Cambridge O Level

BUSINESS STUDIES 7115/21

*1154709314*

Paper 2 Case Study May/June 2021

1 hour 30 minutes

You must answer on the question paper.

You will need: Insert (enclosed)

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 [ ].
• The insert contains the case study.

This document has 12 pages. Any blank pages are indicated.

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1 (a) Explain four reasons for changes in the relative importance of the primary, secondary and
tertiary sectors in a country.

Reason 1: .........................................................................................................................

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Reason 2: .........................................................................................................................

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Reason 3:..........................................................................................................................

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Reason 4: .........................................................................................................................

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(b) Consider the following three problems for FO as it grows through takeovers. Which problem
will be the easiest for FO to overcome? Justify your answer.

• More difficult to control the business

• Lack of finance
• Clash of business cultures

More difficult to control the business: ...............................................................................

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Lack of finance: ................................................................................................................

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Clash of business cultures: ...............................................................................................

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Conclusion: .......................................................................................................................

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2 (a) Explain two reasons why it is important for FO to manage all of its resources effectively when
manufacturing products.

Reason 1: .........................................................................................................................

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Explanation:.......................................................................................................................

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Reason 2: .........................................................................................................................

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Explanation: ......................................................................................................................

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(b) Consider the benefits and limitations of the following three methods of communication FO
could use. Which method of communication would be most suitable when contacting suppliers
about a late delivery? Justify your answer.
• Email
• Mobile (cell) phone
• Letter

Email: ................................................................................................................................

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Mobile (cell) phone: ..........................................................................................................

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Letter: ...............................................................................................................................

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Recommendation: ............................................................................................................

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3 (a) Explain how one internal source and one external source of finance could be used by FO as
it expands.

Internal source of finance: ................................................................................................

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Explanation: ......................................................................................................................

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External source of finance: ...............................................................................................

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Explanation: ......................................................................................................................

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(b) Consider the advantages and disadvantages to FO of using a wholesaler, retailer or selling
direct to the customer when distributing its products. Which channel of distribution should FO
use? Justify your answer.

Wholesaler: .......................................................................................................................

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Retailer: ............................................................................................................................

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Selling direct to customer: ................................................................................................

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Recommendation: ............................................................................................................

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4 (a) Using the information in Appendix 2:

(i) Calculate the break-even level of output per month

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(ii) Calculate the margin of safety per month for tables:

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(iii) Identify four limitations of using break-even analysis.

Limitation 1:............................................................................................................

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Limitation 2:............................................................................................................

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Limitation 3:............................................................................................................

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Limitation 4:............................................................................................................

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(b) Refer to Appendix 2 and Appendix 3 and other information. Consider the following three ways
FO could use to contribute to sustainable development:
• only use raw materials from sources that replace what they have used
• only use packaging that can be recycled
• only use electric vehicles to deliver products.
Which way should FO choose to maximise profit? Justify your answer.

Only use raw materials from sources that replace what they have used: ........................

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Only use packaging that can be recycled: ........................................................................

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Only use electric vehicles to deliver products: .................................................................

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Recommendation: ............................................................................................................

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