Download AQA A-level BUSINESS Paper 2 Business 2 2024 QP and more Exams Business Economics in PDF only on Docsity!
JUN247132201
IB/G/Jun24/G4004/E6 7132/
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Tuesday 21 May 2024 Morning Time allowed: 2 hours
Materials
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Instructions
- Use black ink or black ball-point pen.
- Fill in the boxes at the top of this page.
- Answer all questions.
- You must answer the questions in the spaces provided. Do not write outside the box around each page or on blank pages.
- If you need extra space for your answer(s), use the lined pages at the end of this book. Write the question number against your answer(s).
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Information
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- The maximum mark for this paper is 100.
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Centre number Candidate number
Surname
Forename(s)
Candidate signature I declare this is my own work.
A-level
BUSINESS
Paper 2 Business 2
Your text here 1
Do not write outside the Answer all questions in the spaces provided. box
(^0 1) Read the information below and then answer the questions that follow.
Biggs Ltd
Biggs Ltd operates in the snack food market, selling crisps, nuts and other savoury products. Potatoes are a key ingredient in its snacks. The price of potatoes has risen by 35% over the last two years.
The company is one of six firms who dominate a market that has been growing strongly for ten years. The market growth is largely due to the development of new snacks designed for children. However, Biggs Ltd’s market share has been falling since 2019.
Biggs Ltd plans to launch a completely new range of products in 2024. It will promote this by sponsoring a major televised sporting competition which has children and families as its audience.
Appendix A Extract from Biggs Ltd’s recent financial statements
£000s
£000s
Revenue 47 569 46 994
Gross profit 22 289 22 820
Operating profit 4 650 4 701
Payables 5 056 5 221
Appendix B Labour productivity for Biggs Ltd and the snack food industry average (shown as an index number, base year = 2017)
Year Biggs Ltd Industry average
Do not write outside the Appendix E Percentage of snack products bought and consumed by different box age groups
Results from a recent survey of 3000 respondents conducted by an independent market research firm.
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Do not write outside the 0 1. 1 Using Appendix A , calculate Biggs Ltd’s payables days ratio for 2023. box [4 marks]
(^0 1). 2 Using the information provided, explain one reason why Biggs Ltd’s gross profit margin for 2023 fell to 46.9%. [ 3 marks]
Question 1 continues on the next page
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Do not write outside the 0 1. 4 In 2024, Biggs Ltd became the sponsor of a major televised sporting competition that box attracts a wide range of ages and is popular with families.
With reference to the information provided, evaluate whether Biggs Ltd’s decision to promote its new product range in this way is a good idea. [16 marks]
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Do not write outside the 0 2 Read the information below and then answer the questions that follow. box
Soundcheck plc
Soundcheck plc offers a streaming service enabling users in more than 160 countries to play a variety of content, such as music and podcasts, on electronic devices. The company initially offered its services free to consumers and earned revenue from advertisers. An additional, paid service was introduced in 2022. Paying subscribers benefit from better quality audio, no adverts, and playlists made by celebrities. Exclusive podcast content also provides paying subscribers with an enhanced experience which justifies a paid subscription model.
Since its launch in 2006, Soundcheck plc has grown to become the market leader. It now employs nearly 4000 staff globally. A stock market flotation has funded huge investment in building a high-quality technology platform, strong brand and a skilled workforce. However, Soundcheck plc has not regularly made an operating profit. Its costs have been rising significantly in recent years and in 2023 it lost £26 million as a global economic slowdown began.
In 2023, Soundcheck plc reached an agreement with trade unions about pay rates and ways of working. The agreement guaranteed starting salaries of at least £36 000 to many staff. This is significantly higher than the industry average. However, there is a global shortage of skilled software engineers and marketing staff so labour turnover rates remain high. In addition to competition for staff, new competitors are attracted to the growing market, including large rivals who are well established in other streaming markets. Other new entrants have also targeted the ‘free’ sector of the market. Some of these rivals have a competitive advantage because they own the rights to music or other content and so have lower costs than Soundcheck plc.
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Do not write outside the 0 2. 1 When introducing its paid service, Soundcheck plc changed its positioning strategy box from position 1 to position 4 on Bowman’s strategic clock.
Analyse why Soundcheck plc decided to change its positioning strategy. [ 9 marks]
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Do not write outside the 0 2. 3 Soundcheck plc’s management has had good relationships with trade unions and its box staff have been supportive of strategic change.
To what extent does consultation with trade unions enable all businesses to overcome resistance to strategic change? [16 marks]
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Do not write outside the 0 3 Read the information below and then answer the questions that follow. box
WWH Ltd
WWH Ltd manufactures and sells a single model of wood-burning stove. Rising energy prices mean that gas and electric heating is expensive to run. Wood-burning stoves are a cheaper and increasingly popular alternative source of heating in homes. This has led to an increase in demand for WWH Ltd’s wood-burning stoves. WWH Ltd is profitable and owns its buildings.
WWH Ltd uses demand forecasts to estimate how many wood-burning stoves to make. Once manufactured, the stoves are stored in WWH Ltd’s warehouse until they are needed. When a customer places an order, they pay a 25% deposit and the remaining 75% when the stove is fitted in the customer’s home. The production department has been able to increase manufacturing to keep up with the growing demand. However, lead time for fitting by WWH Ltd’s expert fitters has been increasing and is currently two months.
Looking to the future, WWH Ltd’s directors are concerned. The government has introduced legislation to set environmental standards for wood-burning stoves. News media continue to run stories that the sale of wood-burning stoves may be banned completely in the future. This uncertainty means that banks are not willing to lend WWH Ltd any more money.
Up until now, WWH Ltd’s directors have seen the focus on a single product as a strength which has allowed them to keep a simple organisational design:
- no need for research and development and new product development
- functional structure with department responsibilities unchanged since the business set up
- relatively flat structure which helps to keep costs under control.
Now, the directors want to grow the business and are considering recruiting more staff and developing a portfolio of new products. Developing newer models of wood-burning stoves may enable WWH Ltd to keep ahead of ever-increasing government environmental standards. Alternatively, developing unrelated products could reduce dependence on a market with increasing government regulation.
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Do not write outside the 0 3. 1 Analyse how WWH Ltd could improve its cashflow. box [9 marks]
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Do not write outside the 0 3. 3 ‘Legislation to protect the environment is always damaging to business.’ box
To what extent do you agree this is true for all businesses? [16 marks]
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