Question 1.
BGN sells furniture such as beds and tables. It started as a partnership but is now a private limited company. BGN has expanded quickly and has 10 shops located in different cities. Each shop manager is responsible for recruitment and decisions about inventory levels. They send the Board
a monthly report. The Managing Director has a laissez-faire leadership style. There has been an increase in customer complaints and employees think internal communications need to be improved.
(c) Identify and explain two advantages to BGN of being a private limited company.
Advantage 1: …………………………………………………………………………………………………………….
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Explanation: ………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Advantage 2: ……………………………………………………………………………………………………………..
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Explanation: …………………………………………………………………………………………………………………………………………………………………………………………………………………………[4]
Question 2
Wilde Soup Stop (WSS) makes a range of soups and hot drinks. It owns 30 shops and has sold its franchise to 10 other shops in country Z. The Marketing Director said: ‘Results from our focus group show that being an ethical business is important’. WSS plans to extend its product range to include curries and cakes. WSS will need to change its brand image. The Marketing Director cannot decide whether to use sponsorship or newspaper advertising as the main method of promotion.
(c) Identify and explain two advantages to WSS of selling its franchise.
Advantage 1: ……………………………………………………………………………………………………………..
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Explanation: ………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Advantage 2: ……………………………………………………………………………………………………………..
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Explanation: …………………………………………………………………………………………………………………………………………………………………………………………………………………………. [4]
Question 3
STC manufactures toothpaste for the mass market. STC’s products have price elastic demand as there is a high level of competition in this market. STC uses a competitive pricing strategy (method).
The marketing manager is thinking of changing this pricing strategy to increase sales (see Table 2). The head office of STC is located in country X, but the factory is in country Y. There have been complaints about communication issues between the managers and workers. STC has continued to grow but the managers still have a laissez-faire leadership style.
Table 2: Forecast effect of changing price
| Current Price | Quantity demanded | Planned new price | Forecast quantity demanded |
| $2.00 | 100, 000 per month | $1.50 | 150, 000 per month |
(c) Identify and explain two disadvantages to STC of business growth.
Disadvantage 1:…………………………………………………………………………………………………..
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Explanation:………………………………………………………………………………………………………..
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Disadvantage 2:…………………………………………………………………………………………………..
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Explanation:………………………………………………………………………………………………………..
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Question 4
Filltum is the brand name for a chain of vegetarian restaurants. It has 28 restaurants, 16 of which are operated by franchisees. The Managing Director is pleased with its fast rate of growth at a time
when many businesses are failing. She said: ‘Having a well-motivated workforce is important to our success. All new employees are given on-the-job training.’ Filltum plans to have 10 more restaurants in the next year. The Managing Director has to decide whether to sell additional franchises or open its own restaurants.
(e) Do you think selling more franchises is the best way for Filltum to expand? Justify your answer.
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