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INSTRUCTIONS: This paper consists of a case study and FOURTEEN questions_ Candidates must
answer ALL FOURTEEN questions. All answers must he written in the space provided on the question
paper.
Read the following case study and answer the questions which follow.
CASE STUDY
CASE: Ronnie's Trucking and Haulage
Thirty-seven year old Ronnie Redbress worked as a production supervisor for a large multi-national company
in the industrial town ofMalbook.
Recently, the company reorganized and the post of production supervisor was made redundant. This would
create tremendous hardship for his family of four.
The company, however, provided tremendous support for Ronnie and fellow employees by paying for their
market research into the business of their choice. The firm was also willing to pay for their training and legal
requirements to start their own business, plus provide an interest free loan of up to $1,500,000 for twenty-four
months.
Having conducted research into his target market, Ronnie Redbress decided to go into haulage and trucking. The
research indicated the price per load charged by other trucking firms and the specifications of different tractors
and trailers with respect to fuel consumption and servicing periods. Other operating costs to Ronnie would
include road tax, vehicle and goods intransit insurance, his wage, plus the wages of three other employees.
Ronnie found out that he would need additional training if he was to comply with legal restrictions on road
transport.
There were already three large established trucking businesses . However, many clients were dissatisfied with
their performance as they were very unreliable. While there would be slow periods, there was great demand for
a wide range of loading and unloading arrangements which influenced the type of vehicle he would buy to suit
the target market.
Along with a sizable amount for his redundancy, Ronnie was able to secure the maximum amount as an interest
free loan from his former employers. He also received a two-year contract to truck goods for the company.
Although he could have started out as a partnership with a few ofhis co-workers, Ronnie chose to go into a private
limited company with his family. His wife had management and secretarial training skills and in two years both
his sons would graduate with accounting and human resource development training.
Ronnie was also encouraged to advertise in the local newspaper. However, he had his sights on the internet and
world wide web. He was also concerned that recently, the trucking business was coming under criticism and
scrutiny from the government. Many haulage firms were aiding contractors in illegal quarrying and removal of
sand from river basins as well as illegal dumping of waste.
Despite these concerns Ronnie Redbress was anxious to start business within three months of being redundant.
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ORGANIZATIONAL PRINCIPLES
1. State TWO advantages of a pri vate limited company over a partnership.
( 2 marks)
2. Identify FOUR job position s that are vital to Ronnie's business. Gi ve a brief description of EACH
position identified.
( 4 marks)
3. State TWO advantages of a small business like Ronnie's over large firm s in the same industry.
( 2 marks)
4. Explain how ONE legal issue mentioned in thi s case would affect thi s new ilrrn .
2 marks)
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0 1240032 F/2005
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5. Identify TWO government regulations which Ronnie must satisfy in order to start his business
operations.
2 marks)
Total 12 marks
PRODUCTION AND MARKETING
6. (a) (i) Define the term 'target market".
( 1 mark)
(ii) Give TWO examples of Ronnie's likely target market.
2 marks)
(b) Select TWO areas of Ronnie's market research, and state why the information gathered in
EACH area would be useful to him.
( 2 marks)
7. Justify TWO types of promotional activities that can boost Ronnie's business.
( 4 marks)
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8. State THREE ways in which Ronnie's trucking and haulage business can contribute to the de velopment
of the economy.
( 3 marks)
Total 12 marks
FINANCE AND INTRODUCTION TO ECONOMICS
9. List THREE sources from which Ronnie can obtain capital to finance hi s business.
( 3 marks)
10. State THREE requirements that Ronnie must meet in order to raise capita l to financ e hi s business.
( 3 marks)
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11. Outline TWO disadvantages to a business, of raising capital from an outside source.
( 2marks)
12. State ONE environmental issue which must be addressed by Ronnie. if he is to comply with
government regulations.
( 2 marks)
13. Discuss TWO types of insurance coverage that you would recommend to Ronnie.
( 4marks)
14. Identify TWO areas of the business that would have immediate demand on capital.
( 2marks)
Total 16 marks
END OF TEST
01240032 F/2005
