IGCSE Business Studies Paper2b 2007

This document consists of 13 printed pages and 3 blank pages. SP (CW/KS) T29834/2 © UCLES 2007 [Turn over UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. The business described in this question paper is entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. * 8 3 4 4 3 3 1 5 1 7 * BUSINESS STUDIES 0450/02 Paper 2 October/November 2007 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. For Examiner’s Use 12345 Total2 0450/02/O/N/07 © UCLES 2007 Newspapers Plus Newspapers Plus (NP) is a large multinational company that publishes newspapers and magazines in several different countries. It is a public limited company and makes high profits for its shareholders. NP wants to start operating in Country X to publish a new magazine. The management intend to build a new printing factory in Country X to print the new magazine. The printing factory could also be used to produce newspapers if NP decides to expand into the newspaper market in Country X. Factory workers could be recruited in Country X. There are no trained printing workers in Country X but wages are low. Trained printing workers could be transferred from NP factories in other countries. This would be expensive and they would not know the language. Country X has a population of 10 million people and 80% of the population live in towns and cities. There are 6 national newspapers in Country X and many local newspapers. Most of the magazines on sale in Country X are imported. The most popular one being ‘The Healthy Woman’ published monthly. Because these magazines are imported, these magazines do not contain articles about Country X, its shops or its products. Only imported products are advertised or written about in the magazines. The management of NP has three main ideas for the new magazine. A final decision has still to be made. The new magazine is to be aimed at women but different age groups could be targeted which would mean different types of articles could be included. The three ideas are outlined in Appendix 1. Appendix 1 Idea Age group targeted Estimated circulation of the magazine Estimated revenue per month Production cost per magazine Health Magazine -monthly 16 -25 100,000 $500,000 $2 Fashion Magazine -monthly 18 -30 200,000 $800,000 $1 Fashion and Beauty Magazine -monthly 21 -45 150,000 $1,000,000 $33 0450/02/O/N/07 © UCLES 2007 [Turn over Appendix 2 Memorandum To: Managing Director of NP From: Marketing Manager of NP Date: 13 October 2007 Re: Advertising Revenue Several beauty product companies have indicated that they would like to advertise in our new magazine in Country X. We asked them which age group mainly buy their products and the answer was 16-30 years. We estimate that the magazine advertising revenue will increase by approximately $60,000 for each 100,000 copies sold. The more sales we make the more advertising revenue we will receive. Fashion shops which sell expensive designer clothes are willing to pay $100,000 for advertisements in the magazine for each 100,000 copies sold. The age group which tends to buy these types of clothes is 30-45 years. We need to take this data into account when deciding on the style and articles for our new magazine. Appendix 3 Government Economic Data for Country X 2005 2006 2007 2% 4% 6% 8% Interest rates Economic growth 2005 2006 2007 2% 4% 6% 8%% %4 0450/02/O/N/07 For Examiner’s Use © UCLES 2007 1 (a) Explain two advantages to NP of being a multinational company. Advantage 1: .................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... Advantage 2: .................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... .....................................................................................................................................[8]5 0450/02/O/N/07 [Turn overFor Examiner’s Use © UCLES 2007 (b) Do you think the Government in Country X should encourage NP to open the new printing factory? Explain your answer. ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ...................................................................................................................................[12]6 0450/02/O/N/07 For Examiner’s Use © UCLES 2007 2 (a) How do you think NP researched the market to estimate the number of copies likely to be sold of each type of magazine? ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... .....................................................................................................................................[8]7 0450/02/O/N/07 [Turn overFor Examiner’s Use © UCLES 2007 (b) Advise NP on which one of the three magazines to publish. Use the information in the case and appendices 1 and 2 to support your answer. ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ...................................................................................................................................[12]8 0450/02/O/N/07 For Examiner’s Use © UCLES 2007 3 (a) Refer to Appendix 3. Do you think this is a good time to launch a new magazine in Country X? ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... .....................................................................................................................................[8]9 0450/02/O/N/07 [Turn overFor Examiner’s Use © UCLES 2007 (b) (i) The Marketing Manager will need to decide on a pricing strategy for the new magazine. Describe three suitable pricing strategies the company might use. Strategy 1: ................................................................................................................ ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. Strategy 2: ................................................................................................................ ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. Strategy 3: ................................................................................................................ ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ..............................................................................................................................[9] (ii) Which one of these three strategies would you recommend for NP to use for the new magazine and why? ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ..............................................................................................................................[3]10 0450/02/O/N/07 For Examiner’s Use © UCLES 2007 4 (a) NP will need to raise $4m to set up a new printing factory to publish the magazine. Analyse three methods of finance they could use. Method 1: ......................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... Method 2: ......................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... Method 3: ......................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... .....................................................................................................................................[8]11 0450/02/O/N/07 [Turn overFor Examiner’s Use © UCLES 2007 (b) NP will need to recruit employees to work in the new printing factory. Discuss whether they should recruit people living in Country X or transfer workers from their factories in other countries. ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ...................................................................................................................................[12]12 0450/02/O/N/07 For Examiner’s Use © UCLES 2007 5 (a) NP will use flow production in its new printing factory. Outline two benefits of using this method of production. Benefit 1: .......................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... Benefit 2: .......................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... .....................................................................................................................................[8]13 0450/02/O/N/07 For Examiner’s Use © UCLES 2007 (b) Advise NP on what factors will be most important when deciding where in Country X to locate the new printing factory. ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ......................................................................................................................................... ...................................................................................................................................[12]14 0450/02/O/N/07 BLANK PAGE15 0450/02/O/N/07 BLANK PAGE16 0450/02/O/N/07 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. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.