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Worksheet Answers - Chapter 6: Business Structure (A Level)

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445 views1 page

Worksheet Answers - Chapter 6: Business Structure (A Level)

Uploaded by

Priyanka Gothi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Cambridge International AS and A Level Business

Worksheet Answers – Chapter 6


Business structure (A Level)
DGF Insurance is a large financial business. It operates in 25 countries. It is planning to open an office in country
Y for the first time. Country Y has its own small insurance companies, which employ 10,000 workers in total.
Increasing world trade and travel are increasing demand for insurance services.

1 It has operations in more than one country – it is operating in 25 countries.

2 ■ This is part of the globalisation process and is being driven by more free trade agreements between countries/
trading blocs.
■ Increased world GDP and, as incomes rise, consumers demand more imports/travel/tourism.

3 ■ Existing countries might have saturated markets – new countries might have fewer competitors.
■ New countries might be fast-growing, developing countries and this gives opportunities for rapid sales growth
of insurance policies.

4 Different languages – language might be an issue as all of DGF’s insurance documents might have to be translated
into another language at great expense.
Different legal controls – e.g., it might be illegal in this new country to discriminate between gender and charge
higher fees for insuring male car drivers, for example (male car drivers have more accidents than female drivers in
most countries!).

5 Advantages include:
■ More jobs created in the tertiary sector, which could be an important benefit for an economy that might
otherwise be dependent on primary/secondary sectors.
■ Increased GDP and incomes resulting from employment and output. This could lead to higher living standards.

Disadvantages might include:


■ Could put existing insurance companies at risk – there might be job losses if any of these are forced to close.
■ Monopoly – DGF might take over small own country insurance companies and this could create a potential
monopoly.
Overall impact might depend on existing insurance companies’ ability to compete with DGF.

6 Sale of state-owned assets/organisations to the private sector.

7 Workers – some lost their jobs when DGF was originally privatised as the new owners wanted to make the
business more efficient and profitable.
BUT workers with DGF now have good job security as the business is growing and profitable – perhaps wages have
increased over this period as DGF will want to keep the best workers?
Government – it raised capital from the sale of DGF and this could have been used to pay for government spending.
It will tax DGF’s profits and increase tax revenue.
BUT the government has now lost control of DGF and cannot stop it transferring operations abroad, if it would be
cheaper and more profitable for DGF to do this.

© Cambridge University Press 2014 Cambridge International AS and A Level Business Worksheet Answers – Chapter 6 1

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