TEST CODE 01240020

FORM TP 2013028 JANUARY 2013

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

PRINCIPLES OF BUSINESS

Paper 02 – General Proficiency

2 hours

07 JANUARY 2013 (a.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. Answer the THREE questions in Section I, ONE in Section II and ONE

2. All answers must be written in the booklet provided.

3. Begin EACH question on a separate page.

4. Keep ALL parts of EACH answer together.

5. EACH question is worth 20 marks.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2011 Caribbean Examinations Council

SECTION I

Answer the THREE questions in this section.

1. (a) (i) Define the term ‘enterprise’. (2 marks)

(ii) Identify FOUR stakeholders of a business. (4 marks)

(b) State FOUR reasons why individuals start their own business. (4 marks)

(c) Outline TWO ways in which businesses contribute to the development of their
communities. (4 marks)

(d) Distinguish between a ‘co-operative’ and a ‘company’ and give ONE example of EACH.
(6 marks)

Total 20 marks

2. ‘We Market For You’ is a business that provides marketing services to the public. The business is
headed by a general manager. There are also two supervisors, one for marketing and one for finance.
There is one administrative assistant who assists the general manager and the two supervisors.

(a) (i) Draw an organizational chart for ‘We Market for You’. (4 marks)

(ii) Identify TWO functions of the general manager. (2 marks)

(b) Describe TWO possible sources of conflict within an organization. (4 marks)

(c) Outline TWO benefits of teamwork to a business. (4 marks)

(d) Discuss ONE way in which ‘We Market For You’ can use EACH of the following methods
to communicate with employees:

(i) Text messages

(ii) Office memos (6 marks)

Total 20 marks

GO ON TO THE NEXT PAGE

3. To succeed in business, firms must be conscious of their pricing and selling techniques.

(a) State FOUR characteristics of a good salesperson. (4 marks)

(b) Explain the following pricing techniques used by firms to increase sales.

(i) Cost plus pricing (2 marks)

(ii) Penetration pricing (2 marks)

(c) Define EACH of the following terms of sales:

(i) Cash discount (2 marks)

(ii) Trade discount (2 marks)

(iii) Hire purchase (2 marks)

(d) Justify the use of EACH of the following methods as a means of increasing the sales of
insurance products:

(i) Personal selling (3 marks)

(ii) Advertising (3 marks)

Total 20 marks

GO ON TO THE NEXT PAGE

SECTION II

Answer EITHER Question 4 OR Question 5. Do NOT answer both.

4. Ravi is a sole trader. He wants to expand the production of his special ice cream to two more outlets
to meet the increase in demand.

(a) Identify FOUR factors that would determine where Ravi locates his business.
(4 marks)

(b) Explain how Ravi could use the following types of linkages with other businesses to ensure
further growth of his business:

(i) backward

(ii) forward (4 marks)

(c) Outline TWO advantages and ONE disadvantage of Ravi using technology to produce his
product.
(6 marks)

(d) Discuss ONE positive effect and ONE negative effect of Ravi expanding his business.
(6 marks)

Total 20 marks

5. Shiva has done market research on her special sunblock face creams. The survey showed that
50 per cent of her sample is willing to purchase her product.

(a) Define the term ‘target market’ and give TWO examples of the LIKELY target market for
sunblock face creams. (4 marks)

(b) Describe THREE factors that are LIKELY to influence consumers’ demand for sunblock
face creams.
(6 marks)

(c) In carrying out her research, Shiva used questionnaires and conducted interviews.

State ONE advantage and ONE disadvantage of EACH method. (4 marks)

(d) Identify TWO consumer protection agencies and explain how EACH works to protect the
interests of consumers. (6 marks)

Total 20 marks

GO ON TO THE NEXT PAGE

SECTION III

Answer EITHER Question 6 OR Question 7. Do NOT answer both.

6. (a) (i) Apart from taxes, identify TWO other sources from which governments obtain
revenue to perform their roles. (2 marks)

(ii) State TWO ways in which governments use the money collected from taxation.
(2 marks)

(iii) List TWO examples of EACH of the following types of taxes:

a) Direct (2 marks)

b) Indirect (2 marks)

(b) (i) State TWO essential services for which governments are responsible.
(2 marks)

(ii) Outline TWO ways in which governments in the Caribbean attempt to regulate
business activities. (4 marks)

(c) Discuss ONE effect of an increase in sales tax on EACH of the following:

(i) Households

(ii) Businesses (6 marks)

Total 20 marks

GO ON TO THE NEXT PAGE

7. (a) (i) Define EACH of the following terms:

a) balance of payments (2 marks)

b) balance of trade (2 marks)

(ii) Describe the following components of a country’s balance of payments accounts:

a) the current account

b) the capital account

c) the official financing (6 marks)

(b) Outline TWO ways in which a country can finance a balance of payments deficit.
(4 marks)

(c) Discuss how a country might use EACH of the following measures to deal with balance of
payments problems:

(i) Devaluation (3 marks)

(ii) Import quotas (3 marks)

Total 20 marks

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

01240020/JANUARY/F 2013