CIE IGCSE Topical Past Paper 1

1.4 Types of business organisation

0450/12/O/N/2024

SNT is an ethical business. It manufactures a range of soft drinks using batch production. In 2023 SNT produced 300 000 bottles of soft drinks each week. There are many factors which affect how much inventory the business should hold. SNT’s directors are planning to expand the business into new markets in other countries by forming a joint venture. They are considering licensing as another way to help overcome the potential problems of entering these new markets.

(a) Define ‘licensing’. [2]

(d) Explain one advantage and one disadvantage to SNT of forming a joint venture when entering new markets in other countries. [6]
Advantage:
Explanation:

Disadvantage:
Explanation:

0450/11/O/N/2024

JTA is a public limited company. It sells holidays in a mass market. The business has 44 shops and 200 employees. The Finance Director is considering ways a business can increase its profit. She has been asked to analyse JTA’s financial performance using ratio analysis. An extract from JTA’s financial statements is shown in Table 3.1.

Extract from JTA’s financial statements for 2023 ($ million)
Revenue	900
Profit	100
Capital employed	800

Table 3.1

(d) Explain one advantage and one disadvantage of JTA being a public limited company. [6]
Advantage:
Explanation:

Disadvantage:
Explanation:

0450/12/F/M/2024

Suliman owns a small business which sells t-shirts on its website. He operates as a sole trader. Suliman is analysing data for his existing business. An extract from this data is shown in Table 4.1. Suliman wants to open his first shop and needs to decide on a suitable location. He is considering which type of sales promotion to use for the new shop.

Extract from Suliman’s data for his existing business
Break-even output	500 t-shirts
Current sales	550 t-shirts
Selling price per t-shirt	$3.99
Variable cost per t-shirt	$1.99

Table 4.1

(e) Do you think operating as a sole trader is the best type of organisation for a small business? Justify your answer.[6]

045/13/M/J/2023

Meena wants to leave her job as a teacher to become a successful entrepreneur. Her business will produce handmade jewellery. Meena knows that there is government support for business start-ups. She plans to use market research to help identify a market segment for her jewellery. Meena’s brother has offered to become her business partner but she cannot decide whether it would be better to operate as a sole trader

Explain one advantage and one disadvantage to Meena of operating as a sole trader rather than being in a partnership. [6]
Advantage:
Explanation:

Disadvantage:
Explanation:

(c) Outline two characteristics Meena will need to become a successful entrepreneur. [4]
Characteristic 1:
Characteristic 2:

045/11/M/J/2022

CTF is a public limited company. It manufactures beds using batch production. The Operations Director is using break-even analysis to calculate the margin of safety for children’s beds. An extract from CTF’s output data is shown in Table 2.1. The Operations Director wants to know how an increase in inflation might affect CTF. She knows there are many environmental pressures that a manufacturing business could respond to.

Table 2.1 Extract from CTF’s output data (children’s beds per month)
Break-even output	14 000
Current level of output	18 000
Maximum factory output	25 000

(a) Define ‘public limited company’. [2]