Cambridge O Level

BUSINESS STUDIES 7115/11

*1914987266*

Paper 1 Short Answer and Data Response October/November 2020

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

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 [ ].

This document has 12 pages. Blank pages are indicated.

11_7115_11_2020_1.4
© UCLES 2020 [Turn over
 2

1 SRB is a bank which provides loans to business customers. SRB plans to make 100 managers’
jobs redundant from its 80 branches. This would remove one level of hierarchy. This is part of its
plan to save $1m in costs over the next 2 years. The Managing Director said: ‘SRB is working with
the trade union about this plan. SRB will make more use of delegation.The bank has to respond
to increased competition from online banks. SRB could either advertise more or develop new
products and services.’

(a) Define ‘trade union’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Define ‘level of hierarchy’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(c) Outline two advantages of SRB using delegation.

Advantage 1:.....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Advantage 2:.....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2020 11_7115_11_2020_1.4

 3

(d) Explain two factors SRB should consider when deciding which managers to make redundant.

Factor 1:............................................................................................................................

...........................................................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Factor 2:............................................................................................................................

...........................................................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think that more advertising is a better way for a business to respond to increased
competition than introducing new products and services? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2020 11_7115_11_2020_1.4 [Turn over

 4

2 YMG is a private limited company. It is the largest manufacturer of soft drinks in country V. YMG
produces 1 billion litres a year using flow production. The Managing Director wants YMG to expand.
He said: ‘I plan to increase production to 3 billion litres over the next 5 years. This will allow us to
start selling our products in new markets in other countries. I know import quotas and lack of local
knowledge can cause problems but there are ways we can overcome them.’ The Managing Director
also plans to invest $60m in new technology to improve efficiency.

(a) Define ‘flow production’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two methods (other than technology) a business can use to improve efficiency.

Method 1:...........................................................................................................................

...........................................................................................................................................

Method 2:...........................................................................................................................

........................................................................................................................................... [2]

(c) Outline two sources of finance YMG could use for the new technology.

Source of finance 1:...........................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Source of finance 2:...........................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2020 11_7115_11_2020_1.4

 5

(d) Explain how each of the following problems might affect YMG when entering new markets in
other countries.

Problem caused by lack of local knowledge: ....................................................................

...........................................................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Problem caused by import quotas: ...................................................................................

...........................................................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think a joint venture is the best way for a business to enter a new market in another
country? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2020 11_7115_11_2020_1.4 [Turn over

 6

3 Elton is a sole trader. He sells specialist clothing and equipment for sports, including baseball and
hockey. It is a niche market. Elton started his business 5 years ago and it has remained small. A
wide range of inventory is important. Elton has been looking at the financial performance of his
business. The profit margin for 2018 was 35%. An extract of the accounts is shown in Table 3.1.

Table 3.1
Revenue and cost information for Elton’s business for 2018 and 2019 ($)

2018 2019

Revenue ($) 24 000 25 000

Cost of sales ($) 7 200 Y

Gross profit ($) 16 800 18 000

Expenses ($) 8 400 10 000

Profit ($) X 8 000

(a) Define ‘sole trader’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Calculate X and Y.

X : .......................................................................................................................................

Y: ....................................................................................................................................... [2]

(c) State four factors that can influence the amount of inventory a business might hold.

Factor 1:............................................................................................................................

...........................................................................................................................................

Factor 2:............................................................................................................................

...........................................................................................................................................

Factor 3:............................................................................................................................

...........................................................................................................................................

Factor 4:............................................................................................................................

........................................................................................................................................... [4]

© UCLES 2020 11_7115_11_2020_1.4

 7

(d) Explain one advantage and one disadvantage to Elton of operating in a niche market.

Advantage:........................................................................................................................

...........................................................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage:....................................................................................................................

...........................................................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think Elton should be pleased with the financial performance of his business? Justify
your answer using appropriate ratios.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2020 11_7115_11_2020_1.4 [Turn over

 8

4 KTF makes building materials, including cement and bricks. Last year KTF had sales of $25bn.
KTF’s objectives have often changed since it was started 60 years ago. The Managing Director
wants KTF to expand. KTF is going to take over one of its main competitors. The newly expanded
business will have combined sales of $40bn. The Managing Director said: ‘Many stakeholder groups
will be affected by this decision.’ She knows there are many external factors that affect business
activity including the business cycle, interest rates and legal controls to protect the environment.

(a) Define ‘business cycle’.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [2]

(b) Identify two reasons why a business might change its objectives.

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

...........................................................................................................................................

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

........................................................................................................................................... [2]

(c) Outline one advantage and one disadvantage to KTF of taking over the other business.

Advantage:........................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Disadvantage:....................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [4]

© UCLES 2020 11_7115_11_2020_1.4

 9

(d) Explain how two external stakeholder groups might be affected by the take over.

Stakeholder group 1:.........................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

Stakeholder group 2:.........................................................................................................

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

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

(e) Do you think businesses will be more affected by new legal controls to protect the environment
than an increase in interest rates? Justify your answer.

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

...........................................................................................................................................

........................................................................................................................................... [6]

© UCLES 2020 11_7115_11_2020_1.4

 10

BLANK PAGE

© UCLES 2020 11_7115_11_2020_1.4

 11

BLANK PAGE

© UCLES 2020 11_7115_11_2020_1.4

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.

© UCLES 2020 11_7115_11_2020_1.4