Answers to Exam practice questions Unit 1 Business organization and environment

1 a Stakeholders could include: ■ Employees (25 000 job losses) ■ Turkish and Brazilian governments ■ Shareholders ■ Directors (of HSBC) Award 1 mark for each appropriate stakeholder identiied, 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 conlict identiied and explained, up to the maximum of 4 marks. 2 ■ At £1 = $1.6, the customers pay £120 000 × $1.6 = $192 000 ■ At £1 = $1.8, the customers pay £120 000 × $1.8 = $216 000 ■ Hence, customers in the USA have to pay an extra $24 000 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. Award 2 marks for a clear and succinct definition of the term merger.