for business managers [app] as car
acts as sign of status [an]
● Opportunities for promotion [k] so clerks have chance to become managers [app]
Accept practical examples.

(e) Do you think that introducing new information technology in the office will help
improve the profitability of TPW? Justify your answer. [6]
Knowledge [2] – award 1 mark for identification of relevant issue(s)
Application [1] – award 1 mark if relevant reference made to TPW’s business
Analysis [1] – award 1 mark for relevant development of point (s)
Evaluation [2] – justified decision made as to whether introducing new technology will help
improve profitability of TPW. Either viewpoint is acceptable.
Relevant points might include:
● High cost of installing technology [k] which would increase fixed costs [an]
● Higher costs of training and maintenance for IT [k] which could lower profit margin [an]
● Help provide a better service [k] which could help attract more businesses [an]
● Quicker or more accurate work is possible [k] as machines are less likely to make
mistakes [an] in financial calculations [app]
● Help cut labour costs [k] as technology could replace one (or more) of the three workers
in the office [app]
● Risk of job losses could affect the motivation of employees [k] so work is slower or not as
accurate so someone has to check accounts [app] which could cost more [an]
● More organised [k] as able to find documents on line [app] so able to complete work
quicker [an]
Do not accept ‘more efficient’ on its own as too vague
Do not accept references to production of goods as this is a tertiary sector business
1 (a) What is meant by ‘span of control’? [2]
Good knowledge [2], e.g. number of people who answer directly to one manager in a hierarchy.
Some knowledge [1], e.g. number of people who work for you
some knowledge plus example can gain 2 marks, e.g. regional manager has a span of 20.

(b) Identify two factors (other than offering choice of products and having good
communication) which could help make LEK more competitive. [2]
Application [2 × 1] award one mark per factor.
Factors could include:
● lower prices OR price promotions
● improve quality of goods sold
● change location of shops
● offer sales promotions/incentives/advertising
● increase quality of service offered
● offer free delivery
● click and collect
● opening hours
● free/extended warranty
Accept any reasonable answer.
Accept advertising only once.
Do not accept references to production, as this is a retailer.
Do not accept promotion on own [TV] or market research.

(c) Identify and explain two benefits to LEK of having an organisational chart. [4]
Knowledge [2 × 1] – award 1 mark for each relevant benefit.
Application/analysis [2 × 1] – award 1 mark for each relevant explanation.
Relevant points might include:
● Clear structure so everyone knows their roles [k] which is important in a large
organisation [app]
● Clear chain of command [k] so everyone knows who to report to [an] OR so orders can
be passed effectively between directors and shop managers [app]
● Can show where possible problems of control/communication might be [k] e.g. 20 is a
very large span of control for each region manager [app]
● Helps retention of workers [k] as shop managers can see how to progress up the
organisation [app]
● Allows for effective delegation [k]
Points must be related to business, not employees, e.g. do not reward ‘makes employees have
a sense of belonging’.

(d) Identify and explain two suitable methods of communication that LEK could use to
communicate with its customers [6]
Knowledge [2 × 1] – award 1 mark for each relevant method identified.
Application [2 × 1] – award 1 mark if relevant reference made to LEK.
Analysis [2 × 1] – award 1 mark for each relevant explanation (e.g. how the method works or
advantage of using this method).
For each reason: maximum 3 marks [1k + 1ap + 1an].
Methods could include:
● Emails/mailshots [k] could be targeted at individual customers [an] who are interested in
different electrical products [app]
● Social media e.g. on facebook or twitter [k] as many people use it these days to find out
about the latest offers [an] phones [app]
● Telephone [k] as two way communication would allow LEK to explain specific product
details to customers who could ask questions [an]
● Website [k] would allow customers to access instant news about appliances [app]
without having to spend a lot of money on advertising [an]
● Press releases [k] can be used to inform existing customers in the different regions [app]
so business is able to control the information that is given out [an]
● Newsletters [k] to inform customers about the latest technology or appliances [app] to
keep them up to date with what is available [an]
● Text messages [k] which can be sent directly to customers, phones [app]
● Market research methods [accept only once] e.g. consumer panels [k] to find out what
existing customers think about its products [an] and whether it should stock new types of
phones [app]
Methods of communication can only be accepted if aimed directly at existing customers. Do not
accept advertising (e.g. posters, leaflets) as this is too general.
Do not accept internet, verbal/face to face or written as too vague.

(e) Do you think that the takeover of the competitor would benefit LEK? Justify your
answer. [6]
Knowledge [2] – award up to 2 marks for identification of relevant issue(s).
Application [1] – award 1 mark if relevant reference made to LEK’s business.
Analysis [1] – award 1 mark for relevant development of point(s).
Evaluation [2] – justified decision made as to whether the takeover would benefit LEK. Either
viewpoint is acceptable.
Relevant points might include:
● Possible economies of scale (accept only once) e.g. buy in bulk [k] will help reduce unit
costs [an] so might be able to reduce prices to become more competitive [app]
● Gain brand name of rival [k] may widen range which could help them be competitive
[app]
● Increased market share [k] as could offer wider coverage of shops [an] across the 4
regions [app]
● Reduce competition [k]
● Management issues e.g. communication problems between businesses [k] as current
structure of regional managers might need to change [app]
● No guarantee that benefits will happen [k] as their 40 shops might be in the same towns
as LEK’s [app]
5. (a) Identify two stakeholder groups, other than employees. [2]
Knowledge [2 × 1] – award one mark per stakeholder
Stakeholders could include:
customers, suppliers, Government, owners or shareholders, lenders, community.
Note: Do not accept competitors, managers, directors.

(b) Identify two functions of management that each shop manager will have to
perform. [2]
Application [2 × 1] award one mark per function
Functions could include:
planning rotas, organise or delegate tasks to various employees, coordinating sections, giving
commands to department managers, controlling shop budgets or monitoring targets.
Note: Do not accept functions of management which can only be applied to production.
Leadership is too vague.

(c) Identify and explain two features of Callow’s organisational structure. [4]
Knowledge [2 × 1] – award 1 mark for each relevant feature
Application [2 × 1] – award 1 mark for each relevant explanation
Features might include:
● Tall hierarchy [k] / long chain of command [k] as there are seven levels in the
organisation [app]
● Functional departments [k] but also a regional division of responsibility for operations [k]
as split into north south east and west [app]
● Comment on various spans of control e.g. managing director has a short span [k] of 4
employees / supervisors have a wide span of 8 sales assistants [app]
Note: Do not award wide/narrow span of control alone as this does not apply to the whole chart,
an employee must be specified.

(d) Identify and explain two possible methods that Callow could use to improve the
motivation of its employees. [6]
Knowledge [2 × 1] – award 1 mark for each relevant method identified
Application [2 × 1] – award 1 mark if relevant reference made to Callow’s business
Analysis [2 × 1] – award 1 mark for each relevant explanation
For each reason maximum 3 marks [1k + 1app + 1an].
Methods might include:
● Bonuses / commission [k] for sales assistants [app] as this would encourage them to sell
more to earn extra money [an]
● Fringe benefits[k] e.g. the regional directors / managers could receive a company
car[app] they will feel important / position recognised [an]
● Payment methods e.g. increase wage rate or salary (only allow once)
● Job rotation [k] sales assistants could move to different departments [app] so they are
not bored [an]
● Training/CPD[k]
 (e) Do you think it is a good idea for Callow to use off the job training for all its shop
employees? Justify your answer. [6]
Knowledge [2] – award up to 2 marks for identification of relevant issue(s)
Application [1] – award 1 mark if relevant reference made to Callow’s business
Analysis [1] – award 1 marks for relevant development of point(s)
Evaluation [2] – justified decision made as to whether it is a good idea for Callow to use off the
job training for all its shop employees.
Either viewpoint is acceptable.
Relevant points might include:
● Training costs will increase [k] as they will need to pay for employees training[k] as well
as people to cover them in the department [app] this could negatively impact on profits
[an]
● Might not have the right people to do training [k] as a good department manager does
not necessarily make a good trainer [app] so could teach assistants the wrong skills [an]
● Could gain new ideas or skills [k] which could mean that the Callow can become more
competitive [an] against other retailers. [app]
● On the job could distract good employees from their work [k] so sales could be lost [an]
as they might not be able to give their full attention to customers [app]
Note: Do not accept development or evaluation which focuses on whether training is a good
idea for workers.