™

Cambridge IGCSE

BUSINESS STUDIES 0450/13

*6251666735*

Paper 1 Short Answer and Data Response May/June 2023

1 hour 30 minutes

You must answer on the question paper.

No additional materials are needed.

INSTRUCTIONS
• Answer all questions.
• Use a black or dark blue pen. You may use an HB pencil for any diagrams or graphs.
• Write your name, centre number and candidate number in the boxes at the top of the page.
• Write your answer to each question in the space provided.
• Do not use an erasable pen or correction fluid.
• Do not write on any bar codes.
• You may use a calculator.

INFORMATION
• The total mark for this paper is 80.
• The number of marks for each question or part question is shown in brackets [ ].

This document has 12 pages. Any blank pages are indicated.

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1 TDG is a bicycle retailer. It has 3 employees. TDG needs to maintain customer loyalty as the
business sells in a mass market. Simon, the manager, knows managing cash flow is important. He
is analysing TDG’s cash-flow forecast. An extract is shown in Table 1.1. Simon is considering ways
for TDG to overcome its short-term cash-flow problem in September.

Table 1.1
Extract from TDG’s cash-flow forecast 2023 ($000)

July August September

Cash inflow X 50 40

Cash outflow 50 50 Y

Net cash flow 10 0 (40)

Opening balance 20 30 30

Closing balance 30 30 (10)

(a) Define ‘mass market’.

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(b) Calculate X and Y.

X: ......................................................................................................................................

Y: ...................................................................................................................................... [2]

(c) Outline two reasons why managing cash flow might be important for TDG.

Reason 1: .........................................................................................................................

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Reason 2: .........................................................................................................................

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(d) Explain two ways TDG could overcome its short-term cash-flow problem in September.

Way 1: ...............................................................................................................................

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Explanation: ......................................................................................................................

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Way 2: ...............................................................................................................................

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(e) Explain two methods a retailer could use to maintain customer loyalty. Which would be the
best method to use? Justify your answer.

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2 KCL manufactures paper which is used in the production of newspapers and books. KCL holds a
high level of inventory and buys all its raw materials, including wood, from local suppliers. Quality
control is important. The Operations Director is considering ways to increase efficiency in the factory.
Pressure groups are trying to influence KCL’s decisions to ensure that the business does not create
more external costs than external benefits.

(a) Define ‘quality control’.

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(b) Identify two ways a pressure group might try to influence business decisions.

Way 1: ...............................................................................................................................

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Way 2: ...............................................................................................................................

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(c) State four benefits to a business of increasing efficiency.

Benefit 1: ..........................................................................................................................

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Benefit 2: ..........................................................................................................................

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Benefit 3: ..........................................................................................................................

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Benefit 4: ..........................................................................................................................

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(d) Explain one external cost and one external benefit that may be created by KCL’s business.

External cost: ....................................................................................................................

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Explanation: ......................................................................................................................

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External benefit: ................................................................................................................

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Explanation: ......................................................................................................................

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(e) Explain two factors a manufacturing business should consider when deciding how much
inventory to hold. Which factor is likely to be the most important? Justify your answer.

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3 PCY provides insurance services for businesses such as farms and factories. Being ethical is
important to PCY. The business has 4 offices and 500 employees. Managers use different leadership
styles. The Managing Director is planning to change how PCY is organised and managed. He said:
‘I want to reduce communication barriers within the business. Delegation will be encouraged. The
span of control could change.’

(a) Define ‘span of control’.

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(b) Identify two leadership styles.

Leadership style 1: ...........................................................................................................

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Leadership style 2: ...........................................................................................................

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(c) Outline two benefits to PCY of encouraging its managers to use delegation.

Benefit 1: ..........................................................................................................................

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Benefit 2: ..........................................................................................................................

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(d) Explain two possible reasons why being ethical is important to PCY.

Reason 1: .........................................................................................................................

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Explanation: ......................................................................................................................

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Reason 2: .........................................................................................................................

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Explanation: ......................................................................................................................

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(e) Do you think lack of feedback is the main barrier to effective communication in a business?
Justify your answer.

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4 Meena wants to leave her job as a teacher to become a successful entrepreneur. Her business
will produce handmade jewellery. Meena knows that there is government support for business
start-ups. She plans to use market research to help identify a market segment for her jewellery.
Meena’s brother has offered to become her business partner but she cannot decide whether it
would be better to operate as a sole trader.

(a) Identify two ways a government might support business start-ups.

Way 1: ...............................................................................................................................

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Way 2: ...............................................................................................................................

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(b) Identify two ways a market can be segmented.

Way 1: ...............................................................................................................................

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(c) Outline two characteristics Meena will need to become a successful entrepreneur.

Characteristic 1: ................................................................................................................

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Characteristic 2: ................................................................................................................

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(d) Explain one advantage and one disadvantage to Meena of operating as a sole trader rather
than being in a partnership.

Advantage: .......................................................................................................................

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Explanation: ......................................................................................................................

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Disadvantage: ...................................................................................................................

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Explanation: ......................................................................................................................

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(e) Do you think accessing government sources, such as statistics, is the best method of market
research for a start-up business to use? Justify your answer.

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