AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)

Sir Danish Tabassum (0345-2091270)

March 2023/22

Fruit Farm (FF)

(a) (i) Identify one content theory of motivation. [1]

Herzberg's Two-Factor Theory.

(ii) Explain the term supply chain management. [3]

Supply chain management involves the coordination and management of a network of interconnected
businesses involved in the provision of products and services to end customers. In the context of FF,
effective supply chain management could mean managing relationships with suppliers of seeds and
packaging materials, ensuring timely delivery of these items, and coordinating these processes to meet
production schedules efficiently, thus improving overall operational efficiency.

b(ii) Explain one advantage to FF of introducing time-based payment. [3]

One significant advantage of introducing time-based payment at FF is that it could improve worker
motivation and quality of work. Under the piece rate system, employees might prioritize speed over
quality, potentially leading to lower quality fruit being harvested to maximize their earnings. With a
time-based payment system, employees are likely to focus more on the quality of their work, as their pay
is guaranteed regardless of the quantity they pick. This shift could lead to higher overall product quality,
enhancing FF's reputation in the market and potentially leading to better customer satisfaction.

c. Analyse two non-financial motivators that FF could use to motivate its fruit pickers. [8]

Non-financial motivators refer to incentives that do not involve monetary compensation but rather focus
on improving job satisfaction and employee well-being. These motivators can significantly impact
motivation by addressing psychological and social needs.

A crucial non-financial motivator, induction training, provides new employees with the necessary
information and support to begin working effectively. This introduction can cause a feeling of belonging
and confidence, leading to higher motivation. The impact on FF would be reduced turnover and
increased productivity, resulting in better financial performance due to more efficient operations.

Job enrichment is another effective motivator, involving the redesign of jobs to make them more
challenging and fulfilling. By implementing this, FF can cause an increase in employee engagement and
satisfaction, impacting the business by fostering a more committed and productive workforce. This leads
to higher quality output and potentially greater customer satisfaction, contributing positively to FF's
profitability and market reputation.

d. Evaluate the likely impact on FF’s stakeholders of improving the sustainability of operations. [12]

Sustainability in a business context involves developing operations that are environmentally friendly and
economically viable over the long term. For FF, this means adopting practices that minimize
environmental impact while still being cost-effective.

Introducing sustainable practices such as using recycled materials and reducing chemical usage in
farming can cause a need for new skills among employees. The impact will be an initially increased
workload and possibly stress due to new training requirements. However, it also leads to increased job
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

security and satisfaction as employees feel part of a progressive company. This, therefore, might result in
lower turnover rates and a more skilled workforce.

Shifting to sustainable practices may lead to higher product prices due to the increased cost of
sustainable materials. This can impact customer purchasing decisions; however, the consequence might
be an enhanced brand image and customer loyalty from environmentally conscious consumers.
Therefore, FF can access new market segments interested in sustainable products.

An alternative strategy would be for FF to develop closer partnerships with local suppliers to reduce
transportation emissions and support the local economy. The impact of this would be reduced carbon
footprint and enhanced community relations, with the consequence being improved sustainability
credentials and potential local government support.

Overall, while there are challenges associated with transitioning to sustainable practices, such as initial
costs and changes in operations, the long-term benefits of increased stakeholder satisfaction, market
differentiation, and potential regulatory advantages outweigh these difficulties. FF should consider the
long-term value these practices offer against short-term challenges.

Wedding Gifts (WG)

(a) (i) Identify one factor of production. [1]

Labour

(ii) Explain the term sole trader. [3]

A sole trader is an individual who owns and operates a business alone. This form of business ownership
involves no legal distinction between the owner and the enterprise, meaning the owner has unlimited
liability for any debts incurred by the business. In the context of Tomas and WG, he is solely responsible
for all aspects of the business, including debts and day-to-day management, which simplifies decision-
making processes but also places significant financial risk on him personally.

b (ii) Explain one advantage for Tomas of using cost-based pricing. [3]

Cost-based pricing ensures that all costs incurred in producing a product are covered, including a
predetermined profit margin. For Tomas and WG, using cost-based pricing provides a straightforward
method to ensure profitability on each order. This pricing strategy guarantees that Tomas makes a profit
on each sale by adding a consistent markup over costs. It simplifies financial management and helps in
stabilizing his income, crucial for a business without retained earnings and solely reliant on ongoing cash
flows.

c. Analyse one advantage and one disadvantage for Tomas of giving Jo the order for free. [8]

Giving Jo the order for free could significantly increase WG’s exposure, as Jo is a social media influencer
with a substantial following. This act could cause her followers to become aware of WG's products,
leading to increased traffic and potential sales. The impact would be a broader customer base and
potentially higher future sales, benefiting WG's long-term market positioning and revenue streams.

The immediate disadvantage of giving the order for free is the direct financial loss of $675, which Tomas
calculated as the selling price. This financial hit could impact WG’s short-term cash flow, especially
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

problematic for a business that operates without retained profits. The consequence could be a
constrained budget, potentially affecting Tomas' ability to invest in other business areas or fulfill other
orders, thereby impacting operational capacity.

d. Evaluate the most important factor which may influence Tomas’ choice of sources of finance for the
new 3D printing machine. [12]

Sources of finance refer to the various means through which a business obtains money to fund its
operations, expansions, or equipment purchases. These sources can include bank loans, equity financing,
government grants, or even reinvested profits.

The cost of finance is critical because it determines the expense of borrowing or the equity given up in
exchange for capital. High-interest rates on loans or giving up a significant share of business equity can
drain WG's financial resources or dilute Tomas's control. The impact of high costs is particularly
significant for Tomas, as it could lead to reduced profitability and increased financial pressure. This might
make sustaining the business more challenging if cash flows are negatively affected. However, careful
negotiation and comparison of financing terms may mitigate some of these risks, potentially securing
more favorable borrowing conditions.

The availability of collateral Tomas can offer influences his financing options. Since WG is a sole
proprietorship, Tomas might need to use personal assets as collateral for loans. This situation could put
his personal assets at risk in case of business failure, impacting his personal financial security. The
consequence of using personal assets as collateral might deter Tomas from pursuing high-value loans or
investments, limiting business growth opportunities. However, exploring unsecured loans or alternative
financing that does not require collateral could be a solution, though these may come with higher
interest rates or more stringent repayment terms.

An alternative strategy Tomas should consider is seeking funding from angel investors. These investors
could provide capital in exchange for equity without the need for collateral. The impact of this is twofold:
it preserves Tomas's personal assets and injects additional expertise into WG. The consequence might be
a loss of some control over business decisions and sharing of profits. Yet, the potential influx of business
knowledge and networks could far outweigh these drawbacks, providing WG with a strategic advantage.

In conclusion, while the cost of finance and the need for collateral are significant factors influencing
Tomas's choice of financing, exploring alternative strategies like engaging with angel investors could
provide a balanced approach. This strategy not only secures necessary funding for the 3D printer but
also potentially brings in strategic advantages without overleveraging personal assets. Ultimately, Tomas
must weigh these options against his business objectives and personal risk tolerance to make the most
informed financing decision for WG's future growth.

June 2023/21

Great Resources (GR)

(a) (i) Identify one barrier to entrepreneurship. [1]

Lack of finances.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(ii) Explain the term partnership. [3]

A partnership is a business structure where two or more individuals own and operate the business. This
structure allows the partners to share the profits, but also holds them jointly and severally liable for any
debts and obligations of the business. In the context of GR, the partnership between Sanjay, Rukmal, and
Boris means they share the responsibilities and the profits derived from their educational resources
venture. However, this also means they face unlimited liability, which could impact their personal
financial security if the business incurs debt that cannot be covered by its assets.

b (ii) Explain one factor which may influence the supply of GR’s products. [3]

One significant factor that may influence the supply of GR’s products is the cost of production. This
includes expenses related to creating and maintaining digital educational resources, such as software
development, content creation, and website maintenance. For GR, high production costs can reduce the
profitability of the venture and limit the resources available for further development and updates. This
might result in fewer new products being developed, impacting GR's ability to meet customer demand
and remain competitive in the digital education market.

c. Analyse one advantage and one disadvantage to GR of using a bank overdraft. [8]

A bank overdraft allows a business to withdraw funds beyond the current balance in its bank account up
to an approved limit, providing flexibility and immediate access to cash.

One advantage of using a bank overdraft for GR is the ability to manage cash flow fluctuations effectively.
Cause: GR operates on a subscription model which may result in uneven cash inflows. Impact: The
overdraft facilitates continuous operation by allowing GR to meet financial obligations even during
periods of low income. Consequence: This can prevent service interruptions, maintaining customer
satisfaction and retention, crucial for a growing business.

However, a significant disadvantage is the high cost associated with overdraft fees and interest rates.
Cause: Overdrafts are often priced higher than regular loans due to their flexible nature. Impact:
Frequent reliance on overdrafts increases the overall financial burden on GR. Consequence: This can lead
to reduced profitability and constrain the business's ability to invest in other critical areas such as
marketing or product development, potentially hampering growth.

d. Evaluate whether price or promotion is the most important element of GR’s marketing mix. [12]

The marketing mix elements, particularly price and promotion, play pivotal roles in a business's strategy
to attract and maintain a customer base. Price determines the cost to the buyer, while promotion
involves informing potential customers about the product and convincing them to purchase.

The importance of price for GR is evident in the penetration pricing strategy initially used. Cause: GR
aimed to quickly attract subscribers by offering lower prices than competitors. Impact: This strategy
effectively drew initial interest, evidenced by 250 new subscribers. Consequence: However, the low
pricing did not sustain long-term subscription renewals, potentially due to perceived low value. However,
addressing this could involve gradually raising prices as value and brand recognition increase, ensuring
financial sustainability without losing customers.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

Promotion, on the other hand, is critical in communicating GR's unique value proposition to potential
customers. Cause: GR operates in a niche market that requires explaining the benefits of its products.
Impact: Effective promotion, such as through educational newspapers, can increase brand awareness
and understanding among a broader audience. Consequence: This can lead to higher conversion rates
from trial to regular subscriptions. Therefore, GR needs to ensure that its promotional content is
compelling and accurately reflects the value of its offerings to translate into actual sales.

An alternative strategy could be enhancing product differentiation by incorporating unique features or

content that addresses specific customer needs not met by competitors like EM. Impact: This could
establish GR as a leader in innovative educational resources. Consequences: Such differentiation could
justify a premium pricing model, further enhancing revenue and customer loyalty.

In conclusion, while both price and promotion are vital to GR's marketing mix, the emphasis should be
on strengthening promotional activities at this stage. Effective promotion not only educates the market
about GR's offerings but also builds the perceived value, essential for justifying the subscription model
and achieving long-term profitability. As GR solidifies its market position, it can explore adjusting prices
to reflect the enhanced value better.

Delicious Cocoa (DC)

(a) (i) Identify one element of the triple bottom line. [1]

Environmental.

(ii) Explain the term added value. [3]

Added value refers to the increase in worth of a product or service as a result of a particular process. It is
calculated by the difference between the selling price and the cost of inputs involved in making it. In the
context of DC, converting raw cocoa beans into cocoa butter adds value. This process increases the
worth of the cocoa beans by transforming them into a product with higher demand and price point in
the market, thus generating higher profit margins for the cooperative and its farmer members.

b (ii) Explain one reason why labour productivity is important to DC. [3]

Labour productivity is crucial for DC as it directly impacts cost efficiency and profitability. Cause: With DC
expecting a productivity increase by 5%, this means each worker is producing more output per unit of
input. Impact: Higher productivity helps in lowering the cost per unit of cocoa beans produced, which is
essential for maintaining competitiveness and profitability, especially when market prices fluctuate.
Consequence: This efficiency can enable DC to reinvest profits into sustainable practices or further
improvements, supporting its triple bottom line objectives of economic viability along with social and
environmental responsibility.

c. Analyse two ways DC can motivate young people to work on its farms. [8]

Employee motivation involves strategies to encourage staff enthusiasm and commitment to work.
Motivation can be intrinsic (internal satisfaction) or extrinsic (external rewards).

One way to motivate young people at DC could be through significant investment in training and
development. Cause: Young people often seek jobs that offer personal and professional growth. Impact:
By providing training in advanced agricultural techniques and opportunities for career advancement
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

within the co-op, DC can make farm work more appealing. Consequence: This investment can lead to a
more skilled workforce, increasing operational efficiency and product quality, which can enhance DC's
market competitiveness and sustainability.

Another method could be improving job conditions and compensation. Cause: The manual nature of
farm work and uncertainty over earnings can deter young people. Impact: By enhancing job conditions,
such as safer work environments and clearer paths to earning increases, and implementing
performance-based bonuses, DC can address these concerns directly. Consequence: Improved working
conditions and fair compensation can lead to higher job satisfaction and retention rates, ensuring the
longevity and stability of the workforce, critical for ongoing productivity and growth.

d. Evaluate whether DC should grow its operations by opening its new cocoa processing factory. [12]

Expanding into cocoa butter production is a strategic move to add value to DC’s raw cocoa beans. Cause:
Processing cocoa beans into butter can fetch higher market prices than selling raw beans. Impact: This
added value increases profitability per unit. Consequence: Higher profits can be reinvested into the co-
operative, benefiting member farmers by providing higher returns. However, such expansion requires
substantial upfront capital, and the return on investment might take time, posing financial risks if the
market demand does not meet expectations.

Additionally, diversifying into processing could create new employment opportunities for the
community. Cause: Building a factory would need both construction and operational personnel. Impact:
This can reduce unemployment in the area and improve the local economy. Consequence: By offering
stable jobs, DC can improve its social impact, aligning with its triple bottom line goals. Therefore, the
move can bolster DC's reputation as a socially responsible business.

An alternative strategy could involve forming partnerships with existing processing facilities instead of
building a new one. Impact: This could reduce initial capital expenditure and mitigate risks associated
with new operations. Consequences: It allows DC to test the market for processed products without the
full commitment of new infrastructure, providing flexibility to adjust business strategy based on market
response.

In conclusion, while the expansion into cocoa butter processing offers significant benefits in terms of
profitability and social impact, DC must carefully consider the financial and operational risks. A phased
approach or strategic partnerships could provide a safer path to achieving these goals, ensuring the
cooperative's sustainability and long-term success.

June 2023/22

Office Furniture Designs (OFD)

(a) (i) Identify one quality an entrepreneur needs for success. [1]

One quality that an entrepreneur needs for success is creativity.

AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(ii) Explain the term opportunity cost. [3]

Opportunity cost refers to the benefits forgone from the next best alternative when a decision is made.
For instance, if Markus, the entrepreneur planning to set up OFD, chooses to allocate funds to improve
customer service instead of marketing, the opportunity cost is the foregone benefits that could have
been gained from investing in marketing efforts. This decision could impact the visibility of his business
and potentially affect sales growth, as the benefits of increased customer reach and brand awareness
through marketing are lost.

b (ii) Explain one factor that will influence Markus’ choice of a source of finance. [3]

One crucial factor influencing Markus' choice of a source of finance is the cost of finance. Given that
Markus has limited start-up funds and the business's cash flow forecast shows a deficit, the cost involved
in obtaining finance will be a significant consideration. Lower-cost financing options, such as a business
loan with a favorable interest rate, might be more appealing because they would reduce the overall
financial burden on OFD. High financing costs can exacerbate cash flow problems, making it challenging
for Markus to sustain operations in the critical early months of the business.

c. Analyse two benefits to OFD of offering induction training to all employees. [8]

Induction training introduces new employees to the workplace, providing them with essential
information about their roles, the company’s culture, and operational procedures.

One benefit of offering induction training is that it ensures employees understand the company's
operational standards from the start. Cause: This understanding comes from detailed introductions to
their daily responsibilities and the company’s expectations. Impact: Employees are likely to perform their
roles efficiently and effectively, leading to smooth operations and consistent service delivery.
Consequence: As a result, OFD can maintain high customer satisfaction and build a positive reputation in
the competitive market.

Another benefit is fostering team cohesion and alignment with the company's strategic goals. Cause:
Induction training often includes team-building activities that help employees understand their part in
achieving the company’s objectives. Impact: This alignment enhances collaboration and support among
team members. Consequence: Enhanced teamwork leads to innovative problem-solving and improved
productivity, which are critical for a new company like OFD that needs to establish itself quickly in the
market.

(d) Evaluate whether Markus needs accurate cost information before setting up OFD. [12]

Accurate cost information encompasses data about all expenses associated with running a business,
including fixed and variable costs, and it is crucial for pricing, budgeting, and financial forecasting.

One point of significance is that accurate cost information allows for effective budget management.
Cause: Knowing the exact cost figures helps Markus avoid overspending and manage financial resources
more efficiently. Impact: Proper financial planning based on accurate costs ensures that funds are
allocated where most needed, maintaining liquidity. Consequence: As a result, OFD can avoid
unnecessary debt and maintain financial stability. However, inaccuracies in cost estimation could lead to
financial mismanagement, potentially leading to cash flow crises.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

Additionally, accurate cost information aids in setting competitive prices. Cause: By understanding the
complete cost structure, Markus can price his products competitively without sacrificing margins.
Impact: Competitive pricing attracts more customers without compromising profitability. Consequence:
Increased sales volumes contribute to overall business growth and market share gains. Therefore, if the
cost information is inaccurate, OFD risks either pricing too high and losing customers or too low and
incurring losses.

An alternative strategy would be to adopt a flexible pricing strategy that can adjust based on early
market feedback and cost adjustments. Impact and Consequences: This approach would allow OFD to
remain competitive and responsive to market dynamics while refining cost estimations.

In conclusion, accurate cost information is essential for Markus as it underpins critical business decisions
from pricing to budgeting. While alternative strategies like flexible pricing can provide temporary
solutions, the long-term success of OFD hinges on the accuracy of its cost data to ensure sustainable
operations and strategic decision-making.

MX Bikes (MXB)

(a) (i) Identify one stakeholder of a business. [1]

Customer.

(ii) Explain the term sustainability. [3]

Sustainability in a business context refers to the ability to maintain operations over the long term
without depleting resources or harming the environment. For instance, MXB may focus on using
sustainable materials in their mountain bikes to ensure that they do not exhaust natural resources,
thereby supporting the well-being of current and future generations. This approach not only helps in
conserving resources but also in building a positive brand image that appeals to environmentally
conscious consumers.

(b) (ii) Explain one reason why MXB’s objectives may change. [3]

One reason why MXB's objectives may change is the introduction of new technologies. Cause: With
advancements in technology, particularly in the production of electric scooters, MXB has the opportunity
to innovate and expand its product line. Impact: These technological changes can lead to shifts in
consumer preferences and market dynamics, requiring MXB to adapt its strategic goals to remain
competitive. Consequence: If MXB aligns its objectives with these technological trends, it can capture a
larger market share in the emerging electric scooter market while maintaining its leadership in mountain
bikes.

c. Analyse one advantage and one disadvantage to MXB of growing by launching a new product
range of electric scooters. [8]

Expanding into electric scooters allows MXB to target the growing urban youth market. Cause: This
market segment is attracted to innovative and environmentally friendly transportation options. Impact:
By capturing this new segment, MXB can increase its overall sales and revenue. Consequence: This
diversification can reduce MXB's dependency on the mountain bike market, which is experiencing static
demand.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

However, venturing into a new product category like electric scooters involves significant research and
development costs. Cause: MXB needs to invest in new technologies and marketing strategies specific to
electric scooters. Impact: These upfront costs can strain financial resources. Consequence: If the electric
scooter market does not grow as anticipated, MXB could face financial losses, potentially impacting its
profitability and existing product lines.

d. Evaluate how MXB can change its marketing mix to extend the product life cycle of its range of
mountain bikes. [12]

The marketing mix consists of the four Ps—Product, Price, Place, and Promotion. Effective manipulation
of these elements can significantly impact the product life cycle of MXB’s range of mountain bikes,
particularly as they face static demand.

One strategy is to enhance the product features of the mountain bikes. Cause: By introducing innovative
features like adjustable suspension or lighter materials, MXB can differentiate its bikes from competitors.
Impact: These enhancements can revitalize consumer interest in older models. Consequence:
Consequently, this could lead to increased sales and prolonged market presence. However, the R&D for
new features requires significant investment, which might not yield immediate returns, potentially
stressing MXB's financial resources in the short term.

Another approach is to revise the pricing strategy. Cause: Implementing competitive pricing or limited-
time promotions could make the bikes more appealing. Impact: Lower prices or promotional offers can
attract price-sensitive customers and clear older inventory. Consequence: This tactic might boost sales
volumes and extend the product's market life. Therefore, while reduced prices might lower the profit
margin per bike, the overall profitability could increase due to higher sales volumes.

Expanding the distribution channels represents another potential strategy. Impact and Consequences: By
selling mountain bikes online or through additional retail outlets beyond specialist shops, MXB could
reach a broader audience. This expansion not only increases market penetration but also introduces the
bikes to customers who prefer online shopping or those not visiting specialist stores.

In conclusion, while adjusting the product features and revising the pricing strategy can effectively
extend the product life cycle of MXB’s mountain bikes, the choice of strategy should be guided by careful
consideration of the associated costs and potential market response. Expanding distribution channels
offers a lower-risk alternative that could yield substantial benefits without the immediate financial
burden of R&D. Thus, MXB should pursue a balanced approach that considers both immediate and long-
term marketing objectives to sustain its market leadership.

June 2023/23

Fretter’s Music (FM)

(a) (i) Identify one element of the marketing mix. [1]

Price
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(ii) Explain the term consumer market. [3]

A consumer market refers to the environment where goods or services are sold to individuals who
purchase them for personal use rather than for resale or business purposes. For example, Fretter's Music
(FM) operates in the consumer market by selling musical instruments like guitars and keyboards directly
to end-users such as musicians and students. This direct sales approach ensures that FM can tailor its
marketing strategies and product offerings to meet the specific needs and preferences of individual
consumers.

b (ii) Explain one method of reducing FM’s labour turnover. [3]

One effective method for reducing labour turnover at FM could be to enhance career development
opportunities, such as offering more promotion opportunities or professional training. Given that 5
employees left due to lack of promotion opportunities, addressing this could reduce turnover. By
providing clear career paths and professional growth, employees are more likely to feel valued and
invested in the company, leading to increased job satisfaction and loyalty. This approach directly
addresses one of the key reasons why employees are leaving FM, thus potentially reducing turnover
rates.

(c) Analyse two impacts on FM’s costs if it enters international markets. [8]

International markets are the arena where businesses from different countries buy and sell goods and
services across borders.

Firstly, entering international markets can increase FM's costs due to the need for localized marketing
strategies. The cause of this is the diversity in consumer preferences and regulatory environments in new
markets. The impact is that FM will need to spend more on research and development to understand
these new markets and adapt its products accordingly. Consequently, this could lead to higher
operational costs as FM strives to meet varied customer expectations.

Secondly, there will be additional logistics and supply chain costs. Expanding into international markets
means FM will need to establish new supply chain networks or modify existing ones to ensure efficient
product delivery. The cause is the geographic expansion requiring more complex logistics solutions. The
impact is higher transportation and warehousing costs. The consequence is an increase in the overall
cost of goods sold, which could affect FM's pricing strategy and profitability in the short term.

(d) Evaluate the impact on FM’s stakeholders of a change from batch production to mass
customisation. [12]

Batch production involves producing goods in batches based on demand forecasts, while mass
customisation combines the efficiency of mass production with the personalisation of custom-made
products.

For employees, the shift to mass customisation means learning new skills to adapt to more versatile
production techniques. This change can cause uncertainty and stress among the workforce, impacting
job satisfaction and productivity. However, the long-term consequence might be more fulfilling work as
employees engage in more diverse tasks, which could reduce turnover.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

For customers, mass customisation offers products tailored to their specific needs, leading to higher
customer satisfaction. The cause is the ability to meet diverse consumer preferences more precisely. The
impact is potentially increased sales and customer loyalty. However, this could lead to higher product
costs due to more complex production processes.

An alternative strategy to consider would be enhancing the existing batch production process with
technology that increases flexibility without fully shifting to mass customisation. This approach could
mitigate the risk of significant operational changes while still offering some level of product
personalisation.

In conclusion, while the shift from batch production to mass customisation presents challenges,
particularly in terms of increased operational complexity and the need for employee retraining, the
potential benefits in customer satisfaction and market share growth are compelling. FM should carefully
weigh these factors and plan the transition to minimize disruptions and capitalize on the opportunities
presented by mass customisation.

Great Desks (GD)

(a) (i) Identify one advantage to a business of using job production. [1]

High quality product.

(ii) Explain the term just in time (JIT). [3]

Just in Time (JIT) is an inventory management system where materials and goods are ordered and
received only as needed in the production process, minimizing inventory costs. This system is beneficial
for companies like Great Desks (GD) which uses JIT to manage its inventory, allowing GD to reduce
storage space and decrease the capital tied up in unsold stock. By ordering materials only when
required, GD can maintain a streamlined production process that responds quickly to customer orders
without the burden of excessive inventory, enhancing operational efficiency and reducing waste.

b (ii) Explain one disadvantage to GD’s employees of it being a co-operative. [3]

One disadvantage for GD's employees in a co-operative model is the potential for conflict and slower
decision-making due to the democratic process. In co-operatives like GD, all employees have a say in
decision-making, which can lead to disagreements and delays in implementing changes, especially in
critical business decisions such as opening a new retail shop. This democratic approach, while inclusive,
may also lead to inefficiencies and frustration among employees if consensus is hard to reach, potentially
impacting GD’s agility and ability to respond quickly to market changes.

(c) Analyse two sources of finance GD could use to open its new shop. [8]

Sources of finance refer to the various ways businesses obtain the money they need to operate and
grow.

A bank loan provides immediate capital necessary to fund significant investments like opening a new
retail shop. The cause for considering this source is GD's need for a substantial sum ($2m), which might
be beyond what can be internally generated through profits. The impact of taking a bank loan is the
increase in GD's financial liabilities, leading to potential consequences such as higher ongoing interest
expenses that could affect its profitability and cash flow stability.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

Another source is issuing equity or getting venture capital. By selling a portion of the company’s equity
to investors, GD can raise the needed funds without incurring debt. The cause is to avoid interest
payments and the dilution of existing owners' control. The impact is the influx of capital which could
support expansion while allowing GD to maintain its cash reserves. However, this could lead to
consequences such as loss of autonomy in decision-making, as new investors may demand a say in
business operations.

(d) Evaluate whether Steve’s management style will contribute to GD’s future success. [12]

Steve's management style is perceived as overly democratic and focused on maintaining employee
happiness rather than decisiveness in addressing business challenges.

One positive aspect of Steve’s style is that it likely promotes a supportive and collaborative work
environment. The cause is his emphasis on employee input and satisfaction, leading to an impact where
employees feel valued and involved. This can result in increased motivation and productivity. However,
the consequence might be inefficiency in situations requiring quick decision-making, possibly hindering
GD’s response to rapid market changes.

Conversely, his approach could be detrimental in a competitive business landscape. The cause of concern
is the lack of strategic long-term planning and problem-solving focus, leading to an impact where
potential threats and opportunities may be overlooked. The consequence of this could be missed
business opportunities or unaddressed risks affecting the company’s growth and stability.

An alternative approach could be for Steve to blend his democratic style with more strategic, decision-
focused leadership. This adjustment could help in maintaining employee morale while ensuring that
decisions are timely and aligned with GD’s long-term business goals.

In conclusion, while Steve’s democratic management style has its merits in fostering a positive
organizational culture, its effectiveness in driving GD’s future success is questionable unless balanced
with strategic leadership. It is crucial for Steve to adapt his approach to incorporate more decisive and
strategic elements to ensure the company's sustainability and growth.

November 2023/21

Plasshape (PS)

(a) (i) Identify one non‑financial motivator. [1]

Job enrichment

(ii) Explain the term piece rate (line 6). [3]

Piece rate is a payment method where employees are compensated based on the quantity of items they
produce or complete. This system ensures that workers are paid directly for the amount of work they do,
potentially increasing productivity as employees are motivated to work faster or more efficiently to
increase their earnings. In the context of PS in country V, this method might encourage workers to
produce more packaging to maximize their daily earnings, directly impacting the company's overall
production output.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

b (ii) Explain one way PS could use cost information to improve business performance. [3]

PS can use cost information to identify areas where costs are high and potentially unnecessary, allowing
management to make strategic cuts or changes to improve efficiency. For example, by analyzing the cost
breakdowns, PS could find that certain materials or processes in the packaging production are more
expensive than alternatives that could be just as effective. Reducing these costs can directly increase the
profitability of the new environmentally friendly food packaging, which in turn can help in reallocating
funds towards more profitable or innovative areas, thereby enhancing overall business performance.

(c) Analyse two elements of the marketing mix that PS should consider when launching the new
packaging. [8]

The marketing mix is a foundational model in marketing that refers to the set of controllable, tactical
tools a company uses to achieve its marketing objectives in a target market.

The new environmentally friendly packaging developed by PS is a significant element of the marketing
mix. As this product is more costly to produce, PS should leverage its environmental benefits in
marketing strategies to justify a potential premium price (Cause). This can lead to increased customer
loyalty and brand image enhancement as consumers are increasingly drawn to sustainable products
(Impact). The consequence could be a strengthened market position and long-term profitability due to
differentiated product offerings.

Pricing strategy is crucial, especially as the product costs more to produce. PS should consider value-
based pricing to reflect the environmental benefits of the product (Cause). This approach can attract a
segment of the market that values sustainability and is willing to pay a premium, thus potentially
increasing the company's revenue (Impact). However, this might limit the market to more affluent
customers, potentially excluding price-sensitive segments (Consequence). To address this, PS could
consider a tiered pricing strategy to accommodate different customer segments.

(d) Evaluate whether PS should use the same payment method and employee development in both
factories. [12]
Payment methods and employee development are crucial in managing workforce motivation and
productivity. Different approaches can lead to varying levels of employee satisfaction and output, which
are integral to achieving corporate objectives.

In country Z, the combination of time-based payment and various non-financial motivators such as
employee development programs has likely contributed to higher employee satisfaction and retention
(Cause). This could lead to a more motivated workforce, potentially increasing productivity and quality of
output (Impact). However, this approach might be more costly compared to piece rates (Consequence).
Thus, it is important to balance these costs with the benefits to determine if a unified strategy could be
implemented across both locations.

In contrast, country V uses piece rate payment without much focus on employee development, which
might encourage higher short-term productivity but could lead to lower job satisfaction and higher
turnover rates (Cause). This can negatively impact the consistency and quality of the output over time
(Impact), potentially harming the brand's reputation and operational efficiency (Consequence).
Introducing more non-financial motivators could help mitigate these issues.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

An alternative approach would be to develop a hybrid model that incorporates both payment methods
tailored to the specific conditions and needs of each factory, taking into account local cultural and
economic conditions to optimize outcomes.

PS should consider standardizing certain aspects of employee development while allowing some
flexibility in payment methods to address the diverse motivational drivers and operational conditions in
each country. This balanced approach would help in maintaining a satisfied and productive workforce
across both factories, contributing positively to PS's overarching goals.

Direct News (DN)

(a) (i) Identify one function of a manager. [1]

Planning.

(ii) Explain the term secondary market research (lines 6–7). [3]

Secondary market research involves the use of data that has already been collected by others for
different purposes. This type of research is beneficial as it is generally less costly and quicker to obtain
compared to primary market research. For DN, using secondary market research might involve analyzing
existing reports or studies on media consumption trends among the 18-30 age group to inform their
decision on transitioning from QNews to QLine.

b (ii) Explain one additional piece of market research data DN would find useful before making the
decision to produce QLine. [3]

Before deciding to shift focus to QLine, DN would benefit from obtaining demographic data on the online
behaviors and preferences of the 18-30 age group. Understanding the types of content this demographic
consumes, their online engagement patterns, and preferences for subscription models would help DN
tailor QLine’s content and marketing strategies more effectively. This data could ensure the new
magazine's content aligns with potential readers' interests, maximizing subscription and advertising
revenue.

(c) Analyse two reasons why Shila and Lucy will have to change DN’s objectives. [8]

Transitioning from a local news platform to a monthly magazine aimed at a younger demographic
(Cause). This strategic pivot necessitates a shift in business objectives to align with a new target market,
requiring adjustments in content style, marketing strategies, and potentially, business operations
(Impact). This realignment could lead to expanded market reach and increased revenue streams, helping
DN adapt to changing media consumption trends (Consequence).

Changes in the advertising market and revenue models for digital publications (Cause). As DN shifts focus
to QLine, which is projected to attract national advertisers, it is crucial to redefine objectives that
maximize advertising revenue and align with market opportunities (Impact). Successfully targeting and
securing national advertisers can substantially increase DN’s profitability and sustainability in the
competitive online media space (Consequence).
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(d) Evaluate the importance to DN of effective supply chain management. [12]

Supply chain management in the context of digital publishing involves managing the flow of content
from creation to delivery. This ensures that the content reaches the consumer efficiently and at the
desired quality.

Effective management of the content creation process ensures that DN can produce high-quality,
engaging content consistently (Cause). This leads to higher satisfaction and retention rates among
subscribers (Impact). However, inefficiencies or disruptions in content production can result in delays or
subpar content, potentially diminishing subscriber loyalty and revenue (Consequence). Therefore,
maintaining a streamlined content creation process is crucial.

The distribution aspect of the supply chain is equally important as it ensures that the content is
accessible across various platforms and devices seamlessly (Cause). This accessibility broadens the reach
and appeal of QLine, potentially increasing subscriber base and ad revenue (Impact). Failure to manage
this effectively could lead to accessibility issues, negatively impacting the user experience and the
perceived value of the magazine (Consequence). However, by continuously optimizing distribution
channels, DN can ensure high availability and reliability of their product.

An alternative to consider would be outsourcing certain aspects of the supply chain, such as content
delivery through established platforms, which can offer more robust infrastructure and potentially
reduce costs.

Effective supply chain management is critical for DN as it underpins the ability to deliver a high-quality
product consistently. By focusing on both content creation and distribution, DN can enhance its
competitive edge and achieve greater market success with QLine. Neglecting this aspect could hinder
their ability to adapt to market demands and technological changes, ultimately impacting their growth
and sustainability in the digital age.

November 2023/22

Gold Theme Park (GT)

(a) (i) Identify one type of training. [1]

On the job training

(ii) Explain the term direct costs (line 2). [3]

Direct costs refer to the expenses directly attributed to the production of goods or services. These costs
are directly linked to specific business activities or cost centers. In the context of GT, a direct cost
example would be the wages paid to tour guides who are integral to the operations of the theme park.
Direct costs are variable in nature, changing with the level of production or service delivery. This means
that as the number of tours increases, the wages associated to these services would also increase,
directly affecting the overall costs of GT's operations.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

b (ii) Explain one way to measure the size of GT. [3]

One way to measure the size of GT is by examining its number of employees. The number of employees
is a direct indicator of the scale of a business's operations. In 2020, GT employed 54 people, and by
2022, this number decreased to 47. This reduction could imply a downsizing in operations or an increase
in efficiency. The number of employees impacts many aspects of the business, such as the capacity to
offer services and the costs associated with human resources, indicating the overall size and capacity of
GT within the theme park industry.

(c) Analyse two possible sources of secondary market research that the Marketing Director could use
to help improve GT. [8]

Secondary market research involves collecting data from existing resources to gain insights into the
market. This research method is often cost-effective and less time-consuming than primary research.

One potential source of secondary market research is industry reports from other theme parks or
entertainment venues. The cause for utilizing these reports is that they provide benchmark data and
industry averages that can help GT understand its position within the industry. The impact of this
analysis could be strategic adjustments in GT’s operations to improve competitiveness. The consequence
of implementing these changes could lead to increased visitor numbers and revenue.

Another source could be customer feedback available on social media platforms and travel review
websites. The cause for examining this feedback is to understand the public perception and satisfaction
levels of visitors to similar attractions. The impact of this would be the identification of GT’s strengths
and weaknesses from a customer perspective, which is crucial for tailored marketing strategies. The
consequence could be enhanced customer experiences and a boost in GT’s reputation, leading to more
visits and potentially higher profits.

(d) Evaluate the importance to the ongoing success of GT of developing intrapreneurship. [12]

Intrapreneurship involves fostering an environment where employees are encouraged to think and act
like entrepreneurs within a company, contributing innovative ideas and solutions.

Intrapreneurship can lead to the development of new attractions or services at GT, driven by employees
who feel empowered and motivated. The cause of fostering intrapreneurship is the potential for
innovation and creativity from within. The impact could be the introduction of unique visitor
experiences, differentiating GT from other parks. The consequence could be an increase in visitor
numbers and enhanced competitive advantage. However, if not managed properly, it could lead to a
misalignment of ideas with the company’s objectives, potentially wasting resources.

Another aspect of intrapreneurship is problem-solving. When employees are intrapreneurs, they are
likely to take initiative in identifying and solving operational issues quickly. The cause of this is the
delegation of responsibility and autonomy to employees. The impact of rapid problem-solving could be
smoother operations and better visitor experiences. The consequence is improved efficiency and
customer satisfaction, which are critical for repeat business and positive word-of-mouth. However, over-
reliance on intrapreneurship may lead to inconsistencies in service if not properly standardized.

An alternative strategy for GT could be to invest heavily in external consultancy for new ideas and
problem-solving instead of relying solely on intrapreneurship. While this may bring professional insights
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

into the business, it could lead to higher costs and may not engage the employee base as effectively as
intrapreneurship.

In conclusion, developing intrapreneurship within GT is crucial for its ongoing success as it leverages
internal talent and fosters a proactive and innovative organizational culture. However, it should be
balanced with strategic oversight and integration with standardized procedures to maximize its benefits
and ensure the company’s long-term goals are met.

Bear Bears (BB)

(a) (i) Identify one method of market segmentation. [1]

Demographics.

(ii) Explain the term mass customisation (line 3). [3]

Mass customisation is a production process that combines elements of mass production with
customisation to meet individual customer preferences. In BB's context, although each teddy bear has
the same shape and size, specific elements such as names and words are customised based on customer
orders. This approach allows BB to efficiently produce large quantities while also meeting specific
customer needs, enhancing customer satisfaction through personalisation. The key impact is the ability
to cater to diverse customer desires without significantly increasing production costs, leading to higher
customer retention and potentially increased sales.

b(ii) Explain one limitation for BB of using break‑even analysis. [3]

One limitation of using break-even analysis for BB is the assumption that all units produced are sold.
Break-even analysis does not account for potential unsold inventory, which is particularly relevant for BB
due to the custom nature of their products. If there is a discrepancy between production and actual
sales, BB could either have excess inventory or unmet demand, leading to either wasted resources or
lost sales opportunities. This could impact their financial planning and operational efficiency, making the
break-even analysis less reliable for decision-making.

(c) Analyse two possible impacts on BB of adopting a just in time (JIT) approach to inventory
management. [8]

Just in Time (JIT) is an inventory management system aimed at aligning raw material orders from
suppliers directly with production schedules.

A positive impact of adopting JIT for BB would be the reduction in inventory holding costs. By receiving
materials only as needed, BB would reduce storage space and decrease the cost associated with holding
large amounts of inventory. The cause is the efficient management of inventory that reduces waste and
excess. The impact of this would be improved cash flow and reduced overhead costs. The consequence
is potentially increased profitability and resources that could be redirected to other areas of the business
such as marketing or product development.

A negative impact, however, could be the increased risk of supply chain disruptions. With JIT, BB relies
heavily on the punctuality and reliability of suppliers. Any delay or disruption in the supply chain can halt
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

production, leading to inability to meet customer orders on time. The cause of this risk is the lack of
buffer stock. The impact could be customer dissatisfaction and potential loss of sales. The consequence
might be damage to BB's reputation and reduced customer loyalty, which are critical for a business
reliant on customised products.

(d) Evaluate the most likely impact on BB of increased equality in its stitching department. [12]

Equality in the workplace ensures fair treatment and opportunity for all employees regardless of gender,
race, or any other differences.

Increasing equality in the stitching department can lead to a more motivated workforce. The cause is the
fair and inclusive treatment of employees, such as addressing the specific complaint about washroom
facilities and the distribution of tasks. The impact would be higher job satisfaction and employee
engagement. The consequence is improved productivity and quality of work. However, the process of
implementing these changes might require initial financial investment and restructuring efforts.

Another impact would be the potential legal and reputational benefits. By actively addressing and
promoting equality, BB would mitigate risks of legal actions due to discrimination claims. The cause here
is proactive management of HR policies. The impact is a safer and more compliant workplace. The
consequence is the enhancement of BB's reputation as a fair employer, which can attract more skilled
workers and possibly lead to business growth. However, this may also raise expectations for similar
actions in other departments, requiring comprehensive policy revisions across the company.

An alternative strategy could involve increased training and development programs, not just focusing on
equality but also on upskilling employees. This would impact BB by creating a more capable workforce
and potentially reducing the perceived need for strict equality measures if all employees feel valued and
effectively utilized.

In conclusion, while the immediate financial and operational challenges of increasing equality in BB's
stitching department are non-negligible, the long-term benefits of improved employee morale, legal
compliance, and enhanced company reputation support the importance of this initiative. However, BB
must carefully manage the transition to ensure all changes align with broader business goals and
maintain operational efficiency.

November 2023/23

Jake’s Cakes (JC)

(a) (i) Identify one element of a business plan. [1]

Executive summary.

(ii) Explain the term variable costs. [3]

Variable costs are expenses that change in proportion to the activity of a business. In the context of
Jake's Cakes (JC), variable costs include ingredients like flour and sugar, which vary depending on the
number of cakes produced. These costs increase as production increases because more materials are
required to meet higher demand, and decrease when fewer cakes are baked.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

b(ii) Explain one of Jake’s human needs that may be satisfied by operating JC. [3]

Operating JC satisfies Jake's need for esteem, part of Maslow’s hierarchy of needs. By running his own
business and receiving positive feedback from social media and a celebrity endorsement, Jake gains
recognition and a sense of accomplishment, which are crucial for his self-esteem and personal growth.

(c) Analyse two benefits to JC of using digital promotion. [8]

Digital promotion involves the use of online platforms to advertise and engage with customers, which
includes social media marketing, email marketing, and online advertising.

One benefit of digital promotion for JC is the ability to reach a wide audience cost-effectively. Cause:
Digital platforms like Facebook and Instagram have global reach. Impact: This allows JC to showcase
cakes to a broader audience without the high costs associated with traditional media. Consequence: As a
result, JC can increase its customer base and sales without significantly raising marketing expenses.

Another benefit is the immediate feedback and interaction with customers. Cause: Social media enables
real-time communication. Impact: Jake can quickly gauge customer reactions and receive feedback on
new designs or flavors. Consequence: This direct engagement helps JC to improve product offerings and
customer service, enhancing customer satisfaction and loyalty.

(d) Evaluate whether a bank loan is the most appropriate source of finance for JC’s growth. [12]

A bank loan involves borrowing a set amount of money from a financial institution to be repaid with
interest over a predetermined period. This method is often used by businesses seeking to expand
without diluting ownership.

One benefit of a bank loan for JC is retaining full ownership and control. Cause: Jake wishes to grow his
business without involving partners. Impact: Securing a bank loan avoids sharing decision-making power
and future profits. Consequence: Jake can implement his vision for JC independently, fostering a sense of
autonomy crucial for personal and business growth. However, this financial independence comes with
the obligation of regular repayments, which can be a burden if JC's cash flow becomes inconsistent.

Another point to consider is the financial flexibility that a bank loan offers. Cause: The loan provides a
lump sum, enabling immediate investment in growth initiatives like the garage conversion. Impact: This
capital infusion allows for an accelerated expansion timeline. Consequence: JC can potentially increase
revenue through enhanced production capabilities. Therefore, the direct financial impact of the loan
could be very positive, provided that JC maintains enough cash flow to meet its repayment obligations.

An alternative to consider is attracting equity investors, which could bring additional benefits such as
business expertise and networking opportunities not typically offered by banks. Impact and
Consequence: While this would reduce Jake's ownership percentage, it could lead to a more sustainable
business model with potentially higher growth rates and strategic guidance.

In conclusion, while a bank loan offers a straightforward path to expansion with full control retained by
Jake, it also presents risks associated with fixed repayment obligations. Considering JC's ability to
manage these payments against the backdrop of its financial projections is crucial. Furthermore,
exploring equity investment should be weighed for its potential to provide not just capital but strategic
value that could catalyze JC's long-term success and stability.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

Custom motorcycles (CM)

(a) (i) Identify one non-financial motivator. [1]

Job enrichment.

(ii) Explain the term demand. [3]

Demand refers to the quantity of a product or service that consumers are willing and able to purchase at
a given price level within a specific period. In the context of Custom Motorcycles (CM), demand reflects
how many specialized motorcycle components consumers are ready to buy at the prices set by CM,
influenced by factors such as market trends, consumer income levels, and the uniqueness of CM’s
products.

b(ii) Explain one benefit to CM of using price skimming. [3]

Price skimming allows CM to set high initial prices for its specialized motorcycle components, which are
unique and high in quality. Cause: CM's products are distinctive and cater to a niche market that values
exclusivity. Impact: By setting high prices, CM can maximize its profits on early sales when competition is
limited. Consequence: This strategy not only boosts profitability but also positions CM's products as
premium, enhancing the brand's image among enthusiasts and collectors.

(c) Analyse two impacts on CM of its employees having a poor work-life balance. [8]

Poor work-life balance can lead to employee fatigue and stress. Cause: CM’s employees are working
extended hours, including evenings and weekends, to meet increased demand and long lead times.
Impact: This can result in reduced productivity and increased errors in the manufacturing of specialized
components. Consequence: Ultimately, this might lead to lower product quality, affecting CM’s
reputation for high-quality products and potentially leading to decreased customer satisfaction and
sales.

Another impact of poor work-life balance is high staff turnover. Cause: Continuous overwork and stress
may lead employees to seek better-balanced jobs elsewhere. Impact: CM would then face higher costs
related to recruiting and training new staff. Consequence: Frequent turnover can disrupt production
processes and lead to knowledge loss, which can further affect the efficiency and quality of production.

(d) Evaluate whether CM should change its method of production. [12]

CM currently employs job production, a method well-suited to producing customized, high-quality

motorcycle components.

Job production allows for detailed customization and high-quality outputs, which are central to CM’s
business model. Cause: Each component is made to meet specific customer requirements. Impact: This
method ensures customer satisfaction through precision and quality. Consequence: The business
maintains a strong market position and can command premium prices. However, this method is labor-
intensive and may not be sustainable as demand grows.

Shifting to batch production could increase efficiency and reduce lead times. Cause: Batch production
involves producing components in batches, allowing for more units to be made simultaneously. Impact:
This could reduce costs per unit and improve delivery times. Consequence: The ability to meet customer
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

demand more quickly could enhance customer satisfaction and potentially increase sales. Therefore, this
could also lead to economies of scale.

However, moving away from job production risks losing the bespoke element that defines CM’s brand
identity. Impact and Consequence: This could alienate existing customers who expect high customization
and could potentially dilute the brand’s premium positioning.

In conclusion, while adapting to batch production offers potential efficiencies and cost savings, CM must
carefully consider how it aligns with their strategic objectives and brand identity. Balancing operational
efficiency with maintaining product quality and customer satisfaction is crucial. CM might explore a
hybrid approach, maintaining job production for highly customized orders while adopting batch
processes for standard components to best manage growth and customer expectations.

November 2022/21

Drone Development (DD)

(a) (i) Define the term ‘Computer Aided Design (CAD)’ (line 4). [2]
NO MORE IN AS SYLLABUS

(ii) Explain the term ‘primary research’ (line 15). [3]

Primary research involves gathering new, firsthand data directly related to a business's specific needs.
This type of research is conducted by the business itself or commissioned externally to gather unique
information that is not already available through secondary sources. For instance, using questionnaires
or interviews to understand customer preferences in a targeted market helps generate relevant insights
that are specific to the company’s products or services, such as consumer preferences for drone features
like ease of use or performance.

b(ii) Explain one possible limitation of the Marketing Director’s primary research. [3]

A potential limitation of the Marketing Director's primary research could be the small sample size. Only
30 respondents were surveyed, which may not be representative of the broader consumer market
targeted by DD. This limited scope could skew the research findings, affecting the reliability and validity
of the data used to make strategic decisions about the production and marketing of the Robodz drones.
Consequently, decisions based solely on this data might not accurately reflect the preferences and needs
of all potential customers, potentially leading to less effective marketing strategies and product features
that do not align with most consumer demands.

(c) Analyse two factors that could influence the leadership style used as DD moves into the production
of Robodz. [8]

Leadership style in a business context refers to the manner in which decisions are made regarding the
direction of the company and how directives are communicated to and executed by team members. In
the context of DD, this involves how managers interact with and motivate a team transitioning into new
production processes for Robodz.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

One significant factor influencing the leadership style as DD transitions to producing Robodz is the shift
toward more automated production processes. Cause: This shift requires a more standardized approach
to drone manufacturing to ensure consistency and quality at higher volumes. Impact: The increased
automation reduces the scope for individual creativity previously enjoyed by the design team under the
laissez-faire leadership style. Consequence: This could lead to reduced job satisfaction among employees
who valued autonomy and creativity in their roles, potentially affecting their overall motivation and
productivity.

Another factor is the need for enhanced interdepartmental coordination between design, production,
and marketing teams. Cause: As the production of Robodz involves complex, consumer-focused features,
there is a greater need for collaboration to ensure that market needs are accurately translated into
technical specifications and production processes. Impact: This necessitates a leadership style that is
more participative or democratic, where input from various departments is actively sought and valued to
make informed decisions. Consequence: Improved coordination can lead to more effective and efficient
production processes, resulting in a product better tailored to market demands, ultimately enhancing
customer satisfaction and competitive advantage.

(d) Recommend a suitable marketing mix for the Robodz. Justify your recommendation. [12]

The marketing mix refers to the set of actions, or tactics, a company uses to promote its brand or
product in the market. Traditionally, this encompasses four Ps: Product, Price, Place, and Promotion.

Point: Given the uniqueness of Robodz and its appeal to a niche market segment interested in aerial
photography and videography, a premium pricing strategy could be adopted. Cause: Robodz features
advanced technology suitable for capturing high-quality images and videos, which distinguishes it from
competitors. Impact: Premium pricing could position Robodz as a high-quality product in the consumer
perception. Consequence: This could maximize initial revenues from early adopters who are less price
sensitive. However: Premium pricing may limit the market size; therefore, it should be accompanied by
strong promotional strategies to build brand value.

Point: Distribution should focus on online sales directly from the company’s website and through major
electronic retail platforms to reach a tech-savvy audience. Cause: The target market's familiarity with
technology makes online platforms an ideal place for product availability. Impact: This could increase the
product’s accessibility and convenience for potential customers. Consequence: Enhanced accessibility
could lead to higher sales volumes. However: It requires robust digital marketing strategies to drive
traffic to these platforms.

Point: Implementing a robust customer engagement strategy, including interactive social media
campaigns and partnerships with technology influencers, could further amplify the product's reach.
Impact: This strategy can create buzz and establish a strong brand community. Consequences: Engaged
customers are more likely to provide valuable feedback and become repeat customers.

The recommended marketing mix, combining premium pricing, strategic online placement, and
aggressive promotion with strong customer engagement, is well-suited to launching Robodz in the
competitive drone market. This approach should capitalize on the product's unique features while
addressing the potential challenges of reaching a niche target audience effectively.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

Move Well (MW)

(a) (i) Identify one corporate objective. [1] – Question has been changed

Profit maximization.

(ii) Explain the term ‘internal growth’ (line 3). [3]

Internal growth, also known as organic growth, refers to the expansion of a business using its own
resources and capabilities without relying on external entities through mergers or acquisitions. This
growth strategy involves increasing a company's output, enhancing sales internally, and expanding
operations through reinvestment of profits back into the business, such as by opening new branches or
increasing production capacities.

b(ii) Explain one method MW could use to improve its cash flow. [3]

One effective method to improve MW's cash flow would be to implement a deposit policy at the time of
booking. Cause: MW experiences a lag between booking services and receiving payments, which strains
cash flow. Impact: By requiring a deposit, MW would secure immediate cash inflow at the time of
booking. Consequence: This reduces the financial risk associated with cancellations and delays in
payment, stabilizing cash flow and providing funds upfront for operational expenses.

(c) Analyse two benefits to MW of introducing process innovation to update its information systems.
[8]

NO MORE IN AS SYLLABUS

(d) Evaluate the factors that John needs to consider before opening the new location in country P.

[11]

NO MORE IN AS SYLLABUS

November 2022/22

Friendly Fit (FF)

(a) (i) Identify one method of advertising. [1] – Question have been changed

Informative advertisements.

(ii) Explain the term ‘public limited company’ (line 1). [3]

A public limited company (PLC) is a type of corporation that offers its securities (shares) to the general
public, typically through a stock exchange. PLCs have limited liability, meaning the shareholders' personal
assets are protected in the event of the company’s failure. This type of company also benefits from
continuity, allowing it to continue operation even if ownership changes.

(b) (i) Refer to Table 1.1. Calculate FF’s profit margin for the app in 2020. [3]

NO MORE IN AS SYLLABUS
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(ii) Explain one way in which FF could use profit margin data. [3]

NO MORE IN AS SYLLABUS

(c) Analyse two ways in which FF can increase the value added to its app using the operations process.
[8]

Increasing the value added to the FF app through operational processes can be achieved by focusing on
both feature enhancement and operational efficiency.

One effective way to add value is by integrating advanced customization options. Users increasingly
demand personalized experiences, and by allowing them to customize their interfaces and workout
plans, FF can significantly enhance user engagement. The direct impact of this is increased user
satisfaction, which can translate into higher subscription rates and consequently boost revenue,
improving both user loyalty and attracting new customers.

Another approach is through the implementation of enhanced data analytics. Recognizing the
importance of precise user insights is crucial for service improvement. By employing advanced analytics
to observe and analyze user behaviors and preferences, FF can tailor its features more adeptly to meet
specific user needs. This targeted modification not only improves user experience but also enhances the
app's competitiveness in a saturated market. The consequential benefit is a more appealing product
offering, which can lead to an increase in market share and sustainable growth for FF.

(d) Evaluate the limitations of FF’s sampling process. [12]

The current sampling process utilized by FF, while providing initial insights into user preferences, is
encumbered by significant limitations that may affect the reliability of the data collected.

A primary concern is the potential bias introduced by offering incentives for survey participation.
Participants may provide overly positive feedback to gain further access to premium features, leading to
skewed data. The impact of this is significant; decisions made based on this data might not effectively
address user needs, potentially leading to unsuccessful feature updates and wasted resources. However,
this bias can be managed by employing a varied incentive structure and corroborating survey results
with data from control groups who do not receive such incentives.

Moreover, the representativeness of the feedback is questionable since the sampling is confined to
current users of the app. This limitation means that the feedback might not encompass the views of
potential or past users, leading to an incomplete picture of the market's needs. The consequence of this
is a narrowed focus, which may hinder the app's ability to attract new users or win back those who have
ceased using the app. However, by expanding the sampling frame to include non-users and previous
customers, FF can obtain a more holistic understanding of the broader market dynamics.

An alternative strategy that FF should consider is the implementation of analytical customer feedback
tools directly within the app. This approach would allow for the collection of real-time, actionable
feedback from a wide array of users, providing continuous insights that are more representative and less
biased. The integration of such tools could significantly enhance the strategic decision-making process,
leading to better-informed updates and features that align more closely with the actual needs and
preferences of the app's user base.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

In conclusion, while FF’s current sampling method provides valuable insights, it is imperative to address
its limitations to better support strategic decisions regarding app development and market positioning.
By diversifying the feedback mechanisms and enhancing the scope of data collection, FF can ensure
more accurate and comprehensive market intelligence, fostering more effective operational and strategic
planning.

Cartoon Costumes (CC)

(a) (i) Identify one method inventory management. [1] – Question have been changed

Just in case (JIC).

(ii) Explain the term ‘entrepreneur’ (line 1). [3]

An entrepreneur is an individual who initiates, manages, and assumes the risks of a business venture in
the pursuit of profit. Entrepreneurs are characterized by their ability to innovate, take risks, and drive
economic growth by identifying and capitalizing on business opportunities. They play a critical role in any
economy by introducing new products or processes and improving existing ones.

b(ii) Explain the distinction between revenue expenditure and capital expenditure for CC. [3]

Revenue expenditure refers to the costs that are incurred by a business for its day-to-day functioning,
which include expenses like raw materials, wages, and utilities. These are recorded as expenses in the
profit and loss account of the period in which they are incurred. In contrast, capital expenditure is
spending on assets that have a useful life extending beyond the current accounting period. These
expenditures include purchases like machinery or building improvements and are capitalized on the
balance sheet. For CC, the brightly colored materials and rent on the new shop are revenue
expenditures, whereas the large sewing machine would be classified as a capital expenditure.

(c) Analyse one possible advantage and one possible disadvantage to CC of using crowdfunding to
finance growth. [8]

Crowdfunding is a method by which a business raises capital by receiving small amounts of money from
many people, typically via the Internet.

This financing approach can be particularly advantageous for a business like CC, which has a creative and
engaging product offering. The primary advantage of using crowdfunding is the rapid acquisition of funds
without the need for collateral, which is often a barrier in traditional financing. This access to funds
allows CC to quickly increase inventory and capitalize on bulk purchase discounts, thus reducing the cost
of goods sold and enhancing profitability.

However, crowdfunding also presents the risk of not achieving the funding target, which can lead to a
significant waste of time and resources spent on preparing and marketing the campaign. This failure
could also negatively impact CC’s reputation, potentially deterring future investment and affecting
customer confidence in the company’s stability and growth prospects.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(d) Refer to Table 2.2 and other information. Recommend which person Ava should employ. Justify
your recommendation. [12]

In business, employee selection is a critical process that involves evaluating and choosing individuals
based on their suitability for a specific role, considering both their skills and potential to contribute to
the organization's success. Effective employee selection not only impacts immediate productivity but
also influences long-term business growth and stability.

Ahura's extensive managerial experience in a large clothing shop makes him a highly suitable candidate
for the salesperson role at Cartoon Costumes (CC). Cause: His background provides him with a deep
understanding of customer service and sales management, which are crucial for a retail environment.
Impact: Employing Ahura could lead to enhanced customer interactions, a better shopping experience,
and increased sales due to his expertise. Consequence: This could significantly boost CC's revenue and
market reputation as a customer-centric business. However, there is a risk associated with his recent
five-year unemployment gap, which might have resulted in a degradation of his skills or adaptation to
new market trends. Therefore, continuous training and professional development should be part of his
employment agreement to refresh and enhance his capabilities.

Liu, the younger candidate, offers a fresh perspective and potential alignment with the younger
customer demographic of CC. Cause: Her recent educational background in Business and Design
Technology could bring new ideas and innovations to the role. Impact: Liu could effectively engage with
younger customers and understand their preferences, possibly leading to increased appeal among this
demographic. Consequence: This could expand CC’s customer base and increase its relevance in the
market. However, Liu's expressed intention to pursue further education and own a business indicates
potential short-term commitment to CC. Therefore, hiring Liu might lead to future recruitment and
training costs if she leaves the company to pursue her ambitions.

Considering the benefits and risks associated with both candidates, a dual-hiring strategy could be
explored. CC could employ Ahura as the main salesperson while bringing in Liu as a part-time assistant or
intern. Impact and Consequences: This approach allows CC to leverage Ahura's experience for immediate
business needs while gradually integrating Liu's innovative approaches and affinity with younger
customers. It also mitigates the risk of Liu's early departure by not relying solely on her for key sales
operations.

Ahura is recommended as the primary candidate for the salesperson position at CC due to his relevant
experience and the immediate impact he can bring to the business. Implementing a strategy that
includes provisions for his ongoing training will ensure his skills remain current and beneficial to CC.
Simultaneously, employing Liu in a capacity that accommodates her future career goals can provide CC
with valuable insights into a younger market segment without significant long-term commitment risks.
This balanced approach will allow CC to maximize its human resource assets and enhance its market
position.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

November 2022/23

Pop-up Movies (PM)

(a) (i) Identify one way to increase revenue. [1] – Question have been changed

By improving quality of services.

(ii) Explain the term ‘above the line promotion’ (line 6). [3]

Above the line promotion refers to the use of mass media methods by a business to promote products or
services to a wide audience. This type of promotion is typically paid for and includes media such as
television, radio, newspapers, and the Internet. The purpose is to create awareness among a broad
consumer base rather than targeted individual communication.

b(ii) Explain one way in which PM could use break-even data. [3]

PM can use break-even data to determine the minimum number of customers needed at each venue to
cover all costs and start making a profit. This information is crucial for making pricing and promotional
decisions, ensuring that each event is financially viable and supports overall business profitability.

(c) Analyse two advantages to PM of training the team of customer service workers. [8]

Training is the process of enhancing an employee's skills and knowledge to perform specific tasks more
effectively.

One advantage of training customer service workers at PM is improved customer satisfaction. Cause:
Trained employees handle customer interactions more professionally. Impact: This professionalism can
lead to better customer experiences during events. Consequence: Satisfied customers are more likely to
return and recommend PM to others, which can boost future ticket sales and revenue.

Another advantage is increased efficiency in operations. Cause: Training can help employees perform
their duties, such as setting up and taking down the venue, more quickly and effectively. Impact: This
reduces labor hours and costs associated with each event. Consequence: The saved resources can be
redirected towards enhancing other areas of the business or hosting more events, ultimately increasing
profitability.

(d) Evaluate the economies of scale that PM might gain from booking larger venues. [11]

NO MORE IN AS SYLLABUS

Planting Pots (PP)

(a) (i) Identify one feature of batch production. [1] – Question have been changed

Each batch must be completed before the next one begins.

(ii) Explain the role of an ‘entrepreneur’ (line 1). [3]

An entrepreneur is someone who initiates, manages, and assumes the risks of starting a new business
venture. Entrepreneurs are responsible for making strategic decisions, innovating, and driving the
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

business towards success. They coordinate resources, manage operations, and continually seek
opportunities for growth and improvement in the business.

b(ii) Explain one implication for PP of a fall in market share. [3]

One significant implication of the fall in market share for PP is the potential loss of competitive edge.
Cause: The decrease indicates that competitors may be capturing a larger portion of the market. Impact:
This could reduce PP's visibility and attractiveness in the market. Consequence: If continued, the loss of
market share might lead to decreased sales and profits, putting PP at a disadvantage in a growing
market.

(c) Analyse two factors which may affect PP’s choice of a source of finance to build the additional
factory. [8]

Sources of finance refer to the various ways businesses obtain the money they need to operate and
grow.

One factor is the cost of finance. Cause: Different financing options have varying costs, such as interest
rates for loans or dilution of ownership in equity financing. Impact: High costs can strain PP's financial
health. Consequence: Choosing a source with lower costs could preserve profits and ensure the
sustainability of the expansion.

Another factor is the impact on control. Cause: Equity financing often involves sharing control with new
shareholders. Impact: This could dilute the decision-making power of existing owners, Emily and Kabir.
Consequence: Favoring debt financing might retain their control but increases financial risk due to the
obligation of regular repayments.

(d) Refer to Table 2.2 and other information. Evaluate PP’s use of different payment methods forits
employees. [12]

Payment methods directly influence employee motivation and productivity.

Creative designers on a piece rate. Cause: This incentivizes them to produce more designs. Impact: Could
increase output but might compromise design quality. Consequence: While production increases,
creative integrity may suffer. However, PP needs to balance quantity with quality to maintain brand
reputation.

Supervisors on a salary. Cause: Salaries provide a stable income regardless of output. Impact: This could
lead to consistent supervision but might not encourage extra effort. Consequence: Consistency is
maintained, though innovation may lag. However, implementing performance-based bonuses could
enhance motivation.

Managers on profit-sharing. Cause: Aligns their interests with the company’s profitability. Impact:
Encourages managers to work towards increasing profits. Consequence: Might focus on short-term gains
over long-term stability. Alternative Strategy: Introducing long-term performance metrics could ensure
sustained growth without sacrificing future stability.

Overall, while PP’s diverse payment strategies cater to different roles effectively, a balanced approach
incorporating both stability and incentive-driven compensation would likely yield the best results,
fostering motivation while ensuring quality and innovation in a competitive market.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

June 2022/21

Priya’s Bookshop (PB)

(a) (i) Identify one method of market segmentation. [1] – Question have been changed

Demographics.

(ii) Explain the difference between cash and profit (line 23). [3]

Cash refers to the actual money that is available for use by a business, encompassing all inflows and
outflows from operational activities, investments, and financial activities. It indicates the business's
liquidity, showcasing its ability to cover immediate and short-term obligations. Profit, however, is the
financial gain achieved when total revenues exceed total expenses. It represents the overall financial
success of a business over a period and is crucial for long-term sustainability. While cash impacts the
day-to-day operations ensuring that a business can meet its immediate obligations, profit affects the
long-term growth and expansion capabilities of the business.

(ii) Analyse two benefits to Priya of producing a cash flow forecast. [8]

A cash flow forecast is a financial tool that estimates the expected flow of money coming into (inflows)
and going out of (outflows) a business over a specific period of time. It helps businesses predict their
future cash position and make informed financial decisions.

First, a cash flow forecast allows Priya to anticipate financial shortfalls. Specifically, the forecast helps
Priya see periods when cash outflows exceed cash inflows, like in Month 3 where there is a predicted
shortfall. The impact of this is significant; it allows Priya to make informed decisions about managing
resources, potentially avoiding a liquidity crisis that could jeopardize her business operations. The
consequence of managing these shortfalls early is maintaining business continuity without the need for
drastic financial corrections.

Secondly, another benefit of producing a cash flow forecast is it helps in tracking the effectiveness of the
business's operational strategies. By comparing projected figures with actual cash flows, Priya can gauge
whether her marketing efforts and operational adjustments are yielding the expected increase in
revenue. The cause of this benefit is the systematic tracking of financial performance, which impacts
Priya’s ability to make strategic adjustments quickly. This can lead to an optimized cash flow situation,
enhancing the overall financial health of the business and potentially leading to faster growth and
expansion.

(c) Explain one entrepreneurial qualities that Priya has shown. [3] – Question and marks have been
adjusted

Priya has demonstrated significant initiative and risk-taking in establishing PB. She showed initiative by
successfully applying for a startup grant, indicating a proactive approach to capitalize on available
resources. This quality is essential for any entrepreneur looking to navigate the complexities of starting
and maintaining a new business.
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(d) Recommend suitable promotional methods that Priya could use to raise awareness of PB in town
R. Justify your recommendation. [12]
Promotional methods refer to the various strategies and techniques used by businesses to communicate
with potential customers, increase awareness about their products or services, and ultimately drive
sales. These methods can range from digital marketing to traditional advertising and special events, each
tailored to meet specific marketing goals and reach targeted consumer groups.

One effective promotional method for Priya is leveraging social media marketing, which can be
specifically targeted to the demographics prevalent in town R, such as the 16-64 age group. Cause: The
widespread use of platforms like Facebook, Instagram, and Twitter among these age groups makes this a
prime channel for engagement. Impact: By regularly posting engaging content, promotions, and book
reviews, Priya can attract a younger demographic looking for lifestyle-aligned purchases. Consequence:
This approach is likely to increase foot traffic to PB and enhance brand awareness among locals and
tourists alike, fostering a community around the bookshop. However, over-reliance on social media
might not reach older demographics, who are also significant in town R and may prefer traditional
media.

Another promotional strategy is hosting local community events such as author signings, book launches,
and reading sessions. Cause: These events utilize the town's existing reputation as a potential booktown,
creating a thematic alignment with community interests and the local council’s vision. Impact: Such
events can draw in book enthusiasts and families, providing an immersive experience that online
platforms cannot match. Consequence: The direct interaction with authors and themed events can
significantly enhance customer engagement and loyalty, leading to increased sales and repeat visits.
However, the costs and logistics involved in organizing such events can be considerable, and without
careful planning, the return on investment may be lower than expected.

As an alternative, Priya could consider a partnership with local businesses and cafes to set up mini pop-
up bookshops or themed displays. This collaboration can extend the reach of PB into everyday
community spaces, increasing visibility. Impact: Collaborations can help distribute promotional costs and
reach a broader audience through cross-promotion. Consequence: This method might also appeal to
casual readers who frequent these spaces, potentially opening up new customer segments.

In conclusion, while social media offers broad reach and community events provide depth of
engagement, incorporating a strategy that includes partnerships for pop-up bookshops could offer a
balanced approach to promotional efforts. This combined strategy not only aligns with the town's
literary branding but also ensures a diversified approach to marketing, maximizing both reach and
engagement within the community of town R.

Motorcycle Components (MC)

(a) (i) Identify one example of capital expenditure. [1] – Question have been changed

Purchasing machinery.

(ii) Explain the term ‘mission statement’ (line 2). [3]

A mission statement is a formal summary of the aims and values of a company or organization. It defines
the company’s core purpose, focusing on its objectives and approach to reach these objectives. It serves
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

as a guide to what the company’s policies are intended to achieve, helping to steer the strategies and
corporate behavior. For MC, their mission statement to be "the world leader in delivering quality
motorcycle components to our customers" clarifies their intent to prioritize quality and customer
satisfaction in their operations.

(b) (i) Refer to Table 2.1. Calculate MC’s acid test ratio. [4]

NO MORE IN AS SYLLABUS

(ii) Explain one reason why the acid test ratio is useful to MC’s Finance Director. [2]

NO MORE IN AS SYLLABUS

(c) Analyse two benefits to MC of Just in Time (JIT) inventory control. [8]

Just In Time (JIT) inventory control is a management strategy that aligns raw-material orders from
suppliers directly with production schedules. It is used to increase efficiency and decrease waste by
receiving goods only as they are needed in the production process, thereby reducing inventory costs.

One benefit of JIT for MC is the reduction in inventory costs. Cause: By ordering inventory to align exactly
with production needs, MC avoids overstocking and reduces storage space requirements. Impact: This
reduction in inventory levels means less capital is tied up in non-liquid assets. Consequence: The
financial flexibility gained from lower inventory levels allows MC to reallocate resources to other areas of
need, such as research and development or expanding production capacity, leading to improved
competitive positioning in the market.

Another benefit of JIT is enhanced responsiveness to market demands. Cause: JIT allows for quicker
adjustments to production schedules based on customer requirements due to reduced lead times and
more frequent deliveries. Impact: This flexibility makes MC capable of responding more promptly to
shifts in customer demand or changes in the market. Consequence: The ability to quickly meet customer
needs increases customer satisfaction and can lead to higher customer retention rates, further
solidifying MC’s market position as a leader in quality and responsiveness.

(d) Evaluate the possible impact on MC from introducing process innovation. [11]

NO MORE IN AS SYLLABUS

June 2022/22

Farm Produce (FP)

(a) (i) Identify one advantage of labour intensive. [1] – Question have been changed

Less expensive.

(ii) Explain the term ‘co-operative’ (line 1). [3]

A co-operative is an organization owned and operated by a group of individuals for their mutual benefit.
In a co-operative, members pool resources to gain benefits such as bulk purchasing, shared services, or
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

lower product costs, and decisions are typically made democratically with each member having an equal
vote.

b(ii) Explain one problem FP may have when deciding how to allocate fixed costs to each box size. [3] –
Question and marks have been adjusted

One problem FP may have when allocating fixed costs to each box size is that this can distort the
perceived profitability of each product. For instance, allocating an equal part of fixed costs to each box
size regardless of their production cost or revenue can make less expensive products seem less profitable
than they are.

(c) Analyse how two stakeholders of FP might be affected by a decision to stop selling the small box
size. [8]

Stakeholders refer to individuals or groups that have an interest or concern in the business operations,
such as employees, managers, and customers.

If FP stops selling the small box size, employees involved in assembling these boxes might face reduced
hours or layoffs (Cause). This reduction in work could lead to lower income and job insecurity (Impact),
potentially resulting in decreased employee morale and increased turnover (Consequence).

Discontinuing the small box size would directly affect customers who prefer this size due to affordability
or consumption needs (Cause). They might have to switch to more expensive or larger boxes, increasing
their expenses (Impact), which could lead to customer dissatisfaction and loss of customer loyalty
(Consequence).

(d) Evaluate the most important factor affecting the supply of FP’s boxes of fruit and vegetables to
customers. [12]

Supply factors in business are elements that can influence the amount of product a company can provide
to its customers.

FP's ability to supply boxes is heavily influenced by weather conditions (Cause). Favorable weather can
increase crop yields, enhancing product availability (Impact). This abundance can lead to more sales and
higher profits (Consequence). However, dependency on weather makes supply unpredictable (Long-term
issue).

Government grants for agriculture help reduce production costs (Cause). Lower costs enable FP to price
their products competitively, potentially increasing sales (Impact). Increased sales can improve profit
margins and business sustainability (Consequence). However, reliance on subsidies may hinder FP's
motivation to improve efficiency or innovate (Long-term issue).

FP could diversify its product range to include non-seasonal items, reducing dependency on weather and
enhancing year-round supply stability.

Considering the factors affecting supply, the most significant is weather due to its direct impact on
production capacity and profitability. FP should seek to mitigate this risk by diversifying products and
leveraging government subsidies to stabilize and enhance supply.

Seaside Hotel (SH)

AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

(a) (i) Identify one reason of redundancy. [1] – Question have been changed

The services of the employee are no more required

(ii) Explain the term ‘joint venture’ (line 25). [3]

A joint venture is a business arrangement where two or more parties agree to pool their resources for
the purpose of accomplishing a specific task. This can be a temporary partnership for various business
activities, each party in the joint venture maintains their separate business entity.

b (ii) Explain one possible limitation to SH of using break-even analysis. [3] – Question and marks have
been adjusted

Break-even analysis assumes constant average variable costs and fixed costs (Cause). In a hotel like SH,
costs vary significantly depending on the season and the occupancy rate (Impact). This can lead to
misleading financial insights, impacting strategic and operational decisions (Consequence).

(c) Analyse one possible advantage and one possible disadvantage to SH of Tia’s autocratic leadership
style. [8]

Autocratic leadership is a management style characterized by individual control over all decisions with
little input from group members.

Tia’s autocratic style allows quick decision-making, crucial during the peak season at SH when rapid
coordination of 42 workers is needed (Cause). This can lead to more efficient operations, especially in
critical service areas like room cleanliness and readiness (Impact), ultimately leading to increased guest
satisfaction and repeat business (Consequence).

Tia's autocratic approach may stifle employee creativity and motivation (Cause). In a service-oriented
environment like SH, this could reduce employee engagement (Impact), which may lead to poorer
service quality and a decline in guest experiences and reviews (Consequence).

(d) Recommend how SH could increase the value added to its service. Justify your recommendation.
[12]

Value addition involves enhancing the product or service offered to increase its perceived value by the
customer, thereby potentially increasing profitability.

Improving service quality, such as offering personalized guest services or enhancing room amenities, can
directly enhance guest experiences (Cause). This increases customer satisfaction (Impact), leading to
higher occupancy rates and possibly allowing for premium pricing (Consequence). However, this requires
increased staff training and quality control (Long-term issue).

Adopting technology like mobile check-ins and smart room features can streamline operations and
enhance guest convenience (Cause). This could improve operational efficiency and guest satisfaction
(Impact), increasing overall profitability by reducing costs and boosting revenues (Consequence).
However, initial technology investment and maintenance could be substantial (Long-term issue).

Investing in broader marketing strategies, including digital marketing to target younger demographics,
can increase bookings (Strategy Impact). This approach broadens the customer base and leverages SH’s
seaside location to attract more guests (Consequence).
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

Investing in service quality enhancements and technology are recommended strategies for SH to add
value. While both require significant investment, the potential returns in terms of customer satisfaction
and profitability justify the expenditure. Marketing expansion should also be pursued to maximize the
hotel’s exposure and attract diverse clientele.

June 2022/23

Child Play (CP)

(a) (i) Identify one factor influencing supply. [1] – Question have been changed

Cost of production.

(ii) Explain the term ‘product differentiation’ (line 17). [3]

Product differentiation is the process by which a company distinguishes a product or service from others
in the market. It involves uniqueness in design, features, or branding that makes a product stand out. For
Su's potential café, differentiating her offerings from other cafés might include unique décor, special
menu items, or additional services catering specifically to parents who bring their children to CP. This
strategy can attract more customers by offering them something they cannot get elsewhere, leading to
increased profitability.

b(ii) Explain one way in which the size of CP can be measured. [3]

The size of CP can be measured by the revenue generated from selling its services. As revenue directly
reflects the business volume handled by CP, it provides a tangible measure of its size. More revenue
indicates more customers or higher pricing, both signs of a larger business operation.

(c) Analyse one advantage and one disadvantage to Su of using working capital as a source of finance
for the new café. [8]

Working capital refers to the funds available for the day-to-day expenses of a business, calculated as
current assets minus current liabilities.

An advantage of using working capital is immediate availability. Cause: This source of finance does not
require additional borrowing or external financing. Impact: Su can quickly utilize these funds to set up
the café, aligning with her plan to open in four weeks. Consequence: This rapid deployment can lead to
early revenue generation, enhancing cash flow.

A disadvantage is the potential risk of undercapitalization. Cause: Utilizing working capital reduces the
buffer Su has for operational expenses. Impact: If the café incurs unforeseen costs or if CP's regular
business dips, the reduced working capital could strain financial stability. Consequence: This could lead
to financial difficulties, affecting both the new café and the existing play area.

(d) Evaluate appropriate promotion methods that Su could use for the new café. [12]

Promotion methods refer to strategies used to market products or services.

AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

Utilizing social media can be an effective promotion method. Cause: Many parents use social media and
could be reached with targeted ads. Impact: This would increase awareness of the café among the target
demographic. Consequence: More parents might visit the café, boosting its sales. However, if not
targeted correctly, the promotion might not reach the intended audience.

Another effective method could be partnering with local schools to distribute flyers. Cause: Schools are
central hubs where parents often congregate. Impact: Flyers can directly reach the target market.
Consequence: This could lead to a higher conversion rate from flyer distribution to café visits. However,
the success of this method depends on the willingness of schools to cooperate.

An alternative strategy could be offering opening week discounts. Impact and Consequences: This could
incentivize initial visits and word-of-mouth promotion, potentially establishing a loyal customer base
quickly.

In conclusion, while each method has its potential drawbacks, a combination of social media marketing
and local school partnerships, supplemented by promotional discounts, would likely be the most
effective strategy for promoting Su's new café.

Clever Televisions (CTV)

(a) (i) Identify one disadvantage of autocratic leadership. [1] – Question have been changed

Demotivation of employees.

(ii) Explain what is meant by ‘the business environment is dynamic’ (lines 14–15). [3]

The term 'dynamic' refers to the constant change and flux in the external factors that influence a
business's operations. For CTV, a dynamic business environment means that factors like consumer
preferences, technological advancements, regulatory changes, and economic conditions are continually
evolving. These changes require CTV to adapt its strategies frequently to maintain competitiveness and
relevance in the market.

b(ii) Explain one implication for CTV of the forecast change in market growth for 2022. [3]

A forecast decline of -3% in market growth for 2022 suggests a shrinking market. Cause: This could be
due to market saturation, increased competition, or economic downturn. Impact: Reduced market size
could result in lower sales volumes for CTV. Consequence: The company might need to adjust its
production levels or explore new markets to maintain its revenue and profitability.

(c) Analyse two advantages to CTV of introducing automation into one of its factories. [8]

Automation involves using technology to perform tasks which are traditionally done by humans.

An advantage of automation is cost reduction. Cause: Automation can decrease the need for manual
labor, which is often more expensive in terms of wages and benefits. Impact: Reduced labor costs can
result in lower overall production costs. Consequence: This can allow CTV to price its products more
competitively, potentially increasing its market share.

Another advantage is increased production efficiency. Cause: Machines can operate faster and with
greater precision than human workers. Impact: This leads to higher output rates and consistent product
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

quality. Consequence: Enhanced efficiency can meet market demand more effectively, particularly in
peak sales periods.

(d) Recommend ways in which CTV employees can participate in the management and control of the
business. Justify your recommendation. [12]

Employee participation in management refers to methods by which employees can have a say in
decision-making processes.

One way is through a representative management board. Cause: This board could include employee-
elected members who participate in strategic decisions. Impact: Their inclusion ensures that employee
concerns and insights are considered in management decisions. Consequence: This can improve
employee morale and engagement. However, the effectiveness depends on the genuine empowerment
of these representatives and their ability to influence decisions.

Another method is profit-sharing schemes. Cause: These schemes directly link employee compensation
to the company's financial performance. Impact: Employees who benefit financially from the company's
success are likely to be more motivated and productive. Consequence: This can lead to enhanced
company performance. However, it may lead to discontent during less profitable periods.

An alternative strategy could be the implementation of continuous improvement teams. Impact and
Consequences: These teams can foster innovation and efficiency, allowing employees to directly
contribute to operational improvements.

In conclusion, fostering active participation through a representative board, profit-sharing, and

continuous improvement teams can lead to a more inclusive and motivated workforce, ultimately
benefiting CTV's overall strategic objectives.

March 2022/22

Rehana Recycles (RR)

(a) (i) Identify one advantage of mission statement. [1] – Question have been changed

Gives direction to all departments.

(ii) Explain the term ‘democratic leadership style’ (line 13). [3]

A mission statement is a formal summary that defines the aims and values of a company. It essentially
captures the essence of a company's goals and the philosophies underlying them. In the context of RR,
the mission statement "Make waste beautiful" clearly indicates the company's commitment to
transforming waste into aesthetically pleasing products, thus aligning business operations with
environmental consciousness

(b) (i) Refer to Table 1.1. Calculate the acid test ratio for RR. [3]

NO MORE IN AS SYLLABUS

(ii) Explain one method Rehana may use to improve liquidity. [3]
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

NO MORE IN AS SYLLABUS

(c) Analyse two benefits for RR of having a unique selling point (USP). [8]

A unique selling point (USP) refers to the distinct feature that makes a product or service different and
more appealing than that of the competition. It's what makes a business stand out in a crowded market.

RR's USP of creating products from recycled waste enhances brand recognition. Cause: The
environmental focus appeals to eco-conscious consumers. Impact: This leads to increased visibility and
customer attraction. Consequence: Higher brand recognition can drive more sales and potentially allow
for premium pricing due to the unique environmental value proposition.

Having a USP of recycling waste helps RR differentiate itself from competitors. Cause: Few businesses
may focus on this green initiative within the same industry. Impact: This differentiation solidifies RR's
market position as a pioneer in sustainable glassware. Consequence: It can capture a niche market,
leading to sustained business growth and loyalty from environmentally aware consumers.

(d) Evaluate whether RR should change to batch production. [12]

Batch production involves manufacturing a group of identical items through the same production
process before switching to a different batch, whereas job production focuses on customized products
individually crafted.

Batch production can reduce costs through economies of scale. Cause: Purchasing materials in bulk and
streamlining the production process. Impact: Lower production costs per unit. Consequence: Increased
profitability. However, there may be a risk of excess inventory if demand is overestimated.

Batch production may enable RR to meet the growing demand more effectively. Cause: Faster production
rates. Impact: More products available for sale in less time. Consequence: Ability to serve a larger
customer base. Therefore, RR might need to consider potential market saturation and maintain product
quality.

An alternative to changing production methods could be outsourcing certain production tasks. Impact
and Consequences: This would keep the job production benefits of customization while potentially
lowering costs and scaling up production capacity.

Considering the growth in demand and the need to maintain the USP, RR should cautiously approach
batch production, starting with a small-scale pilot to assess feasibility and impact on brand image before
fully committing. This approach allows balancing cost, efficiency, and maintaining product uniqueness.

Benjamin’s Beds (BB)

(a) (i) Identify the formula of market share. [1]

Market share = (Sales of the business / Sales of the industry) * 100

(ii) Explain the term ‘efficiency’ (line 21). [3]

Efficiency in a business context refers to the company's ability to maximize output from a given set of
inputs while minimizing waste. In terms of production, efficiency means generating the highest amount
of products using the least amount of resources, which can include time, labor, and materials. For BB,
AS – Solved Past Papers – Paper 2 (March 2022 to Nov 2023)
Sir Danish Tabassum (0345-2091270)

higher efficiency would mean producing more beds at a lower cost, thereby potentially increasing
profitability and competitive advantage.

b (ii) Explain one possible limitation to BB of using the proposed new machinery. [3]

A significant limitation of adopting new machinery for BB could be the substantial capital expenditure
required. Impact: This investment could strain the company's finances, especially if the return on
investment (ROI) is lower or slower than anticipated. Consequence: Allocating a large portion of funds to
new machinery could limit BB's ability to invest in other areas such as marketing or expanding into new
markets, potentially stunting growth in other profitable segments.

(c) Analyse two possible disadvantages to BB of decreased staff morale and welfare. [8]

Staff morale refers to the overall outlook, attitude, satisfaction, and confidence that employees feel at
work. Welfare involves the health, happiness, and fortunes of a person or group, in this case within a
workplace setting.

Decreased morale and welfare often lead to higher employee turnover. Cause: Employees dissatisfied
with their work environment are more likely to seek employment elsewhere. Impact: This results in
increased recruitment and training costs. Consequence: The disruption and costs associated with hiring
and training new staff can reduce operational efficiency and increase operational costs.

Low morale can significantly diminish productivity. Cause: Unmotivated employees are less likely to
perform their best. Impact: The output per employee decreases, which can extend lead times and
reduce the overall quality of the beds produced. Consequence: This reduction in productivity and quality
can damage BB's brand reputation for quality, potentially leading to a loss of market share.

(d) Recommend whether BB should focus on the producer market (B2B) or the consumer market
(B2C). Justify your recommendation. [12]

B2B (business-to-business) involves selling products directly to other businesses as part of their supply
chain, while B2C (business-to-consumer) involves selling products directly to consumers.

The B2B market offers stability due to constant demand from hotel chains. Cause: Hotels regularly
update their furnishings to maintain standards. Impact: Steady sales ensure predictable revenue
streams. Consequence: This can support consistent cash flow management and financial planning.
However, focusing solely on B2B might limit potential growth as the consumer preferences evolve.

The B2C market presents significant growth opportunities. Cause: Increasing consumer preference for
buying online. Impact: Expands the potential customer base beyond the geographical limitations of B2B.
Consequence: Can significantly increase revenue. Therefore, BB needs to invest in digital marketing and
e-commerce capabilities to capture this market segment.

Considering both markets, a hybrid approach could leverage the stability of the B2B while capitalizing on
the growth potential of the B2C. Impact and Consequences: This strategy allows diversification, reduces
dependence on one market, and utilizes production capacity efficiently.

BB should adopt a hybrid approach to balance the immediate stability offered by the B2B market and the
expansive growth potential in the B2C market. This balanced approach can mitigate risks and maximize
profitability in the long term.