4IB 

Introduction to Business
QCF
Wednesday 8 June 2016, Afternoon

1. Time allowed: 3 hours.

2. Read the instructions at the top of each section carefully.

3. No books, dictionaries, notes or any other written materials are allowed in this
examination.

4. Calculators, including scientific calculators, are allowed provided they are not
programmable and cannot store or recall information. All other electronic devices,
including mobile phones, are not permitted.

5. Candidates who break ABE Examination Regulations will be disqualified from the
examinations.

6. Question papers must not be removed from the examination room.

Structure of paper: Answer all three sections

Section A: Answer all five questions Q1 14 marks

Q2 14 marks
Q3 14 marks
Q4 14 marks
Q5 14 marks

Section B: Answer one question Either Q6 or Q7 15 marks

Section C: Answer one question Either Q8 or Q9 15 marks

Total marks available for the paper 100 marks

4IB0616 © The Association of Business Executives 2016 J/600/0661

 This paper consists of three sections.
Follow the instructions at the top of each section.

Section A
You must answer all five questions in this section.

Q1 (a) Define the term ‘corporate strategy’ and explain why it is important to a business.
(4 marks)

(b) Define the term ‘stakeholder’. (2 marks)

(c) Explain how the commitment of a business to its shareholders might conflict with its
commitment to its staff. (8 marks)
(Total 14 marks)

Q2 Explain the advantages and disadvantages of operating as a partnership when compared to

operating as a sole trader or a company. (14 marks)

Q3 (a) Define the term ‘interest rate’. (2 marks)

(b) Describe three ways in which a change in interest rates might affect a business.
(6 marks)

(c) Explain how firms can use PESTEL analysis as part of a business strategy. (6 marks)
(Total 14 marks)

Q4 (a) Explain three factors that might affect the choice of production process chosen by a
business. (6 marks)

(b) Explain what is meant by ‘economies of scale’, and suggest how small firms manage to
survive and prosper without these. (8 marks)
(Total 14 marks)

Q5 (a) Describe two elements of the marketing mix and comment on why these elements are
important to the success of a product or service. (6 marks)

(b) Discuss whether promotion is the most important element of the marketing mix.
(8 marks)
(Total 14 marks)

End of Section A

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 Section B
You must answer one question in this section. Do not answer both Q6 and Q7.

EITHER:

Q6 (a) Define the terms:

(i) Working capital (2 marks)

(ii) Budget (2 marks)
(iii) Cash flow (2 marks)

(b) Explain the advantages and disadvantages of setting budgets. (9 marks)

(Total 15 marks)

OR:

Q7 (a) Describe three factors that affect a business’s choice of finance. (6 marks)

(b) Explain the advantages and disadvantages to a business of leasing as a short-term

source of finance. (9 marks)
(Total 15 marks)

End of Section B

Section C
You must answer one question in this section. Do not answer both Q8 and Q9.

EITHER:

Q8 Explain the advantages and disadvantages to a business of using fringe benefits as a

method of improving staff motivation. (15 marks)

OR:

Q9 (a) Outline three reasons why a business might want to motivate its employees. (6 marks)

(b) Explain the advantages and disadvantages to a business of adopting a piece rate
system of pay. (9 marks)
(Total 15 marks)

End of Section C
End of question paper

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