Cambridge O Level

BUSINESS STUDIES 7115/21

*8601522328*

Paper 2 Case Study October/November 2020

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. Blank pages are indicated.

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1 (a) Explain two reasons why having business objectives is important to Gemma.

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

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

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

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(b) Consider the advantages and disadvantages of buying the Beautywise franchise. Do you think
Gemma was right to buy the franchise? Justify your answer.

Advantages: ......................................................................................................................

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Disadvantages: .................................................................................................................

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

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2 (a) Explain four requirements for the new manager that Gemma should include in the job
specification below.

Job specification for the shop manager

Job title: Shop manager

Location: New shop
Details of job: Manage the shop and the employees
Requirement 1: .................................................................................................................

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

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Requirement 2: .................................................................................................................

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

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Requirement 3: .................................................................................................................

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

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Requirement 4: .................................................................................................................

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

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(b) Consider the advantages and disadvantages of the three towns for the new shop shown in
Appendix 3. Recommend which town Gemma should choose for the location of the new shop.
Justify your answer.

Town A: .............................................................................................................................

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Town B: .............................................................................................................................

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Town C: .............................................................................................................................

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

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3 (a) Explain why liquidity and profitability are important to a business.

Liquidity: ...........................................................................................................................

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Profitability: .......................................................................................................................

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(b) Consider the advantages and disadvantages of the following three sales promotion methods
Gemma could use for the new shop. Recommend which method Gemma should choose to
maximise revenue. Justify your answer.

• Buy one, get 50% off second purchase

• 10% off everything in the shop for one week after opening
• Pay a celebrity to open the shop

Buy one, get 50% off second purchase:............................................................................

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10% off everything in the shop for one week after opening:.............................................

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Pay a celebrity to open the shop:......................................................................................

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

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4 (a) Explain the effect of the following changes on GJ.

• Depreciation in the exchange rate of country Z

• Increase in income tax in country Z

Depreciation in the exchange rate of country Z: ...............................................................

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Increase in income tax in country Z: .................................................................................

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(b) Consider how the following three changes might affect GJ. Which change is likely to have the
most effect on GJ’s profit? Justify your answer.

• All jewellery packaging must state in which country the product has been made
• Country Z has entered a boom phase of the business cycle
• A higher percentage of people in country Z use mobile (cell) phones

All jewellery packaging must state in which country the product has been made:............

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Country Z has entered a boom phase of the business cycle: ..........................................

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A higher percentage of people in country Z use mobile (cell) phones:.............................

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

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