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HSC Business Studies Half-Yearly Examination 2012 Student Name: _________________________ AUSTRALIAN INTERNATIONAL SCHOOL HALF-YEARLY EXAMINATION, 2012 BUSINESS STUDIES Examination Structure General Instructions Reading time: 5 minutes Working time: 2 hours Use BLUE or BLACK pen DO NOT write in PENCIL Attempt ALL Questions Write your name on the paper Section I – Multiple Choice 20 marks Attempt Questions 1-20 Allow 20 minutes for this section Section II – Stimulus Based Questions 40 marks Attempt Questions 21-25 Allow 60 minutes for this section Section III – Business Report 20 marks Allow 40 minutes for this section 1 HSC Business Studies Half-Yearly Examination 2012 SECTION I: MULTIPLE CHOICE 20 marks Attempt Questions 1–20 Allow about 20 minutes for this section Use the multiple-choice answer sheet for Questions 1–20. 1. Teala Fashion has launched a new range of clothes aimed towards women aged between 18-39 years. Which form of market segmentation is Teala Fashion using? a) b) c) d) Demographic Geographic Psychological Behavioural 2. What would be the effect of a depreciation of the Australian dollar on Australian exporting businesses? a) b) c) d) Reduced cost of exports and decreased demand for sales globally Reduced cost of exports and increased demand for sales globally Increased cost of exports and decreased demand for sales globally Increased cost of exports and increased demand for sales globally 3. Cable TV packages offer customers basic products with the option of more channels at different price levels. What form of pricing strategy would such a business be using? a) b) c) d) Penetration pricing Price points Market skimming Competitive pricing 4. What are two psychological factors influencing consumer behaviour? a) b) c) d) Perceptions and social class Perceptions and attitudes Income and social class Income and attitudes 2 HSC Business Studies Half-Yearly Examination 2012 Use the data to answer Question 5 and 6 Kim’s Newsagency Financial Data for 2010-2011 $ Sales Revenue Costs of Goods Sold Gross Profit 438 000 365 000 ? Operating Expenses Electricity Rent Wages Total Expenses Net Profit 800 2 000 3 840 6 640 ? 5. Which of the following represents the gross and net profits of this business? a) b) c) d) $73 000 and $59 720 $73 000 and $66 360 $803 000 and $59 720 $803 000 and $66 360 6. What is the value of an efficiency ratio for this business? a) b) c) d) 0.8% 1.5% 3.0% 9.1% 7. Alex receives a call from KT mobile phones. The sales person asks Alex about her current phone plan and her phone call needs. The sales person then suggests a phone plan which may suit her needs more. What practice is this an example of? a) b) c) d) Unethical marketing Sugging Creation of needs Unfair and deceptive conduct 3 HSC Business Studies Half-Yearly Examination 2012 8. Change in work patterns and population trend are reflective of which influence on employment relations? a) b) c) d) Social Economic Legal Technological 9. Which stage of the product life cycle is price skimming normally associated with? a) b) c) d) Establishment Maturity Steady State Decline 10. Benefits employers gain from demonstrating corporate social responsibility in managing staff include: a) b) c) d) Improved staff retention and reduced absenteeism as staff feel more valued Business costs are reduced through reduced claims and fines Reduced training and marketing costs All of the above 11. Which of the following is a disadvantage of using debt finance as a source of funds? a) b) c) d) Dividends are not tax deductible Periodic interest repayments must be met As interest rates fall your interest repayments also fall Lenders gain voting rights at annual general meetings 12. To reduce costs, a business employs external contractors to provide payroll services. Which term describes this strategy? a) b) c) d) Outsourcing Diversification Strategic alliance Vertical integration 4 HSC Business Studies Half-Yearly Examination 2012 13. Which of the following is the first step in the market research process? a) b) c) d) Determining market needs Determining information needs Data analysis and interpretation Determining how to collect data 14. Which of the following best indicates the solvency of a business? a) b) c) d) Current Ratio Expense Ratio Net profit Ratio Debt to equity ratio 15. Which strategy could a business use to effectively manage receivables? a) b) c) d) Offering discounts for early payment Increasing the price of the product Taking out a short-term loan Increasing its overdraft 16. Which of the following would be an effective management strategy to improve the long-term profitability of a business? a) b) c) d) Altering the credit terms to ensure early payment of receivables Improving the efficiency of cost centres Selling of non-productive assets Factoring of accounts receivable 17. Which of the following is a good measure of return on owners’ equity? a) b) c) d) Gearing Liquidity Profitability Solvency 5 HSC Business Studies Half-Yearly Examination 2012 18. A business has received the following information from their accounting firm. Ratio 2010 2011 Current Ratio 0.8 : 1 1.4 : 1 Debt to Equity Ratio 1:1 1.5 : 1 Which of the following would describe the financial position of this business in 2011 compared to 2010? a) b) c) d) Increased liquidity and increased solvency Increased liquidity and reduced solvency Reduced liquidity and increased solvency Reduced liquidity and reduced solvency 19. Andrea’s Shoe Store has operated since the 1940’s. They advertise weekly in both newspapers and women’s magazines. Which of the following best describes Andrea’s Shoe Store’s orientation? a) b) c) d) Customer Marketing Production Selling 20. Trattoria Smallgoods Pty Ltd has been operating in an environment of high domestic interest rates and a rising Australian dollar. What is the likely impact of this environment on Trattoria Smallgoods Pty Ltd? a) b) c) d) Lower import costs and lower costs associated with their domestic debt Lower import costs and higher costs associated with their domestic debt Higher import costs and lower costs associated with their domestic debt Higher import costs and higher costs associated with their domestic debt End of Section I 6 HSC Business Studies Half-Yearly Examination 2012 Section II Total Marks (40) Attempt Questions 21 – 25 Allow about 60 minutes for this section Answer each question in the spaces provided Questions 21 (10 marks) Financial reports indicate declining sales for the Bubbly Baby brand of baby food, despite its low price. Market research indicates that consumers perceive the brand to be of lesser quality than baby food offered by competitors. a) Identify ONE pricing strategy that could be used by business Marking Criteria Lists/names on pricing strategy 1 Marks 1 Answers could include: price skimming, price penetration, loss leader, price-points, prestige pricing Pricing methods – competition-based, market-based, cost-based – not accepted b) Explain the importance of the relationship between price and quality to the managers of the Bubbly Baby brand. Marking Criteria Relates cause and effect of price to quality Must link to case study Provides characteristics and features of price/quality Must link to case study Sketches in general terms either price or quality May/may not link to case study 3 Marks 3 2 1 Answers could include: o Price-quality link to consumer product perception and product image and therefore choice o Link to case study – BB lower price is causing the product to be perceived as a lower quality or ‘cheap’ Question 21 continued on the next page 7 HSC Business Studies Half-Yearly Examination 2012 Question 21 continued… c) Analyse TWO product strategies that could be implemented to improve the sales of Bubbly Baby 6 Marking Criteria Draws out and relates implications of the use of TWO product strategies to improve BB sales Marks 6 Draws out and relates implications of the use of ONE product strategies to improve BB sales AND provides characteristics and features of ONE product strategy to improve BB sales Provides characteristics and features of TWO product strategies to improve BB sales 5 Provides characteristics and features of ONE product strategies to improve BB sales OR Sketches in general terms TWO product strategies to improve BB sales Sketches in general terms ONE product strategies to improve BB sales AND/OR Identifies ONE product strategies to improve BB sales Identifies TWO/ONE product strategies to improve BB sales 3 4 2 1 Answers could include: Packaging- involves the development of a container and graphic design for a product Benefits include: - Form of communication - Attracts consumers attention - Assists with product display - Gives a general impression of the product - Creates the image the business is seeking to portray Branding- is the name, term, symbol, design or any combination of these that identifies a specific product and distinguishes it from its competition. Benefits include: - Repeat sales due to customer recognition - Ease of introduction of new products onto the market - Promotional advantages - Encourages customer loyalty - Reduces purchase risk for consumers - Imagine control and creation All answers must link to sales and be appropriate to the case study End of Question 21 8 HSC Business Studies Half-Yearly Examination 2012 Question 22 (10 marks) A chain of fast food restaurants recently entered the Australian market with the establishment of six restaurants throughout New South Wales. It is currently undertaking an intensive advertising campaign aimed at teenagers via social networking sites. (a) Outline ONE ethical issue that may arise from the restaurant chain’s marketing campaign. Marking Criteria Sketches in general terms ONE ethical issue arising from the restaurants marketing campaign Lists/names ONE ethical issue arising from the restaurants marketing campaign 2 Marks 2 1 Answers could include: ethical – truth, accuracy and good taste in advertising, products that may damage health, (b) Explain how the restaurant chain’s marketing is interdependent with ONE other key business function. Marking Criteria Provides characteristics and features of how marketing is interdependent with ONE other key business function at the restaurant 4 Marks 4 Sketches in general terms how marketing is interdependent with ONE other key business function at the restaurant 3 Sketches in general terms ONE key business function at the restaurant 2 Recognises and names ONE key business function at the restaurant 1 Answers could include: Finance the best key business function to select as the restaurant’s marketing activities rely on the finance department. The finance department sources money and then allocates that money to other functional areas of the restaurant. The money allocated to the marketing department is used to fund the activities needed to carry out their intensive advertising campaign. Question 22 continued on the next page 9 HSC Business Studies Half-Yearly Examination 2012 Question 22 continued… (c) Evaluate the effectiveness of their proposed marketing campaign. Marking Criteria Uses criteria to make a judgment on the effectiveness of the intensive advertising campaign through social networking sites Links to case study 4 Marks 4 Provides characteristics and features of social media advertising Links to case study 3 Sketches in general terms social media advertising May or maynot link to the case study 2 identifies intensive advertising campaign OR social networking sites 1 Answers could include: Students need to describe the proposed marketing strategy – intensive through social networking sites – includes facebook, twitter, youtube Criteria used could include: profit maximization, increased market share, repeat sales, increased customer loyalty , more chain stores opening (geographical expansion) End of Question 22 10 HSC Business Studies Half-Yearly Examination 2012 Question 23 (5 marks) In 2009 Telstra decided it needed to undergo a major transformation to meet its customers’ needs and to improve its operations as a business. To support this transformation, the organization needed to reskill and educate its workforce. Telstra did not have the time nor did the company feel as though it was well-equipped enough to upgrade its own learning function to support its business transformation. It called on the services of Australian-based Accenture to develop a training program as part of its transformation. a) Outline the key influence forcing Telstra to outsource. Marking Criteria Sketches in general terms ONE key influence forcing Telstra to outsource Identifies ONE key influences forcing Telstra to outsource 2 Marks 2 1 Answers could include: Economic – economic cycles, structural change, globalization Technological influences – communications technology b) Explain ONE potential risk of outsourcing for Telstra Marking Criteria Relates cause and effect of ONE potential risk of outsourcing for Telstra 3 Marks 3 Provides characteristics and features of ONE potential risk of outsourcing for Telstra 2 Sketches in general terms ONE potential risk of outsourcing for Telstra 1 Answers could include: Consultants may not understand your business culture Costs may increase Hidden costs Morale and motivate may be damaged Reduced business learning through reliance on experts Loss of security and confidentiality of information Difficulty coordinatirng activities Difficult to monitoring quality and performance Loss of quality End of Question 23 11 HSC Business Studies Half-Yearly Examination 2012 Question 24 (5 marks) a) Identify TWO stakeholders in human resource management. Marking Criteria Recognizes and names TWO stakeholders in HR management 1 Marks 1 Answers could include: Employees, employers, trade unions, society, employer associations b) Describe TWO social influences on human resource management. Marking Criteria Provides characteristics and features of TWO social influences on HR management Provides characteristics and features of ONE social influence AND Stretch in general terms ONE social influence Sketch in general terms ONE social influence AND identifies ONE social influences OR Provides characteristics and features of ONE social influence Recognizes TWO social influences OR Sketches in general terms ONE social influence 4 Marks 4 3 2 1 Answers could include: Social influences include – changing working pattern and living standards Changing work patterns include: - Part-time work, casualization of labour force, flexibility, work-life balance, career flexibility and job mobility, increased female participation rate, aging workforce, early retirement Living standards include: - Generally high due to bonuses, fringe benefits, leave and superannuation benefits, work-life balance shifting and depleting, working hours increasing, increasing pressure to manage finances, ‘quality jobs’. End of Question 24 12 HSC Business Studies Half-Yearly Examination 2012 Question 25 (10 marks) 13 Marks Use the following information to answer Question 25. “Corporate Look Furniture” Profit and Loss Statements 2010 Sales Cost of Goods Sold Gross Profit 2011 $ 650 000 280 000 ? $ 555 000 280 000 ? 10 000 90 000 20 000 8 000 110 000 25 000 10 000 140 000 20 000 9 000 58 000 30 000 ? ? Expenses Rent Wages Insurance Electricity/Phone Motor Vehicle Interest on loan Net Profit (a) Calculate the gross profit for “Corporate Look Furniture” in 2011. Marking Criteria Students accurately calculate gross profit for CLF in 2011 - $275 000 (b) Makes a comment on the state of CLF profitability – does not use the ratio OR Presents either the GPR or NPR without comment Marks 1 Comment on the profitability of “Corporate Look Furniture” over the last two years. Marking Criteria Makes an accurate comment on the state of CLF profitability using either the GPR or NPR 1 Answers could include: GPR – GP/Sales – 2010 – 0.57:1, 2011 – 0.49:1, therefore worsening NPR – NP/Sales – 2010 – 0.16:1, 2011 –0.014:1 – therefore worsening Question 25 continues on the next page Marks 2 1 2 HSC Business Studies Half-Yearly Examination 2012 Question 25 continued… (c) Students correctly calculate the expense ratio for 2010 and 2011 but do not comment on it OR Students only calculate the expense ratio for ONE year and comment on it Students calculate the expense ratio of ONE year OR Make a comment on an incorrect calculation Marks Calculate AND comment on the expense ratio for “Corporate Look Furniture” between 2010 and 2011. Marking Criteria Students correctly calculate and comment on the expense ratio for CLF between 2010 and 2011 14 3 Marks 3 2 1 Answers could include: Expense ratio = expenses/sales 2010 – 263/650 = 0.40:1 2011 – 267/555 = 0.48:1 (d) Recommend ONE profitability and ONE efficiency strategy that “Corporate Look Furniture” can implement to improve its performance. Marking Criteria Students provide reasons in favour of ONE profitability and ONE efficiency strategy that CLF can implement to improve their performance. Recommendations must be clear, justified and linked to the case study Students provide reasons in favour of either ONE profitability or ONE efficiency strategy AND Provides characteristics and features of either ONE profitability or ONE efficiency strategy Sketches in general terms ONE profitability AND ONE efficiency strategy OR Provides reasons in favour of either ONE profitability or ONE efficiency strategy Students identify ONE/TWO strategy/ies Marks 4 3 2 1 4 HSC Business Studies Half-Yearly Examination 2012 Answers could include: End of Question 25 End of Section II 15 HSC Business Studies Half-Yearly Examination 2012 Section III 20 marks Attempt Question 26 Allow about 40 minutes for this section Answer this question in the booklet provided. In your answer you will be assessed on how well you: demonstrate knowledge and understanding relevant to the question apply the hypothetical business situation communicate using relevant business terminology and concepts present a sustained, logical and cohesive response in the form of a business report Question 26 Prine Ltd is a leading Australian manufacturer of hearing aids. One of the business’s new hearing aids has been successfully launched in Australia and Prine Ltd now plans to expand to Europe and North America and outsource some of their operations. The senior managers of Prine Ltd are seeking advice on the following aspects of their international expansion: Outsourcing options Options for global marketing Financial issues to be considered You have been employed as a consultant to prepare a report for Prine Ltd. In your report: Describe TWO outsourcing options for Prine Ltd Propose and justify TWO global marketing strategies that Prine Ltd could use when expanding overseas. Assess ONE internal and ONE external source of finance that could be used by Prine Ltd to enable its expansion 16 HSC Business Studies Half-Yearly Examination 2012 17 Section III Question 26 Criteria Marks 17–20 Presents a sustained, logical and cohesive business report integrating relevant business terminology and concepts Makes effective use of the information provided, demonstrating extensive knowledge and understanding relevant to the question Provides characteristics and features of TWO outsourcing options for Prine Ltd Puts forward for consideration, with detailed supporting arguments TWO global marketing strategies that Prine Ltd could use when expanding overseas, in detail Makes a clear judgement about ONE internal and ONE external source of finance to fund the expansion 13–16 Presents a logical and cohesive business report and uses relevant business terminology and concepts Makes some use of the information provided demonstrating knowledge and understanding of the question Provides characteristics and features of ONE outsourcing option for Prine Ltd AND sketches in general terms ONE Puts forward for consideration, with some supporting arguments TWO global marketing strategies that Prine Ltd could use when expanding overseas Makes a judgement about ONE internal and ONE external source of finance to fund the expansion 9–12 Includes features of a business report and uses some business terminology and concepts Provides characteristics and features of ONE outsourcing option for Prine Ltd OR sketches in general terms TWO outsourcing options for Prine Ltd Provides characteristics and features of ONE global marketing strategy OR sketches in general terms TWO global marketing strategies Provides some characteristics and features of effectiveness of ONE internal and ONE external source of finance to fund the expansion 5–8 Includes some features of a business report and uses basic business terminology Sketches in general terms ONE outsourcing option for Prine Ltd Sketches in general terms some aspect of global marketing/marketing Sketches in general terms some features of sources of finance 1–4 Uses basic terminology May make reference to outsourcing/human resources May refer to an aspect of marketing May make reference to finance HSC Business Studies Half-Yearly Examination 2012 Possible Answers May include: In your report: Describe TWO outsourcing options for Prine Ltd o Domestic subcontracting o Global subcontracting Propose and justify TWO global marketing strategies that Prine Ltd could use when expanding overseas. o Global Branding o Standardisation o Customisation o Global Pricing – customorised/standardized worldwide o Competitive positioning Assess ONE internal and ONE external source of finance that could be used by Prine Ltd to enable its expansion o internal sources of finance – retained profits o external sources of finance – debt – short-term borrowing (overdraft, commercial bills, factoring), long-term borrowing (mortgage, debentures, unsecured notes, leasing) – equity – ordinary shares (new issues, rights issues, placements, share purchase plans), private equity End of Section III End of paper 18