Cambridge O Level

BUSINESS STUDIES 7115/21

*1241573790*

Paper 2 Case Study May/June 2022

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

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1 (a) Explain four reasons why governments might support business start-ups.

To reduce unemployment – new businesses create jobs and therefore

Reason 1: .........................................................................................................................
help to reduce unemployment in the country
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To increase output / improve standard of living – new businesses will

Reason 2: .........................................................................................................................
produce more goods and services in the economy/increase in GDP
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Reason 3: To motivate/encourage entrepreneurs – government support may reduce

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the risk of failure
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Taxation – the business will pay tax if profitable and this will be a
Reason 4: .........................................................................................................................
source of revenue for the government which they can then use for
providing public services.
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(b) Consider the benefits to Yasin of the two sections of his business plan shown in Appendix 1.
Which section do you think helped him most when starting up his business? Justify your answer.

Market research: ...............................................................................................................

Able to identify the market for eating bread as being

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targeted at all age groups
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Market research shows that starting to produce cakes is
likely to be successful as 70% of respondents want to
...........................................................................................................................................
buy cakes
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Resources: .......................................................................................................................

To be able to calculate how much start-up capital is

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needed by Yasin to buy the bakery equipment
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It is a starting point for Yasin to make the necessary
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purchases to get the bakery started
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Market research is the most important as this shows that
Conclusion: .......................................................................................................................
the bakery has the demand for it to be successful.
Without a demand for bread the business will fail.
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However, a lack of experience may mean the list is not
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accurate or complete and Yasin may need a lot more
capital than he thinks
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2 (a) Explain one benefit and one limitation to Yasin of using a break-even chart.

Shows break-even output

Benefit: .............................................................................................................................

...........................................................................................................................................

So Yasin knows how much bread he needs to

Explanation: ......................................................................................................................
sell to break even – this will allow him to plan the bakery and
equipment required – to ensure at least the minimum quantity of
...........................................................................................................................................
bread is produced and sold
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A break-even chart
Limitation: .........................................................................................................................

...........................................................................................................................................

Explanation: it assumes all the output will be sold/provides an

......................................................................................................................
estimate of sales – but MB may not sell all the bread in the day –
some may be wasted and the costs of producing these will not be
...........................................................................................................................................
taken into account – so at a specific output the business may not
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make a profit but may make a loss
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(b) Consider the following two ways MB could achieve lean production. Which is the best way for
Yasin to choose? Justify your answer.
• Kaizen.
• Just-in-time inventory control.

Kaizen: ..............................................................................................................................
Employees might be able to offer suggestions about
...........................................................................................................................................
how small continuous changes may improve
the efficiency of the bakery
...........................................................................................................................................
but
...........................................................................................................................................
The 2 employees may not be willing/able to make
...........................................................................................................................................
suggestions for improvements
...........................................................................................................................................
The employees may have reduced hours if efficiency is improved
which may make
...........................................................................................................................................

...........................................................................................................................................

Just-in-time inventory control: ...........................................................................................

Reduces the costs of holding inventory of ingredients such as flour.

...........................................................................................................................................

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Less working capital required to pay for inventory
...........................................................................................................................................

but
...........................................................................................................................................

If there is an increase in demand for certain types of bread, then

...........................................................................................................................................
there may not be sufficient ingredients to meet the increased
...........................................................................................................................................
demand
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Recommendation: ............................................................................................................
Less working capital is required for JIT, so this is
...........................................................................................................................................
the best option for a small bakery as Yasin is likely
to have limited funds to run the new business. The
...........................................................................................................................................
bread is made each day so fresh ingredients are
...........................................................................................................................................
required, and this makes JIT the most suitable
because a small bakery may have limited
...........................................................................................................................................
opportunities to implement Kaizen ideas
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3 (a) Explain four ways Yasin can advertise MB’s products.

Local radio – as the bakery attracts only local people so many potential
Way 1: ...............................................................................................................................
customers may hear the advert
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...........................................................................................................................................

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Local newspaper/magazine – as a voucher could be included for money

Way 2: ...............................................................................................................................
off bread
...........................................................................................................................................

...........................................................................................................................................

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Posters – in the window of the bakery shop to attract customers passing

Way 3: ...............................................................................................................................
by
...........................................................................................................................................

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Leaflets/fliers – can be handed out in the local town centre so that

Way 4: ...............................................................................................................................

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(b) Consider the two options outlined in Appendix 2. Which option should Yasin choose? Justify
your answer using appropriate calculations.

Option 1: ...........................................................................................................................

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Option 2: ...........................................................................................................................

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Recommendation: ............................................................................................................

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4 (a) Explain one advantage and one disadvantage of Yasin using a democratic leadership style.

Advantage: .......................................................................................................................

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Explanation: ......................................................................................................................

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Disadvantage: ...................................................................................................................

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Explanation: ......................................................................................................................

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(b) Consider the following three ways Yasin could improve the ethical image of MB. Which way
would be most effective? Justify your answer.
• Buying all ingredients from local suppliers.
• Using only environmentally friendly packaging.
• Increasing wage rates to 20% above the legal minimum wage.

Buying all ingredients from local suppliers: ......................................................................

...........................................................................................................................................

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Using only environmentally friendly packaging: ...............................................................

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Increasing wage rates to 20% above the legal minimum wage: ......................................

...........................................................................................................................................

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Conclusion: .......................................................................................................................

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