Total marks: 90 · Duration: 1 hour 45 minutes
Instructions to candidates
- Answer all questions.
- Section A contains multiple-choice and short-answer questions (20 marks).
- Section B (34 marks) and Section C (36 marks) are based on case studies printed in the paper.
- You may use a calculator. Show your working for calculations.
- This paper assesses Business in the real world, Influences on business, Business operations and Human resources.
- The businesses in this paper are fictional.
- The marks for each question are shown in brackets.
Paper
Section A — Multiple choice and short answer (20 marks)
Questions 01–08: choose one answer for each question.
01 Which of these businesses operates in the primary sector? (1 mark) A) A fishing company that catches and sells mackerel B) A bakery that turns flour into bread C) A bank that lends money to small firms D) A factory that assembles bicycles
02 A business has an organisational structure with many layers of management and a narrow span of control. What is this called? (1 mark) A) A flat structure B) A tall structure C) A matrix structure D) A decentralised structure
03 Which payment method rewards workers according to the number of items they produce? (1 mark) A) Salary B) Commission C) Piece rate D) Profit sharing
04 A business reduces waste by keeping stock levels very low and receiving deliveries only when they are needed. Which approach is it using? (1 mark) A) Buffer stock B) Bulk buying C) Batch production D) Just in time (JIT)
05 The Bank of England raises interest rates. Which is the most likely effect on a business with a large bank loan? (1 mark) A) Its interest payments increase B) Its sales to customers rise C) Its costs of raw materials fall D) Its loan is cancelled
06 Which of these is an example of internal recruitment? (1 mark) A) Advertising a job on a recruitment website B) Using a recruitment agency C) Placing an advert in a local newspaper D) Promoting an existing employee
07 Which law sets the lowest hourly rate that employers in the UK may legally pay most workers? (1 mark) A) The Equality Act B) The Health and Safety at Work Act C) The National Minimum Wage legislation D) The Consumer Rights Act
08 A business sets an aim to "become the largest seller of electric bikes in the UK within five years". Which type of aim is this? (1 mark) A) Survival B) Market share C) Cost reduction D) Social and ethical
09 Define the term span of control. (2 marks)
10 A business employed an average of 80 workers last year, and 12 workers left. Calculate the labour turnover for the year. Show your working. (2 marks)
11 Explain one disadvantage to a business of using just in time stock control. (2 marks)
12 State two factors a manufacturing business might consider when deciding where to locate. (2 marks)
13 Explain one benefit to a business of behaving ethically. (2 marks)
14 A factory's output per worker rises from 40 units a day to 46 units a day after new machinery is introduced. Calculate the percentage increase in productivity. (2 marks)
Section B — Case study: Harbour Brew Ltd (34 marks)
Harbour Brew Ltd is a craft brewery in a seaside town in Cornwall. It was started six years ago by two friends, Kerys and Tom, and is now a private limited company with 18 employees. The brewery makes bottled beers and soft drinks and sells them to pubs, restaurants and independent shops across the South West of England.
Most of the brewing is done using labour-intensive methods. Each beer is made in batches of 2000 bottles, and the recipe is changed regularly to offer seasonal beers. Demand has grown by about 25% a year, and the brewery is struggling to keep up. Last month 10 production workers produced 24 000 bottles.
Kerys wants to buy an automated bottling line costing £180 000. She believes it would increase output and improve quality, because bottles would be filled and sealed consistently. Tom is worried that it would reduce the "handmade" image that customers like, and that some staff might lose their jobs.
The business buys its hops and malt from three small local farms. Harbour Brew has a strong reputation for supporting local suppliers, but deliveries are sometimes late, which has delayed production twice this year. A large national supplier has offered to deliver all ingredients at a 12% lower price.
15.1 Using the information in the case study, calculate the labour productivity per production worker last month. (2 marks)
15.2 Explain one way in which batch production benefits Harbour Brew. (2 marks)
15.3 Analyse how the automated bottling line could improve quality at Harbour Brew. (6 marks)
15.4 Kerys and Tom must decide whether to buy the automated bottling line. Evaluate whether Harbour Brew should buy the automated bottling line. (9 marks)
16.1 Identify one factor Harbour Brew should consider when choosing a supplier, other than price. (2 marks)
16.2 Explain two possible impacts on Harbour Brew of late deliveries from its suppliers. (4 marks)
16.3 Harbour Brew could continue to use its three local farms, or switch to the large national supplier. Evaluate which option is better for Harbour Brew. (9 marks)
Section C — Case study: Nimbus Care (36 marks)
Nimbus Care is a private limited company that runs six care homes for elderly people in the Midlands, employing 240 staff. Most staff are care assistants who work shifts, including nights and weekends.
Nimbus Care has a tall organisational structure. Each home has a manager, two deputy managers and several team leaders, and all major decisions are made at head office. Staff surveys show that care assistants feel their views are ignored.
Last year 72 staff left the business, and many said they were leaving for better-paid jobs in supermarkets and warehouses. The cost of recruiting and training each new care assistant is about £2500. Nimbus Care pays care assistants slightly above the National Living Wage.
The managing director, Leon, is considering two options to improve motivation and reduce staff turnover:
Option 1: increase pay for care assistants by 6%, at a cost of about £300 000 a year.
Option 2: introduce a training programme that leads to a nationally recognised care qualification, with a promotion route to team leader. This would cost about £120 000 a year.
Leon is also thinking about removing one layer of management in each home to create a flatter structure.
17.1 Define the term delegation. (2 marks)
17.2 Calculate the labour turnover at Nimbus Care last year. Show your working. (2 marks)
17.3 Using the case study, calculate the total cost to Nimbus Care of recruiting and training replacements for the staff who left last year. (2 marks)
17.4 Explain two reasons why high labour turnover is a problem for Nimbus Care. (4 marks)
17.5 Analyse the benefits to Nimbus Care of changing to a flatter structure. (6 marks)
18.1 Explain one method of non-financial motivation, other than training, that Nimbus Care could use. (2 marks)
18.2 Explain one legal responsibility Nimbus Care has towards its employees. (2 marks)
18.3 Leon must choose between Option 1 and Option 2. Evaluate which option would be more effective in reducing labour turnover at Nimbus Care. (9 marks)
18.4 Analyse how good customer service could help Nimbus Care compete with other care homes. (7 marks)