ANSWER GUIDE

Candidate No. ……………………………….

Sydney Boys High School

2014
Higher School Certificate
Trial Examination
Value=30%

Business Studies
Total marks – 100

Section I – Pages 2–9

General Instructions 20 marks
Attempt Questions 1–20
 Reading time – 5 minutes Allow about 35 minutes for this section
 Working time – 3 hours Section II – Pages 10–16
 Board approved calculators may be used 40 marks
Attempt Questions 21–25
 Write using black or blue pen Allow about 1 hour and 15 minutes for this
 Write your student number at the top of section
every page
Section III – Page 17
20 marks
Attempt Question 26
Allow about 35 minutes for this section

Section IV – Page 18
20 marks
Attempt either Question 27 OR Question 28
Allow about 35 minutes for this section

This paper MUST NOT be removed from the examination room

Section I
20 marks
Attempt Questions 1–20
Allow about 35 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
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2
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10
11
12
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14
15
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19
20
 1 A company has recently decided to offer a discount for early payment of accounts.
What is the likely result?

(A) Decreased profits and improvement in cash flow

(B) Decreased profits and worsening of cash flow
(C) Increased profits and improvement in cash flow
(D) Increased profits and worsening of cash flow

2 Ajax Pty Ltd has provided the following information for the last month.

Sales $120,000
COGS $40,000
Expenses $25,000

What is the net profit ratio (net profit / sales) for this business (to the nearest two decimal
places)?

(A) 33.33%
(B) 66.66%
(C) 20.83%
(D) 45.83%

3. A service organisation transforms inputs into which of the following?

(A) Intangible products

(B) Intermediate goods
(C) Non-perishable goods
(D) Primary products

4. A factory has recently implemented an inventory management system which

has lowered the lead time on stock acquisition and reduced holding costs.

What type of inventory management system would this likely be?

(A) Computer Aided Design

(B) First In First Out
(C) Last In First Out
(D) Just In Time
5. A mobile phone manufacturer introduces a revolutionary new model with technological
features far superior to any other existing mobile phone. It decides to charge the highest
price in the market for this new model.

What pricing strategy is this?

(A) Loss leader

(B) Penetration
(C) Price points
(D) Skimming

6. Who administers workplace health and safety laws and workers compensation in NSW?

(A) Fair Work Australia

(B) Work Cover
(C) Trade Practices Act
(D) The Ombudsman

7. Which of the following terms refers to businesses purchasing supplies or services?

without being constrained by location?

(A) Global sourcing

(B) Interdependence
(C) Operations
(D) Total quality management

8 Which of the following refers to open and accountable business actions based on respect
for people?

(A) Corporate social responsibility

(B) Production approach
(C) Relationship marketing
(D) Sales approach

9. Which of the following is a primary source of data collection in the marketing process?

(A) Customer feedback

(B) Internet sites
(C) Sales reports
(D) Surveys
10. Which distribution strategy will be used by a business wishing to saturate the market with
its product?

(A) Exclusive distribution

(B) Intensive distribution
(C) Selective distribution
(D) Skimming distribution

11. Question 11 refers to the following information

Jan’s Coaching Services Pty Ltd has provided the following data based on the profit and loss
statement ending 30 June 2013.

Total revenue $10000

Net profit ratio 5%
Gross profit ratio 60%

What is the value of the cost of goods sold for Jan’s Coaching Services Pty Ltd?

(A) $ 4 000
(B) $ 6 000
(C) $ 8 000
(D) $ 10 000

12 Which of the following is associated with logistics?

(A) Cost of technology

(B) Material handling and packaging
(C) Insurance and security of stock held
(D) Checking quality of outputs

13 Snap Cameras Pty Ltd uses inspections of their cameras at selected points in the
production process. Which quality management strategy is the business using?

(A) Quality control

(B) Quality assurance
(C) Total Quality Management
(D) Quality improvement
 Use the following information to answer questions 14 & 15

Virginia’s Event Management Pty Ltd

Jan Feb March April May
Cash receipts 12 000 11 000 7 000 5 000 3 000
$
Cash 8 000 5 000 6 000 6 000 8 000
Payments $

The opening balance in January was $2,000.

14. What is the closing balance for May?

(A) $7 000
(B) $9 000
(C) $3 000
(D) $5 000.

15. Which of the following would be a suitable strategy for Virginia to use to help
deal with the cash flow situation?

(A) Factor outstanding sundry creditors

(B) Reduce the proportion of casual staff
(C) Retain higher amounts of profit
(D) Spread annual payments throughout the year

16. Which element of the marketing mix involves creating and maintaining
consumer awareness and interest in the output of a business?

(A) Product
(B) Price
(C) Promotion
(D) Place

17. Flexible work structures is a common method employed by which of the following?

(A) Job analysis

(B) Job description
(C) Job Design
(D) Job Recruitment
 18. Which of the following is an example of covert industrial action?

(A) A lockout
(B) A strike
(C) The implementation of a grievance procedure
(D) Increased absenteeism

19. Which leadership style is most likely to be found in a para military organisation?

(A) Autocratic
(B) Collegial
(C) Democratic
(D) Laissez-faire

20.

Question 20 refers to information found in the following financial report of a business

Stock 35 000
Overdraft 8 000
Cash at bank 23 000
Mortgage 77 000
Owner's capital 40 000
Accounts payable 8 000
Cars and vehicles 50 000
Accounts receivable 20 000
Drawings by the owner 6 000

What is the value of working capital?

(A) $ 8 000
(B) $ 16 000
(C) $ 62 000
(D) $ 78 000
Section II
40 marks
Attempt Questions 21–25
Allow about 1 hour and 15 minutes for this section

Question 21 (10 marks)

(a) Vroom Pty Ltd assembles electronic motors from imported parts. The
diagram below shows the sequencing of tasks in the assembly of the motors.

Task B Task D
10 minutes 10 minutes

Task A Task F Task G

Start Despatched
15 minutes 15 minutes 10 minutes
Task C Task E
25 minutes 25 minutes

(i) Calculate the critical path for Vroom Pty Ltd. 1

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(ii) Distinguish between transforming and transformed resources for this business. 3

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End of Question 21
Question 22 (10 marks) Marks

Gazines Galore Pty Ltd is a specialist magazine publisher with over two hundred titles. In the
past it has monitored obscure clubs and societies around the country and assessed the viability
of providing a monthly magazine. In recent times the company has realised that on line
metadata is providing a ‘gold mine ‘of information for its purposes. It can track the obscure
interests of millions of internet users and bundle them together to create separate defined
markets for their products.

(a) What is marketing? 1

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(b) Outline three types of markets. Which market is Gazines Galore Pty. Ltd targeting?
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(c) Distinguish between a sales (selling) approach and a marketing approach. 2
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Page 10
(d) Describe three marketing objectives for this business and identify how they might be
measured. 4
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End of Q 22

Page 11
Question 23 (10 marks) Marks

Observe the following information.

‘Neverland Pty Ltd’

As at 30 June 2014
$ $
Current assets Current liabilities
Cash 4 450 Overdraft 13 500
Accounts receivable 8 500 Accounts payable 11 600
Inventory 13 600

Non-current assets Non-current liability

Equipment 37 550 Mortgage 280 000
Property 410 000
Vehicles 91 000
Owner’s equity
Capital 165 000
Additional Information Net profit 95 000
2013 debt to equity ratio: 0.8:1
2013 return on owner’s equity: 5.3%
2013 net profit: $323 000

(a) Calculate the current ratio (current assets /current liabilities) for Neverland Pty Ltd in 2014.
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(b) Comment on the change in gearing (total Liabilities / Owners Equity) between 2013 and 2014.
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(c) Outline ONE possible reason for the change in return on owner’s equity
(Net Profit / Total Owners Equity) between 2013 and 2014. 2
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Page 12
(d) With reference to this business discuss the limitations of financial reports. 5
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End of Question 23

Page 13
Question 24 (10 marks) Marks

Joe Pesciona owns and manages a popular suburban pizza and pasta restaurant. For years the
business has been doing well, but in recent months due to harder economic times and
competition, business profits have declined, staff hours have been cut, morale is low
absenteeism is high and staff turnover has greatly increased. Joe is thinking about setting up an
enterprise agreement with his workers but his accountant has told him that it would be cheaper
just to hire casual and part-time staff.

(a) What is an enterprise agreement? 1

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(b) Outline three obligations that Joe Pesciona owes his workers. 3
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(c) Outline three obligations owed to Joe Pesciona by his employees. 3
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Page 14
Question 24 (continued) Marks
(d) Joe Pesciona has decided to sack all his female employees and replace them with
inexperienced, untrained juniors and pay them $5 per hour. Which legislative policies
have been breached and why? 3

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End of question 24

Page 15
Section III

20 marks
Attempt Question 26
Allow about 35 minutes for this section

Answer the question on the booklet provided. Extra booklets are available.

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

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

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

Question 26

Plastiche Industries Pty.Ltd is a large domestic manufacturer of plastic products. Since the
Global Financial Crisis in 2008 it has struggled to compete with cheaper imports while
facing rising domestic costs, including the carbon tax. Sales have declined and low
profitability levels have put at risk the financial viability of the business.
A new General Manager has been appointed and he plans to restructure the business so as to
increase profitability and efficiency. An increased level of investment in the business will
be required if the restructure is to be successful.

An internal audit commissioned by the new General Manager has identified the following
problems;
 Increases in the level of customer complaints about poor service.
 Increases in the number of faulty products being manufactured.
 Cash flow and liquidity problems due to excessive credit sales and bad debts.
 Cost over runs and inaccurate revenue forecasting.

Plastiche Industries Pty. Ltd is looking to:

 Develop a more effective profitability management strategy.
 Improve performance objectives.
 Improve its quality management process.
 Secure investment funds to finance the restructure.

You have been employed as a consultant to prepare a report for the General Manager
In your report;

 Outline influences that might impact on the Operations Management and Financial
Management of this business.
 Propose and justify appropriate operational and financial management strategies that could be
implemented to achieve a successful restructure of the business.

Section IV

Page 16
20 marks
Attempt EITHER Question 27 OR Question 28
Allow about 35 minutes for this section

Answer the question on the booklet provided. Extra booklets are available.

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

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

 demonstrate knowledge and understanding relevant to the question
 use relevant business case study/studies and contemporary business issues.
 communicate using relevant business terminology and concepts
 present a sustained, logical and cohesive response

EITHER

Question 27 (20 marks)

How can the processes of HRM respond to the economic and technological influences on
business? Describe related strategies that a business might utilise to gain a sustainable
competitive advantage. Assess the effectiveness of these strategies.

OR

Question 28 (20 marks)

How can the processes of Marketing respond to the economic and technological influences on
business? Describe related strategies that a business might utilise to gain a sustainable
competitive advantage. Assess the effectiveness of these strategies.

End of paper

Page 17
 SBHS.HSC Business Studies
2014 Trial Examination - Marking Guidelines

Section I Multiple Choice

1 A 6 B 11 A 16 C
2 D 7 A 12 B 17 C
3 A 8 A 13 A 18 D
4 D 9 D 14 A 19 A
5 D 10 B 15 D 20 C

Section II

Question 21 (10 marks)

(a)i Calculate the critical path for Vroom Pty. Ltd

Criteria Mark
ACEFG. 15+25+25+15+10 = 90 mins. 1

(a)ii Distinguish between transforming and transformed resources for this business.

Criteria Mark
Identifies transformed resources as materials, information, customers and refers to
imported parts for Vroom Pty Ltd. Identifies transforming resources as human
3
resources and facilities and refers to the workers, machinery or factory of Vroom
Pty Ltd.
Identifies both transformed and transforming resources but does not refer to the
2
business.
Only identifies one of transformed and transforming correctly. 1

(b) Describe the process of monitoring, control and improvement for this business.

Criteria Mark
Provides characteristics and features of each of monitoring, controlling and
5-6
improvement for this business.
Provides characteristics and features of each but does not clearly relate to the
3-4
business.
Provides general information sometimes confused and inaccurate 1-2

Suggested answer could include:

Monitoring is the process of measuring actual performance against planned
performance. This is done through the use of Key Performance Indicators (KPI’s).
Vroom Pty Ltd might look at defect rates and repair rates after assembling electronic
motors.
Control occurs when KPI’s are assessed against predetermined targets and corrective
action is taken if required. If IT and maintenance costs are above budget guidelines then
corrective action would be taken.
Improvement is the systematic reduction of inefficiencies, wastage, poor work practices
and the elimination of any bottlenecks. Time taken by Vroom Pty Ltd employees to
change over shifts could be minimised.
Question 22 (10 marks)

(a) What is marketing?

Criteria Mark
A total system of interacting activities designed to plan, price, promote and
1
distribute products to present and potential customers.

Suggested answer could include:

(b) Outline three types of markets. Which market is Gazines Galore Pty Ltd targeting?

Criteria Mark
Sketches in general terms any of the following;
Resource - primary production, mining, agriculture etc.
Industrial – purchase of product to use in production.
Intermediate – wholesalers and retailers.
3
Consumer – individuals
Mass – seller mass produces, mass distributes and mass promotes.
Niche – narrowly selected target market segment.
Gazines Galore Pty Ltd is targeting a niche market.
Outlines 3 of the above but does not identify Gazines Galore Pty Ltd as targeting a
2
niche market.
General comment of limited detail 1

(c) Distinguish between a sales (selling) approach and a marketing approach.

Criteria Mark
Recognises differences between the following;
Sales approach – emphasis on selling because of increased competition. Increased
spending on advertising. Persuading customers to buy. 2
Marketing approach – what do customers want? Use of market research.
Satisfying needs.
1

(d) Describe three marketing objectives for this business and identify how they might be
measured?

Criteria Mark
Provides characteristics and features of the following marketing objectives;
Increasing market share – increasing the size of total industry sales
Expanding the product range – increased range of products offered for sale 4
Maximising customer service – increased response to the needs of customers.
Measured through use of specific targets i.e. 10% increase in sales etc
Provides characteristics and features of three marketing objectives but no reference
3
to measurement.
Provides characteristics and features of two marketing objectives but no reference
to measurement. 2

2
Question 23 (10 marks)

(a) Calculate the current ratio (current assets / current liabilities) for Neverland Pty. Ltd.

Criteria Mark
26,550 / 25,100 = 1.06 1

(b) Comment on the change in gearing (TL / OE) between 2013 and 2014

Criteria Mark
2013 = 0.8 : 1
2014 = 1.17 : 1 (305,100 / 260,000)
2
Gearing has deteriorated and increased from 80c to $1.17 in external debt for every
$1 of OE. Too much debt therefore a riskier position.
Miscalculation and /or no comment. 1

(c) Outline one possible reason for the change in return on owners’ equity (NP/TOE)
between 2013 and 2014.

Criteria Mark
2013 = 5.3%, 2014 = 95,000 /260,000 = 36.5 % 2
N.B.These figures make no sense! Therefore 2 marks awarded to all!

(d) With reference to this business discus the limitations of financial reports.

Criteria Mark
Discuss (identify issues and give points for and /or against)
Identifies the major limitations of financial reports (5)
4-5
Relates to the business
The financial information given made no sense!
Limited examples of both limitations and reference to the business. 2-3
1

Suggested answer could include:

Limitations of financial reports-

 normalised earnings  timing issues

 capitalising expenses  debt repayments
 valuing assets  notes to the financial
statements

3
Question 24 (10 marks)

(a) What is an enterprise agreement?

Criteria Mark
Collective agreement made at the workplace level between an employer and a
1
group of employees about terms and conditions of employment

(b) Outline three obligations that Joe Pesciona owes his workers.

Criteria Mark
Sketch in general terms;
Providing work, no ‘stand downs.’
Payment of income and expenses (specifically related to conduct of work).
3
Meeting requirements of legislation both IR and OHS.
Duty of care.
Relates to the business.
Outlines only 2 obligations may not refer to business. 2
Only 1 obligation 1

(b) Outline three obligations owed to Joe Pesciona by his employees

Criteria Mark
Sketch in general terms;
Obey lawful and reasonable commands
Use care and skill in carrying out duties 3
Act in good faith
Relates to the business
Outlines only 2 obligations and may not refer to the business 2
Only 1 obligation 1

(d) Joe Pesciona has decided to sack all his female employees and replace them with
inexperienced, untrained juniors and pay them $5 per hour. Which legislative
policies have been breached and why?

Criteria Mark
Must cover all specific legislation relevant to the scenario given and outline the
3
breach committed and why.
Refers generally to the legislation and may not cover key aspects of the scenario 2
General comments with no legislation 1

Suggested answer could include:

Minimum wage rates- national minimum wage reviewed annually by Fair Work
Australia. (juniors being underpaid)
OHS AND WHS Act 2011 (duty of care, lack of training)
Sex Discrimination Act 1984 (only female workers sacked)
Equal Employment for Women in the Workplace.
(Affirmative Action only applies to businesses employing more than 100 employees)
Provisions of the Fair Work Act 2009 (modern awards)

4
Section III

Question 25 (20 marks)

 Outline influences that might impact on the Operations Management and Financial
Management of this business.
 Propose and justify appropriate operational and financial management strategies that
could be implemented to achieve a successful restructure of the business.

Criteria Mark
 Presents a sustained, logical and cohesive business report integrating relevant
business terminology and syllabus concepts.
 Makes effective use of the information provided, demonstrating extensive
knowledge and understanding relevant to the question.
17-20
 Outlines influences that might impact on the operations and financial
management of this business.
 Proposes and justifies appropriate operational and financial management
strategies that could be implemented for this business.
 Presents a logical and cohesive business report that uses relevant business
terminology and syllabus concepts.
 Makes some use of the information provided, demonstrating knowledge and
understanding of the question. 13-16
 Outlines influences that might impact on operations and financial management.
 Proposes appropriate operational and financial management strategies that
could be implemented for this business.
 Presents a logical report that uses some relevant business terminology and
syllabus concepts.
 Makes limited use of the information provided.
9-12
 Outlines some influences.
 Proposes operational and financial strategies with limited reference to the
business.
 Includes some features of a business report and uses basic business
terminology.
 Does not use the information provided. 5-8
 Identifies influences.
 Proposes operational and/or financial strategies.
 Non –serious attempt
1-4

5
Suggested answer could refer to:

Operational and Financial Management influences could include:

Operational Influences Financial Influences

globalisation, technology. Internal sources of finance – retained profits.
quality expectations. External sources of finance
cost-based competition. debt – short-term borrowing (overdraft,
government policies. commercial bills, factoring)
legal regulation. long-term borrowing (mortgage, debentures,
environmental sustainability. unsecured notes, leasing)
equity – ordinary shares (new issues, rights issues,
placements, share purchase plans), private equity
Corporate social responsibility - Financial institutions – banks, investment banks,
The difference between legal compliance and finance companies, super funds, life insurance
ethical responsibility. companies, unit trusts and the Australian
Environmental sustainability and social Securities Exchange.
responsibility.
Influence of government – Australian Securities
and Investments Commission, company taxation
Global market influences – economic outlook,
availability of funds, interest rates.

Operational and Financial Management strategies could include:

Operations Strategies Financial Strategies

performance objectives cash flow management
quality,speed,dependability, flexibility, – cash flow statements
customisation, cost – distribution of payments, discounts for
new product or service design and early payment, factoring
development working capital management
supply chain management – logistics, e-
commerce, global sourcing
– control of current assets – cash,
receivables, inventories
outsourcing – advantages and disadvantages
technology – leading edge, established – control of current liabilities – payables,
inventory management – advantages and loans, overdrafts
disadvantages of holding stock, LIFO (last- – strategies – leasing, sale and lease back
in-first-out), FIFO (first-in-first-out), JIT profitability management
(just-in-time) – cost controls – fixed and variable, cost
quality management centres, expense minimisation
– control – revenue controls – marketing objectives
– assurance global financial management
– improvement – exchange rates
overcoming resistance to change – financial – interest rates
costs, purchasing new equipment, redundancy – methods of international payment –
payments, retraining, reorganising plant payment in advance, letter of credit,
layout, inertia clean payment, bill of exchange
global factors – global sourcing, economies – hedging
of scale, scanning and learning, research and
– derivatives
development

Students may take an alternative approach, which, if correct, should be rewarded.

6
Section IV
Question 27 (20 marks)

How can the processes of HRM respond to the economic and technological influences
on business? Describe related strategies that a business might utilise to gain a
sustainable competitive advantage. Assess the effectiveness of these strategies.

Criteria Mark
 Presents a sustained, logical and cohesive response that communicates relevant
business terminology and syllabus concepts with skill and understanding.
 Provides a clear, detailed and comprehensive analysis of how specific HRM
processes can respond to the economic and technological influences on
business. 17-20
 Describes related strategies that might be utilised by a business to gain a
sustainable competitive advantage and assesses their effectiveness
 Integrates relevant case study/studies and contemporary business issues with
skill and understanding.
 Presents a logical and cohesive business report that uses relevant business
terminology and syllabus concepts.
 Provides a clear and detailed overview of how specific HRM processes can
respond to the economic and technological influences on business. 13-16
 Describes strategies that might be utilised by a business to gain a sustainable
competitive advantage.
 Uses relevant case study/studies and contemporary business issues.
 Communicates using business terminology and concepts
 Provides a general overview of how specific HRM processes can respond to the
economic and technological influences on business.
 Outlines strategies that might be utilised by a business to gain a sustainable 9-12
competitive advantage.
 May make some reference to case study/studies and contemporary business
issues
 Communicates using some business terminology and concepts
 Sketches in general terms some aspects about HRM processes.
5-8
 Outlines strategies that might be utilised by a business.
 May make limited reference to case study/studies and contemporary business.
 Non Serious Attempt 1-4

7
Suggested answer could refer to:

Key influences
 economic
 technological

Processes of human resource management could include:

 Acquisition - identifying staffing needs, recruitment, selection

 Development - induction procedures, training
 Maintenance - performance appraisal, rewards, monetary (extrinsic) and non-
monetary (intrinsic)
 Separation - voluntary and involuntary, redundancy and dismissal

Strategies in human resource management

 leadership style
 job design – general or specific tasks
 recruitment – internal or external, general or specific skills
 training and development – current or future skills
 performance management – developmental or administrative
 rewards – monetary and non-monetary, individual or group, performance pay
 global – costs, skills, supply
 workplace disputes
– resolution – negotiation, mediation, grievance procedures, involvement of
courts and tribunals

Effectiveness of human resource management

 indicators
Corporate culture
Benchmarking key variables
Changes in staff turnover
Absenteeism
Accidents
Levels of disputation
Worker satisfaction

Students may take an alternative approach, which, if correct, should be rewarded.