Cambridge International Examinations

Cambridge International Advanced Subsidiary and Advanced Level

BUSINESS 9609/21
Paper 2 Data Response May/June 2016
1 hour 30 minutes
No Additional Materials are required.
* 1 5 0 1 6 2 4 2 4 9 *

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An answer booklet is provided inside this question paper. You should follow the instructions on the front cover
of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.

Answer all questions.

The businesses described in this question paper are entirely fictitious.

The number of marks is given in brackets [ ] at the end of each question or part question.

This document consists of 4 printed pages and 1 insert.

DC (NF) 114959/2
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1 Peterson Manufacturing (PM)

PM is a large public limited company operating in the secondary sector. PM manufactures

four types of industrial ovens. PM only sells its ovens to other businesses. Most of PM’s
customers are bakeries which use the ovens to produce bread and cakes.

Jacob is the Marketing Director of PM. He has been examining the data shown in Table 1.

Table 1: Revenue data by oven type ($000s) 5

Oven Type 2013 2015

A 855 770
B 745 755
C 550 450
D 350 400 10

Jacob is worried about the future success of PM. He is aware of how the market for PM’s
products has been changing.

• Market research shows that customers prefer the more advanced products of
competitors.
• The sales team has reported that customers are becoming more demanding when 15
negotiating prices.
• In PM’s industry there is an increasing emphasis on developing effective customer
relationships.
• PM relies on trade fairs to attract new customers. However customer attendance at
these fairs is declining. 20

Jessica, the Human Resources Director, is proposing to replace the performance related
pay scheme with a profit sharing scheme. The current system of bonuses, based on
meeting production targets, will end. Table 2 contains a summary of these pay schemes.

Table 2: Summary of different pay schemes

Current performance related pay scheme Proposed profit sharing scheme 25

• Workers are paid an hourly wage. • Workers will be paid an hourly wage.

• Workers also receive a bonus based • Workers will also receive a bonus
on meeting production targets each based on the profit of PM each year.
month.

• 90% of production targets were met 30

in 2015.

Some workers are not happy about this change and worker representatives have asked for
a meeting with Jessica. Workers know that revenue and profit have been declining over the
last few years. Workers blame poor marketing and a lack of product development. However
PM managers hope that new types of oven will improve company performance in the future. 35
Workers’ bonuses have been rising but only due to increased hours worked.

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(a) (i) Define the term ‘public limited company’ (line 1). [2]
(ii) Briefly explain the term ‘worker representatives’ (line 32). [3]

(b) (i) Refer to Table 1. Calculate the percentage decrease in total revenue between 2013 and
2015. [3]
(ii) Briefly explain one likely effect on PM of this decrease in total revenue. [3]

(c) Analyse how PM could use the 4Cs to improve its customer relationships. [8]

(d) Discuss the advantages and disadvantages to PM’s employees of the change from
performance related pay to a profit sharing scheme. [11]

© UCLES 2016 9609/21/M/J/16 [Turn over

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2 Prestige Jewellery (PJ)

PJ is a partnership operating in a small niche market. It was set up by Tariq and Tanbir five
years ago. PJ manufactures and sells a range of jewellery. PJ specialises in using high
quality diamonds in its product range. PJ has a manufacturing workshop at the back of its
business premises. PJ also has a shop at the front of the premises where it sells directly to
customers. 5

PJ’s product portfolio includes bracelets, necklaces, rings and earrings. PJ’s unit cost is high
as each product is handmade using job production. PJ employs four full-time production
workers.

PJ has an excellent reputation for quality. Customers visit PJ and have a ‘design consultation’
with either Tariq or Tanbir. During the consultation, customers choose the design, diamonds 10
and gold for their product and agree a price. Customers pay a 25% deposit when they
place an order. The lead time from design to delivery is typically four weeks.

Tariq has extracted the following financial data from the latest income statement.

Table 3: Summary financial data for PJ (year ended 30 June 2015)

Revenue $400 000 15

Cost of sales $300 000

Tariq and Tanbir are planning to open a new jewellery shop in a neighbouring town. Tanbir
understands the importance of selecting the right person to manage this new shop. This will
be an important human resource management decision as they cannot risk any damage
to the reputation of PJ. The new manager will need to recruit three employees for the new 20
shop and be responsible for marketing of this shop. Tariq and Tanbir cannot agree on the
best methods of selecting a new shop manager.

(a) (i) Define the term ‘income statement’ (line 13). [2]
(ii) Briefly explain the term ‘human resource management’ (line 19). [3]

(b) (i) Refer to Table 3. Calculate PJ’s gross profit margin. [3]
(ii) Explain one benefit to PJ of accurate cost data. [3]

(c) Analyse the advantages to PJ of using job production. [8]

(d) Discuss the methods of selection that PJ could use to select a manager for the new shop.
[11]

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