CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

Exam-style questions and sample answers have been written by the authors. In examinations, the way marks are awarded may
be different.

Coursebook answers
Most of the answers are in ‘outline’ form indicating the appropriate points and skills that learners need
to include in their answers. They provide the necessary guidance to allow learners to develop and extend
the points for a fuller answer that contains the relevant skills. In many instances, there may be other valid
approaches to answering the question.

Chapter 10
Business in context
Learners’ discussion might include:
• Employees are often described as being the most important asset of a business.
• For example, Huawei is a technology business and depends on employees for the research and
development necessary to maintain competitiveness.
• A poorly managed workforce is likely to be less productive, resulting in higher labour turnover
and absenteeism.
• If health and safety is neglected then there will be more accidents and employee absence. This may also
result in compensation claims being made.
• Nurturing employees through, for example, training, increases their skills and productivity.
• Policies on gender equality will help attract the best employees to a business.
• Keeping labour costs low is important to remain competitive but in the long term a focus on just
reducing costs at the expense of keeping employees safe and nurturing them can be damaging to
business reputation. Costs may rise in the long term due to labour problems.

Activities
Activity 10.1
• Demographic change. Age distribution of the population will impact the number of students due to
start school and therefore the number of teachers required.
• Labour turnover in the school. This is the average number of teachers that change jobs and therefore
leave the school and need replacing.
• Competition. A new school opening would affect the number of pupils attending and teachers required.
• State of the economy. This could affect the number of students deciding to study A Levels rather than
looking for employment.

Activity 10.2
1 Learners’ answers might include:
• Competition from other telecoms businesses. Demand for products is reduced and, as labour is
in derived demand (the demand for workers depends on the demand for the products they make),
there is a need to make workers redundant.
• Economic recession. Negative economic growth has reduced demand for goods and services. To
reduce costs, Alcatel-Lucent has made workers redundant.

1 Cambridge International AS & A Level Business – Stimpson & Farquharson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

2 Learners should define workforce planning. Without a workforce plan problems may arise:
• Incorrect employee numbers. This may result in insufficient output to meet demand. This could
lead to a loss of goodwill and market share.
• If there are too many employees, it may lead to an increase in costs, making the product less price
competitive or reducing the profit margin.
• Skill shortages. For example, research and development employees are required to innovate new
technologies for which demand will rise in the future.
• Workers need to be recruited in time for future demand. Training may take several years.
Specific skills may be in short supply so planning is needed to prevent shortages.
• For Alcatel-Lucent, there is also a need to plan for reducing the number of production
workers. With planning they may be able to avoid compulsory redundancies and industrial
relations problems.
Evaluation might focus on the importance of workforce planning, especially for skilled employees in
a business such as this. However, it is possible that the success of the business depends on many other
factors too, such as the competitive nature of the industry and therefore the need to be innovative
while also controlling costs.

Activity 10.3
1 Training increases employee motivation as it makes employees feel more valued and improves self-
esteem. Maslow’s hierarchy of needs emphasises the importance of higher-level needs being met.
Training also provides a sense of career development. This is a motivator in Herzberg’s
two-factor theory.
Appraisals show that managers are taking an interest in employees and improving communication.
Mayo’s human relations theory emphasises the importance of this to motivation.
2 Arguments for: lower recruitment and training costs, established teams, maintains skills and experience
leading to better customer service.
Arguments against: no fresh ideas, increases complacency, may expect higher wages.
Evaluation: there may be an optimal level of labour turnover to allow new ideas to come into the
business without disrupting customer service. Labour turnover of 69% may be too high to allow
maintenance of customer service standards.

Activity 10.4
1 Advantage: a recruitment agency has specialist knowledge and experience so should be able to recruit
more effectively than SugarCo, which only has a small HR department.
Disadvantage: less control over who is finally recruited, as the recruitment agency provides a shortlist
of ten applicants from which SugarCo makes a choice for interview.
2 Factors influencing the final decision: experience is important as SugarCo is introducing new
computer-controlled machinery; enthusiasm and drive; commitment (Will the individual stay with
SugarCo in the long term?); salary expected (Can SugarCo afford to employ the research scientist?);
leadership skills (they will be controlling the operations department); reason for wanting the job.
Each of the three candidates has positive and negative points. Identifying the most important factor or
the best balance of qualities is important in the final decision. A recommendation should be made that
explains why one candidate should be chosen and not the others.

Activity 10.5
Learners’ own answers.

2 Cambridge International AS & A Level Business – Stimpson & Farquharson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

Activity 10.6
1 Training will reduce labour turnover. There will be lower recruitment and training costs, which will
help keep Lunar Cafés competitive. Employees will be more experienced and have higher skill levels
resulting in better customer service. Companies such as Lunar Cafés rely on high volume of face-to-
face customer interactions for sales success. Ultimately it is the employees working in the cafés that
create the customers’ experience and brand image for Lunar Cafés.
Lunar Cafés’ reputation as a good place to work will be improved, making it easier to attract new
employees of the correct calibre.
2 Arguments for: employees will feel more valued and learn new skills that will improve opportunities
for promotion.
Arguments against: they may use their new skills to gain higher-paid employment elsewhere. Other
needs must also be met, such as social needs and security needs. Financial incentives and working
conditions will also be important (e.g. competitors such as Starbucks give employees health insurance
and good pay).
Evaluation might focus on the industry-leading low level of labour turnover which, in part, is a
consequence of extensive investment in training and this suggests that training, and the benefits from
it, is the most important factor in employee motivation in this case.

Activity 10.7
1 A strike would have been harmful to Cathay Pacific as it would disrupt flights and therefore reduce
flights and sales. The disruption caused to passengers would damage the airline’s reputation, leading to
a long-term loss of sales and profit. Customers would travel with other airlines and might never return
to Cathay Pacific. Compensation might have to be paid to customers and many of the airline’s costs
would still have to be paid.
The strike would be harmful to employees as they would lose pay whilst on strike. Loss of earnings
would decrease living standards. If the business were to lose long-term custom then jobs would
be threatened.
2 Learners’ answers might include:
• It is a competitive industry and therefore controlling costs is important.
• Airlines have high levels of fixed costs which must be met during any industrial disputes.
• Customer service is important. Employees need to be motivated.
• Employees may need to be flexible in their working arrangements to allow airlines to operate
varied routes.
• Evaluation could include a consideration of the importance of reliable flight schedules, especially
for business travellers, so avoiding conflict with effective management–employee cooperation is
particularly important in this industry.

Exam-style questions
Short answer questions
1 Learners’ answers will vary, e.g. recruitment and selection of employees. This is important as
the competitiveness of businesses depends largely on the quality, experience and skills of the
selected employees.
2 Without appropriate employees, a business cannot operate efficiently across its functional areas.
Efficient employees will assist the business in becoming more competitive.
3 A job description focuses on the job to be done, i.e. title, roles, responsibilities, place in the hierarchy.
A person specification, in contrast, focuses on the employee required, i.e. their skills, experience,
qualifications and personality traits.

3 Cambridge International AS & A Level Business – Stimpson & Farquharson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

4 The monetary and time costs of training employees need to be considered and weighed against the
cost of bad reputation and faults if employees are not fully trained. Training may take time and take
employees away from productive activity. However, with insufficient training, employees will not
provide effective customer service and will have lower productivity.
5 Learners’ answers will vary, e.g. training and development can make an employee feel valued and part
of the business. This increases motivation, which gives employees more satisfaction at work. This can
result in increased productivity. Higher productivity will help to make the business more competitive.
6 The process of assessing the effectiveness of an employee judged against pre-set objectives.
7 As these contracts are legally binding, they protect the rights of both parties by clarifying the
responsibilities of both parties, e.g. the hours expected to be worked by an employee and the number
of weeks’ holiday they are allowed.
8 Dismissal means the worker loses the job but the job still exists. A worker may be dismissed for
gross misconduct (e.g. stealing or persistent failure to complete the job role as required). In contrast,
redundancy means a worker loses their job because the job no longer exists. This could be because of a
fall in demand or change in operations.
9 Balance between hours and stress of work and the time spent with friends and family on leisure time.
This allows employees to be more satisfied at work, less tired and more productive.
10 Learners’ answers will vary, e.g. recruiting employees from diverse backgrounds can ensure that the
business’s workforce reflects the demographics of society. Recruitment will be from a wider section of
society and therefore ensures that the business can employ the best workers.
11 Outlines the key qualifications (e.g. nursing degree); characteristics (e.g. able to work under pressure);
and skills (e.g. care of the elderly). This helps select the best candidate for the position.
12 An external candidate will bring new ideas and practices to the business. This may help identify
improvements that need to be made in the business’s procedures and operations, especially as the post
is for a senior manager.
13 On-the-job training takes place within the business itself, often as the worker performs the actual work.
In contrast, off-the-job training takes place away from the business, either through a specialist training
provider or at a college or training institute.
14 The decision on whom to employ is based on merit, e.g. the quality of work the employee can
undertake. This improves the competitiveness of the business.
15 Industrial action would put lives at risk. It is important that there is management–worker cooperation
so that workers and management do not misunderstand each other. This might mean that management
discusses issues with workforce representatives such as a trade union. Misunderstanding can lead to
industrial action which reduces the ability of a business to provide good customer service.

Essay questions
1 a As HRM is a strategic approach to the effective management of a business’s workers to ensure
that they aid the business in gaining a competitive advantage, there are several key roles. Learners’
answers will vary, e.g. workforce planning; recruitment and selection; appraisal and development
of staff; measuring staff performance. Learners need to explain any two of these in the context of
a business.
b Learners should define recruitment and selection. Effective recruitment and selection:
• Ensures that job roles can be performed effectively across all functional areas (e.g. chefs for
preparing menus and cooking meals; waiters for serving customers). As restaurants focus on
customer service, it is essential that the right individuals are recruited for these roles.
• Reduces labour turnover and therefore saves costs.
• Improves cooperation and teamworking within the business.
• Reduces the need for training.
• Evaluation could assess the other factors that are important to effective HRM in a restaurant
such as pay methods, effective communication and management style used.

4 Cambridge International AS & A Level Business – Stimpson & Farquharson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

2 a Learners should define training. Labour is one of the most important resources that a business has
and training may be essential to maximise the efficiency of that resource. Learners’ answers may
include development of any two of:
• Higher labour productivity and therefore an increased value of work undertaken
by employees.
• Better-quality product or service as employees will be able to carry out their jobs more
effectively. Therefore, the value of work completed by employees will be greater.
• More motivated employees as new skills are developed and work becomes more challenging.
• Reduced labour turnover as employees feel valued. This means that the costs of recruitment
can be reduced, resulting in cost savings across the organisation.
• A reduced level of accidents in the workplace as employees are more familiar with good
working practices.
• It may be beneficial to train internal employees rather than recruit from other firms. This
ensures that employees do things the company way.
• Well-trained staff are an asset to the business and help to retain customers.
b Improving employee morale is important as it may increase labour productivity and help control
costs due to lower labour turnover. Improving employee welfare is a hygiene factor according
to Herzberg and this will also reduce the costs associated with labour turnover. However, HR
performs many other important tasks including:
• Workforce planning to ensure that the business has the necessary human resources to
achieve its goals. This function will include ensuring that there are appropriate contracts of
employment.
• Recruitment and selection to ensure that the business has the right workers. If employees are
recruited effectively, they will be more valuable to the business and their skills are more likely
to match the needs of the business.
• Training to improve workforce skills, bringing benefits such as higher labour productivity,
which increases the value of work undertaken by employees; a better-quality product or
service as employees will be able to carry out their jobs more effectively; reduced labour
turnover as employees feel valued.
• Disciplining and dismissal of employees.
• Developing appropriate pay systems to reward and motivate employees.
• HRM also helps avoid costly errors in terms of the misapplication of labour laws. Contracts
of employment must be fair and accord with current employment laws.
Overall evaluation is needed and should consider the relative importance of morale and welfare in the
context of the many other roles of HRM in a manufacturing business.
3 a Learners’ answers should develop any two of:
• reducing workload by ensuring that class sizes are not too large
• employing support staff (e.g. to photocopy work)
• setting appropriate expectations of work to set and mark
• managing contact hours with students
• offering professional development through training to enhance skills
• scheduling meetings with parents at appropriate times.
b Learners’ answers might include:
• Role of effective workforce planning in ensuring that the business has the necessary human
resources to achieve its goals. Customer service is important in retailing and HRM needs to
ensure that, for example, there are always shop assistants available.
• Workforce planning will also ensure that there are appropriate contracts of employment.
• Importance of recruitment and selection to ensure that the business has the right workers.
Effective recruitment also reduces labour turnover, which adds to costs.

5 Cambridge International AS & A Level Business – Stimpson & Farquharson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

•
Role of training in improving the skills of the workforce. Training brings a range of benefits
such as:
• better customer service
• reduced labour turnover as employees feel valued.
However, in evaluation, the profitability of a retailer is not the responsibility of just HRM. Human
resources is just one of the functional areas of the business and must work with finance, operations
and marketing to create a successful retail business. Other factors will also affect profitability.

Data response questions

1 E&B Engineering
a i The employee brings new ideas to the business.
ii Legal document that sets out the terms and conditions governing a worker’s job.
b i 15/60 ×100 = 25%
ii Has to recruit new employees to replace those who have left. It then takes time to discover whether
the new recruits are suitable. This disrupts production, making it difficult to fulfil customer orders.
c Learners’ answers should include analysis of any two of:
• The use of the job centre appears to be ineffective. The job centre does not understand the
needs of the operations manager and is sending unsuitable candidates. However, the job centre
is likely to be cheap to use and can provide workers at short notice.
• E&B needs to communicate more effectively with the job centre about its particular needs.
Alternatively, E&B could use a specialist recruitment agency although this might prove expensive.
• Poor selection procedures mean that unsuitable workers start work before E&B finds out what
they are really like. E&B makes do with whoever happens to be available from the job centre.
• Advertising is not effective at filtering out unsuitable applicants. Job adverts should clearly
identify the skills and experience expected from applicants. However, advertising in the local
media will be relatively cheap.
• Recruitment and selection have been left to the operations manager. It might be more effective
to use an HR specialist.
d HRM is an approach to managing people that emphasises the importance of planning and
developing the workforce. It is a strategic approach to the effective management of a business’s
workers to ensure that they aid the business in gaining a competitive advantage.
Effective induction training will help new recruits settle at E&B. Harryo has little idea how to
introduce recruits to the organisation and is unprepared for this role. Training improves skills and
provides new challenges for employees. Developing skills may help employees achieve their esteem
needs within Maslow’s hierarchy of needs. This would reduce the number of employees leaving the
business. Evaluation could include an assessment of the view that workers may use their training
to look for better employment opportunities. It is therefore important that E&B pays competitive
wages to retain employees.

2 Cameron Sweets Ltd (CS)

a i Theft.
ii  Acquiring skills to complete different tasks (i.e. being able to operate the different machines
used by CS).
b Learners should define workforce plan. A workforce plan will enable CS to have:
• Appropriate staffing levels to meet the demand for sweets from customers. Without sufficient
employees, there may be bottlenecks in production. This could lead to a loss of goodwill
and market share. If there are too many staff, it may lead to an increase in costs, making the
product less price competitive or reducing the profit margin.
• Necessary range of employee skills. With new machinery being installed, if CS does not plan
its future labour needs, it may result in not having workers with the right skills to maintain and
programme the machinery.

6 Cambridge International AS & A Level Business – Stimpson & Farquharson © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE

c
Learners’ answers should include development of any two of:
• These policies should ensure that CS recruits from the widest possible range of potential
employees. Therefore, the best workers can be recruited.
• People who come from different backgrounds can add new experiences, talent and skills to the
workforce. Diversity creates more innovative business outputs. By contributing different ideas,
a diverse team can generate more creative solutions to problems.
• When a business introduces people into teams with different social, geographical and cultural
backgrounds, it gets a new knowledge base for potential new markets.
d Negotiating pay and conditions is easier and less likely to result in conflict. CS introduced flexible
working with the support of trade union officials. This change helps CS control costs and remain
competitive. Cooperation resulted in improvements being made to employee welfare and this
helped improve morale, which should lead to an increase in productivity. A culture of cooperation
between management and the trade union was significant in ensuring that the dismissal of the
three workers did not result in industrial action.
Evaluation could include the view that well-motivated employees and good cooperation between
the union and management will provide a good foundation for business success in a competitive
confectionery industry.

7 Cambridge International AS & A Level Business – Stimpson & Farquharson © Cambridge University Press 2021