™
Cambridge IGCSE
BUSINESS STUDIES 0450/11
*3929277729*
Paper 1 Short Answer and Data Response
You must answer on the question paper.
No additional materials are needed.
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 [ ].
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1 BKH is a large public limited company. It has 2 000 employees across 18 locations. BKH sells a
range of insurance products including house and car insurance. BKH’s shareholders want the
business to increase profit. The Managing Director knows increasing profit can conflict with the
objectives of other stakeholder groups. She said: ‘Private sector businesses have different objectives
to public sector organisations.’ BKH is also planning to expand by taking over another insurance
company.
(a) Define ‘public sector’.
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(b) Define ‘profit’.
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(c) Identify four ways to measure the size of a business.
Way 1: ...............................................................................................................................
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Way 2: ...............................................................................................................................
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Way 3: ...............................................................................................................................
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Way 4: ...............................................................................................................................
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(d) Explain one way each stakeholder’s objectives might conflict with BKH’s objective to increase
profit.
Customers objective: ........................................................................................................
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How this objective might conflict: ......................................................................................
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Employees objective: ........................................................................................................
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How this objective might conflict: ......................................................................................
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(e) Do you think economies of scale are the most important reason for taking over another
business? Justify your answer.
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3 Alex started APB as a sole trader business 4 years ago. APB provide printing services for local
businesses such as leaflets and brochures. Alex thinks having a good location is important to any
business. All APB’s 6 employees receive on-the-job training. Alex has a democratic leadership
style and uses job rotation to help keep employees motivated. To meet an increase in demand,
Alex plans to buy an additional printing machine. This will cost $1 800. Alex has to decide on an
appropriate source of finance.
(a) Define ‘limited liability’.
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(b) State two factors that a service sector business should consider when deciding where to
locate.
Factor 1: ...........................................................................................................................
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Factor 2: ...........................................................................................................................
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(c) Outline two ways APB can use ideas from Herzberg’s theory to motivate its employees.
Way 1: ..............................................................................................................................
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Way 2: ..............................................................................................................................
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(d) Explain two possible advantages to APB of buying a franchise.
Advantage: .......................................................................................................................
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Explanation: ......................................................................................................................
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Advantage: .......................................................................................................................
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Explanation: ......................................................................................................................
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(e) Do you think being a risk-taker is a more important characteristic of a successful entrepreneur
than being creative? Justify your answer.
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