2012

Higher School Certificate

Preliminary Examination

Business Studies

Total marks – 80
General Instructions
Section I – Pages 2–7
● Reading time – 5 minutes 20 marks
●Attempt Questions 1–20
● Working time – 2 hours
●Allow about 25 minutes for this section
● Board approved calculators may be used
● Write using black or blue pen Section II – Pages 8–13
40 marks
● Write your student number and/or name ●Attempt Questions 21–24
at the top of every page ●Allow about 1 hour for this section

Section III – Page 14

20 marks
●Attempt Question 25
●Allow about 35 minutes for this section

This paper MUST NOT be removed from the examination room

STUDENT NUMBER/NAME: ……………………..

 STUDENT NUMBER/NAME: ……………………..

Section I

20 marks
Attempt Questions 1–20
Allow about 25 minutes for this section

Select the alternative A, B, C or D that best answers the question and indicate your choice
with a cross (X) in the appropriate space on the grid below.

A B C D A B C D

1 11

2 12

3 13

4 14

5 15

6 16

7 17

8 18

9 19

10 20

Page 2
 STUDENT NUMBER/NAME: ……………………..

1 DEN is a new restaurant that opened up in a major city. It is receiving great reviews
for its quality food and service.

Which industry is DEN operating in?

(A) Primary
(B) Secondary
(C) Quaternary
(D) Quinary

2 Who sets tactical goals in a business?

(A) Employees
(B) Front line management
(C) Middle management
(D) Senior management

3 Which term refers to a business being registered as a separate legal entity to its owners?

(A) Corporatisation
(B) Incorporated
(C) Unincorporated
(D) Privatisation

4 Michael’s management style is to present problems to staff and management as they

arise and work with his staff to resolve problems.

Which leadership style is Michael most likely to be using?

(A) Autocratic
(B) Authoritarian
(C) Collegial
(D) Democratic

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 STUDENT NUMBER/NAME: ……………………..

5 An estimated 53% of retail customers in Australia are now shopping online. Real
Handbags is experiencing falling sales and profits from the domestic market.
Management is looking at the possibility of exporting, to regenerate growth.

Which stage of the product life cycle is Real Handbags operating?

(A) Establishment
(B) Growth
(C) Maturity
(D) Post maturity

6 Which of the following describes the process whereby an independent person is

appointed to take control of a business with the intention to sell its assets in order to
pay creditors?

(A) Liquidation
(B) Voluntary administration
(C) Bankruptcy
(D) Receivership

7 Which of the following is an example of short-term finance?

(A) Mortgage
(B) Trade credit
(C) Personal loan
(D) Leasing

8 A biscuit producer has implemented a quality management strategy. They use a set of
processes during and after production aiming to prevent faulty products and errors
during production.

Which quality management strategy is being used by this company?

(A) Quality control

(B) Quality assurance
(C) Check control management
(D) Total quality management

Page 4
 STUDENT NUMBER/NAME: ……………………..

9 New Face Cosmetics has designed a high quality, expensive makeup line. Their brand
name evokes an image of the product’s quality. They want to retain this image in the
market.

Which element of the marketing mix will help New Face Cosmetics promote this
image?

(A) Packaging
(B) Positioning
(C) Product design
(D) Product branding

10 Observe the following balance sheet for Tim’s Coffee:

● Current assets worth $45 000; non-current assets worth $50 000
● Current liabilities worth $10 000
● Owner capital worth $60 000

What is Tim’s Coffee net profit?

(A) $5 000
(B) $15 000
(C) $25 000
(D) $50 000

11 Which of the following is considered an on-cost in an employee’s remuneration

package?

(A) Base salary

(B) Commission
(C) Overtime
(D) Superannuation

12 A human resource manager is performing a job analysis in order to recruit staff.

Which element of the human resource cycle is this part of?

(A) Acquisition
(B) Development
(C) Maintenance
(D) Separation

Page 5
 STUDENT NUMBER/NAME: ……………………..

13 Cleanse Shampoo plans to introduce a new line of shampoo that ‘leaves hair silky and
smooth’. They are pricing this shampoo at $20. Fixed costs are $60 000 and variable
costs are $8 per bottle.

How many bottles need to be sold to break even?

(A) 2142
(B) 3000
(C) 5000
(D) 7500

14 Which of the following is an advantage of starting a new business, compare to buying

an existing business?

(A) Time is needed to develop a customer base.

(B) The business can start at the maturity stage.
(C) Less tax is required to be paid.
(D) There is no goodwill for which the owner has to pay.

15 Which of the following is a state tax?

(A) Payroll tax

(B) Fringe benefit tax
(C) Goods and service tax
(D) Pay as you go tax

16 Which of the following describes characteristics of a boom period in the business cycle?

(A) Unemployment levels may rise and level of spending increases.

(B) Unemployment levels may rise and level of spending decreases.
(C) The level of spending increases and higher levels of employment.
(D) The level of spending decreases and higher levels of employment.

17 Which of the following are examples of information resources available to a business?

(A) Economic forecasts and legal advice

(B) Loans and funds available to pay creditors
(C) Machinery and raw materials
(D) Sales reports and employees

Page 6
 STUDENT NUMBER/NAME: ……………………..

18 A car manufacturer has established its organisation with a strict hierarchical

structure, based on specialisation of labour. Management adopts an autocratic
leadership style.

Which management approach is being used by this business?

(A) Behavioural approach

(B) Classical approach
(C) Contingency approach
(D) Political approach

19 Which of the following is a type of involuntary separation?

(A) Resignation
(B) Retirement
(C) Retrenchment
(D) Long service leave

20 Which of the following is a financial goal for a business?

(A) Ecological sustainability

(B) Growth and diversification
(C) Greater financial security for owners
(D) Provision of employment

Page 7
 STUDENT NUMBER/NAME: ……………………..

Section II

40 marks
Attempt Questions 21–24
Allow about 1 hour for this section

Answer the questions in the spaces provided. These spaces provide guidance for the expected
length of response.

Question 21 (10 marks) Marks

Jacob has just completed two cake decorating courses and is interested in opening up his
own cake store selling cakes with custom-made designs.

(a) Outline an appropriate legal structure for Jacob’s cake store.

(b) Describe TWO challenges Jacob may face during the establishment stage of the
business.
(i)

(ii)

Question 21 continues on the next page

Page 8
 STUDENT NUMBER/NAME: ……………………..

Question 21 (continued) Marks

(c) Discuss TWO legal requirements when establishing a business.

(i)

(ii)

End of Question 21

Page 9
 STUDENT NUMBER/NAME: ……………………..

Question 22 (10 marks) Marks

Before starting a ‘small to medium enterprise’ it is essential to learn the specific skills of
effective management. These skills of management will increase the chance of business
success.

(a) Identify TWO skills required by an effective manager.

(i)
(ii)

(b) Describe TWO economic contributions of small to medium enterprises to the

Australian economy.
4
(i)

(ii)

(c) Explain TWO factors that must be considered by a business, to achieve success.

4
(i)

(ii)

Page 10
 STUDENT NUMBER/NAME: ……………………..

Question 23 (10 marks) Marks

Nadia has been running a successful business for the last 8 years but sales have fallen this
year. She wants to launch a new marketing campaign for her baby food which is 100%
organic.

Nadia’s Natural Food

for the year ending 30 June 2011

$ $
Sales 500 000
Opening stock 200 000
Purchases 180 000
Closing stock 140 000

Cost of goods sold ?

Gross profit ?

Expenses

Advertising 25 000
Rent 35 500
Wages 55 500
Delivery expenses 25 000
Electricity 5 000
Telephone 10 000
Insurance 20 000

Additional information: Net profit for 2010

was $100 000.

(a) Calculate the cost of goods sold for Nadia’s Natural Food in 2011.

(b) Calculate the gross profit for Nadia’s Natural Food in 2011.

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Question 23 continues on the next page

Page 12
 STUDENT NUMBER/NAME: ……………………..

Question 23 (continued) Marks

(c) Calculate and comment on the change in net profit from 2010 to 2011.

(d) Describe how market segmentation can result in an increase in sales and profits.

(e) Discuss TWO promotional strategies which could be used by Nadia’s Natural Foods to
increase sales and market share.
(i)

(ii)

End of Question 23

Page 13
 STUDENT NUMBER/NAME: ……………………..

Question 24 (10 marks) Marks

Staff involvement in a business organisation has been directly linked to an increase in
productivity and achieving business goals.

(a) Identify TWO financial goals of business.

(i) ______________________________________________________________
(ii) ______________________________________________________________

(b) Outline TWO benefits of using mentoring as a strategy to increase staff involvement.
(i)

(ii)

(c) Explain the relationship between staff involvement and productivity.

(d) Recommend TWO strategies which can be used by management to effectively reduce
resistance to change.

Page 14
 STUDENT NUMBER/NAME: ……………………..

Section III

20 marks
Attempt Question 25
Allow about 35 minutes for this section

Answer the question on your own paper or in a writing booklet, if provided.

Expected length of the response is approximately 800 words or six written pages.

In your answer you will be assessed on how well you:

● demonstrate knowledge and understanding relevant to the question
● use the information provided
● communicate using relevant terminology and concepts
● present a sustained, logical and cohesive response in the form of a business report

Question 25 (20 marks)

Petar and Dionne have been hairdressers for 12 years. They decide to open a hairdressing
business in Sydney’s south west. After considering a number of options, they choose to start
a new business, as opposed to buying an existing business. It will have a partnership legal
structure. Petar and Dionne see a need to employ an experienced hairdresser and a
hairdressing apprentice.

Assume that you have been hired by Petar and Dionne as a business consultant and have
been asked to prepare them a report.

Write a report that addresses EACH of the following:

● TWO external influences that may impact on the business.

● TWO finance options that can be used to fund this business.
● Human resource strategies that can be used to manage employees effectively.

End of paper

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