Total marks: 75 · Duration: 2 hours 30 minutes
Instructions to candidates
- This paper consists of SIX questions arranged in THREE sections, corresponding to the three Modules of Unit 1.
- Answer THREE questions — ONE from EACH section.
- Each question is worth 25 marks. Marks for each part are shown in brackets.
- Begin each answer on a new page and write the question number clearly in the margin.
- Where a question asks for a diagram, chart or organisation structure, you must draw it in your answer booklet, fully labelled, and refer to it explicitly in your written answer. Unlabelled diagrams earn no marks. No diagrams or figures are supplied with this paper — all data you need is given in tables.
- Where calculations are required, show all working. Method marks are available even where the final figure is incorrect.
- Silent, non-programmable calculators are permitted.
- Unit 1 covers Module 1 (Business and its Environment), Module 2 (The Management of People) and Module 3 (Business Finance and Accounting).
Paper
Section A — Module 1: Business and its Environment (answer ONE) — 25 marks
1. (a) Distinguish between the private sector and the public sector, giving one Caribbean example of an organisation in each. (6 marks)
(b) Explain THREE advantages and TWO disadvantages of operating as a private limited company rather than as a sole trader. (9 marks)
(c) A successful family-owned bakery in Barbados, currently a partnership, is considering incorporating as a private limited company in order to finance expansion into three other islands. Discuss the factors the owners should consider before making this decision. (10 marks)
2. (a) Define the term business environment and distinguish between the internal and external environment. (5 marks)
(b) Using the PEST framework, analyse FOUR external factors currently affecting the Caribbean tourism industry. (10 marks)
(c) "Corporate social responsibility is a cost that small Caribbean firms cannot afford." Evaluate this statement. (10 marks)
Section B — Module 2: The Management of People (answer ONE) — 25 marks
3. (a) Distinguish between leadership and management. (5 marks)
(b) Compare the autocratic, democratic and laissez-faire leadership styles, stating one situation in which each would be appropriate. (9 marks)
(c) A regional manufacturing firm has experienced rising absenteeism, falling output per worker and three resignations from its supervisory team in the past year. Using TWO named motivation theories, recommend measures the firm might take, and assess the limitations of each theory in this context. (11 marks)
4. (a) Outline the stages of the recruitment and selection process. (6 marks)
(b) Draw and label an organisation chart for a firm with a tall hierarchical structure, and explain THREE consequences of a tall structure for communication and decision-making. (9 marks)
(c) Discuss the extent to which delayering would improve the performance of a long-established Caribbean statutory corporation. (10 marks)
Section C — Module 3: Business Finance and Accounting (answer ONE) — 25 marks
5. (a) Distinguish between capital expenditure and revenue expenditure, giving one example of each. (5 marks)
(b) The table below gives extracted figures for Ridgeway Traders Ltd for the year ended 31 December.
| Item | $ |
|---|---|
| Revenue (sales) | 1,200,000 |
| Cost of sales | 780,000 |
| Operating expenses | 260,000 |
| Current assets | 340,000 |
| Inventory (included in current assets) | 120,000 |
| Current liabilities | 200,000 |
| Capital employed | 900,000 |
Calculate, showing all working: (i) gross profit margin, (ii) net profit margin, (iii) the current ratio, (iv) the acid-test ratio, and (v) return on capital employed. (10 marks)
(c) Using your results from (b), advise the directors on the financial position of the firm, identifying TWO areas of concern and recommending action for each. (10 marks)
6. (a) Distinguish between internal and external sources of finance. (5 marks)
(b) Explain THREE factors a manager should consider when selecting a source of finance for the purchase of new machinery. (9 marks)
(c) A Caribbean agro-processing firm needs $2 million to expand. Evaluate the suitability of bank loan finance, a share issue and retained earnings as means of raising this sum. (11 marks)