PPQ - UB

Question 1

Explain the advantages of internal (organic) growth. (4)

Answer 1

• No loss of control as the business is not integrating with others
• Launch new products/services means businesses can target different markets
• Open new physical branches means they can reach new markets by opening up in new locations
• Selling online the business can trade 24/7 around the world

Question 2

Distinguish between a tactical decision and an operational decision. (3)

Answer 2

• Tactical decisions are made to achieve the strategic objectives whereas an operational decision is made to ensure smooth running of the business on a daily basis
• Tactical decisions are normally made by middle managers whereas operational decisions can be made by any level of management (most likely to be lower level)
• Tactical decisions are more likely to be medium term whereas operational are day-to-day

Question 3

Describe the benefits to BT of being a multinational company. (5)

Answer 3

• Increased sales revenue/market share/increased profitability.
• Access to a wider market.
• Increased brand awareness.
• Greater economies of scale.
• Availability of skilled workers.

Question 4

Describe potential conflicts between any of the BT stakeholders mentioned in the case study (4) (shareholders, employees, government and customers)

Answer 4

• Shareholders want high profits whereas employees want high wages.
• Shareholders want a low rate of tax whereas the government may wish to increase it.
• Shareholders want high dividends whereas customers want low prices.
• Employees want a low rate of income tax whereas government may wish to increase it

Question 5

Describe the objectives of third sector organisations. (3)

Answer 5

• Maximise its donations.
• Support a specific cause.
• Provide a service.

Question 6

Using the case study, describe the possible objectives of NHS Scotland. (3)

Answer 6

• to provide a healthcare/quality/free service
• to operate within budget/efficiently/to spend taxpayers’ money wisely
• to be ethical/environmentally friendly

Question 7

Explain the methods NHS Scotland may use to demonstrate they are socially responsible. (4)

Answer 7

• using energy and water efficiently – save on energy costs
• encouraging waste reduction – to reduce landfill
• recycling materials – meeting government targets
• use of sustainable public transport – cuts down carbon footprint/reduces carbon footprint

Question 8

Distinguish between the features of NHS Scotland and a public limited company (plc) in terms of ownership and control. (2)

Answer 8

• NHS owned by government/taxpayers whereas, PLC owned by shareholders
• NHS controlled by Scottish Parliament whereas, PLC is controlled by Board of Directors

Question 9

Describe the role of public relations (PR) in an organisation. (3)

Answer 9

• Building awareness/creating a positive image for an organisation.
• Organising sponsorship.
• Donating to charity

Question 10

Describe advantages of being a social enterprise (3)

Answer 10

• help specific social cause they have chosen
• high quality employees attracted to cause
• make use of an asset lock

Question 11

Describe methods of growth other than organic. (4)

Answer 11

• conglomerate, business in completely different market
• vertical, business at different stage of production
• outsourcing, hire elsewhere to carry out procedures
• divestment, sell off parts of business to focus on core

Question 12

Describe benefits of diversified product portfolio. (5)

Answer 12

• spreads risk over different markets
• increases brand awareness
• ‘stars’ allow business to be market leader
• ‘cash cows’ give finance to fund riskier ventures
• ‘problem child’ gives opportunity to invest

Question 13

Explain advantages of having a varied product portfolio (4)

Answer 13

• spreads the risk if one product fails - because there are others to rely on
• maximise sales - because you are attracting different market segments
• consumers see a variety of products with the same brand – so brand recognition is high
• easier to launch new products as brand recognition and trust is high

Question 14

Describe the impact of competition policy on an organisation. (2)

Answer 14

• Cannot collude with other organisations to fix prices eg cartel
• Cannot use market power to pay unfairly low prices to suppliers