Answers to Exam practice questions
Unit 1 Business organization and environment
1 a Stakeholders could include:
■ Employees (25000 job losses)
■ Turkish and Brazilian governments
■ Shareholders
■ Directors (of HSBC)
Award 1 mark for each appropriate stakeholder identified, up to the maximum
of 2 marks.
b Conflicts following HSBC’s decision to reduce its global workforce could
include:
■ Employees and labour unions protesting against mass job losses whilst
HSBC directors strive to cut costs ($4.5 to $5 billion per year).
■ Shareholders experiencing a decline in the return on their investment
in HSBC (largely due to the compensation for employees made
redundant).
Award up to 2 marks for each stakeholder conflict identified and explained, up
to the maximum of 4 marks.
2 ■ At £1 = $1.6, the customers pay £120000 × $1.6 = $192000
■ At £1 = $1.8, the customers pay £120000 × $1.8 = $216000
■ Hence, customers in the USA have to pay an extra $24000 for each car
3 a Internal economies of scale are generated and enjoyed within the
organization when it operates on a larger scale. By contrast, external
economies of scale occur within the industry, thus benefit all firms.
Award 1 mark for an answer that shows some understanding of internal or
external economies of scale.
Award 2 marks for an answer that shows some understanding of internal and
external economies of scale.
Award 3 marks for clear definitions of internal and external economies of scale
that show a clear distinction between the two terms.
b [($1.50 × 4000) + $4800] ÷ 4000 = $2.70
Award 1 mark for the correct answer and 1 mark for showing the working out
accurately.
c Profit = [($4 – $1.5) × 4000] – $4800 = $5200
Award 1 mark for the correct answer and 1 mark for showing the working out
accurately.
4 a A merger is a form of external growth that involves two or more firms
agreeing to integrate as a single organization, such as Kraft Foods agreeing
with Heinz to become a combined company.
Award 1 mark for a definition that shows some understanding of the term merger.
amurimi
, Award 2 marks for a clear and succinct definition of the term merger.
amurimi
, Answers to Exam practice questions 2
b Possible reasons for the merger between the two companies include:
■ Opportunity for synergies from the complementary nature of the brand
portfolios from Heinz and Kraft.
■ Substantial opportunities to exploit economies of scale of a global scale.
■ Enables the new organization to spread its costs, expertise and risks.
■ It is a quick way for both firms to enter new industries and geographic
markets.
■ The merger presents a quicker way of growth than organic growth
methods.
■ By becoming the fifth largest firm in its industry, the newly formed
organization gains market power to influence prices and output in the
industry.
■ Opportunities for increased investments in marketing and innovation.
Award 1–2 marks for an answer that shows a limited understanding.
Award 3–4 marks for an answer that shows some understanding of the possible
reasons for the merger between the two companies. Application may be missing.
Award 5–6 marks for a detailed answer that shows a good level of
understanding of the possible reasons for the merger between Kraft and Heinz.
There is clear evidence of application.
5 Success (+$215m)
$107.5m
0.5 $147.5m – $100m
Ashtown Failure (+$80m) = $47.5m
B $40m
$100m 0.5
$117m
0.65 $143.25m – $80m
Brigcity (+$75m) = $63.25m
C $26.25m
$80m 0.35
Centrapolis (+$175m)
$105m
0.6 $141m – $90m
(+$90m) = $51m
$36m
0.4
= decision node = chance node
Decision tree for Kingmans Educational Resources
Award 1–3 marks for a decision tree with some attempt at the calculation of the
expected outcomes, although these may be incomplete or inaccurate.
Award 4–5 marks for a complete decision tree although there are one or
two minor errors and/or it does not include an appropriate key. For 5 marks,
the answer clearly shows Brigcity as the best option on
Gantt chart for Project A (weeks)
financial grounds.
1 2 3 4 5 6 7 8 9 10 11 12 13
Award 6 marks for a fully labelled, complete and accurate
decision tree with the working out shown and an appropriate
key. The answer must clearly show Brigcity as the best A
option on financial grounds. B
6 Award 1–2 marks for a Gantt chart that shows some C
understanding in scheduling, although there are two or
more errors. D
Award 3–4 marks for a Gantt chart that shows a good level
of understanding of scheduling, including the correct unit of
measurement (number of weeks to complete the project). Award
full marks if there are no significant errors. Gantt chart for Project A
amurimi
Unit 1 Business organization and environment
1 a Stakeholders could include:
■ Employees (25000 job losses)
■ Turkish and Brazilian governments
■ Shareholders
■ Directors (of HSBC)
Award 1 mark for each appropriate stakeholder identified, up to the maximum
of 2 marks.
b Conflicts following HSBC’s decision to reduce its global workforce could
include:
■ Employees and labour unions protesting against mass job losses whilst
HSBC directors strive to cut costs ($4.5 to $5 billion per year).
■ Shareholders experiencing a decline in the return on their investment
in HSBC (largely due to the compensation for employees made
redundant).
Award up to 2 marks for each stakeholder conflict identified and explained, up
to the maximum of 4 marks.
2 ■ At £1 = $1.6, the customers pay £120000 × $1.6 = $192000
■ At £1 = $1.8, the customers pay £120000 × $1.8 = $216000
■ Hence, customers in the USA have to pay an extra $24000 for each car
3 a Internal economies of scale are generated and enjoyed within the
organization when it operates on a larger scale. By contrast, external
economies of scale occur within the industry, thus benefit all firms.
Award 1 mark for an answer that shows some understanding of internal or
external economies of scale.
Award 2 marks for an answer that shows some understanding of internal and
external economies of scale.
Award 3 marks for clear definitions of internal and external economies of scale
that show a clear distinction between the two terms.
b [($1.50 × 4000) + $4800] ÷ 4000 = $2.70
Award 1 mark for the correct answer and 1 mark for showing the working out
accurately.
c Profit = [($4 – $1.5) × 4000] – $4800 = $5200
Award 1 mark for the correct answer and 1 mark for showing the working out
accurately.
4 a A merger is a form of external growth that involves two or more firms
agreeing to integrate as a single organization, such as Kraft Foods agreeing
with Heinz to become a combined company.
Award 1 mark for a definition that shows some understanding of the term merger.
amurimi
, Award 2 marks for a clear and succinct definition of the term merger.
amurimi
, Answers to Exam practice questions 2
b Possible reasons for the merger between the two companies include:
■ Opportunity for synergies from the complementary nature of the brand
portfolios from Heinz and Kraft.
■ Substantial opportunities to exploit economies of scale of a global scale.
■ Enables the new organization to spread its costs, expertise and risks.
■ It is a quick way for both firms to enter new industries and geographic
markets.
■ The merger presents a quicker way of growth than organic growth
methods.
■ By becoming the fifth largest firm in its industry, the newly formed
organization gains market power to influence prices and output in the
industry.
■ Opportunities for increased investments in marketing and innovation.
Award 1–2 marks for an answer that shows a limited understanding.
Award 3–4 marks for an answer that shows some understanding of the possible
reasons for the merger between the two companies. Application may be missing.
Award 5–6 marks for a detailed answer that shows a good level of
understanding of the possible reasons for the merger between Kraft and Heinz.
There is clear evidence of application.
5 Success (+$215m)
$107.5m
0.5 $147.5m – $100m
Ashtown Failure (+$80m) = $47.5m
B $40m
$100m 0.5
$117m
0.65 $143.25m – $80m
Brigcity (+$75m) = $63.25m
C $26.25m
$80m 0.35
Centrapolis (+$175m)
$105m
0.6 $141m – $90m
(+$90m) = $51m
$36m
0.4
= decision node = chance node
Decision tree for Kingmans Educational Resources
Award 1–3 marks for a decision tree with some attempt at the calculation of the
expected outcomes, although these may be incomplete or inaccurate.
Award 4–5 marks for a complete decision tree although there are one or
two minor errors and/or it does not include an appropriate key. For 5 marks,
the answer clearly shows Brigcity as the best option on
Gantt chart for Project A (weeks)
financial grounds.
1 2 3 4 5 6 7 8 9 10 11 12 13
Award 6 marks for a fully labelled, complete and accurate
decision tree with the working out shown and an appropriate
key. The answer must clearly show Brigcity as the best A
option on financial grounds. B
6 Award 1–2 marks for a Gantt chart that shows some C
understanding in scheduling, although there are two or
more errors. D
Award 3–4 marks for a Gantt chart that shows a good level
of understanding of scheduling, including the correct unit of
measurement (number of weeks to complete the project). Award
full marks if there are no significant errors. Gantt chart for Project A
amurimi
