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INSTRUCTIONS TO CANDIDATES

Use black ink or black ball-point pen. Do not use pencil or gel pen. Do not use correction fluid.Write your name, centre number and candidate number in the spaces at the top of this page.Answer all questions.Write your answers in the spaces provided in this question-and-answer booklet.If you run out of space, use the continuation pages at the back of the booklet, taking care to number the question(s) correctly.

INFORMATION FOR CANDIDATES

Mark allocations are shown in brackets.You are reminded that assessment will take into account the quality of written communication used in answers that involve extended writing (question 4).

AM*(S15-1081-01)

Surname

Other Names

CandidateNumber

2

CentreNumber

MAY1510810101

GCE AS/A level

1081/01

BUSINESS STUDIES – BS1

A.M. MONDAY, 18 May 2015

1 hour 15 minutes

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For Examiner’s use only

Question MaximumMark

MarkAwarded

1.(a) 4

1.(b) 4

2.(a)(i) 3

2.(a)(ii) 5

2.(b)(i) 3

2.(b)(ii) 6

2.(c)(i) 3

2.(c)(ii) 7

3. 6

4. 9

Total 50

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Answer all the questions in the spaces provided.

1. Welsh councils’ budgets announced

Council spending fell from £4.648bn in 2013 to £4.466bn in 2014. This is the total amount of cash available to councils around Wales to pay for services such as refuse collections, libraries, leisure centres, street lighting and public toilets. This resulted in cuts in the provision of both public goods and merit goods.

Source: BBC News, Wales Politics 18 October 2013

(a) With the use of examples, briefly explain the meaning of the terms: [4]

(i) public goods

(ii) merit goods

(b) How might these cuts in services impact on local communities across Wales? [4]

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2.

Iceland Foods Ltd is one of Britain’s fastest-growing and most innovative retailers and is recognised as one of the best companies to work for. In June 2012, Iceland acquired its supplier Loxton Foods Limited (renamed Iceland Manufacturing Limited in April 2013) to help the company develop new products more quickly and secure the benefits of vertical integration.

The introduction of a new ‘Posh Grub’ range is an example of how it is segmenting the market and appealing to customers who may not have considered shopping at Iceland in the past.

The company has achieved considerable success in recent years. It employs a combination of modern batch and flow production methods to produce many of its products, introducing 400 new lines in 2012.

Adapted: The Iceland Story-Iceland.co.uk 2013

(a) (i) Explain, with the use of an example, what is meant by vertical integration. [3]

(ii) How might Iceland Foods Ltd benefit from vertical integration? [5]

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(b) (i) What is meant by segmenting the market? [3]

(ii) Explain the possible advantages to Iceland Foods Ltd of segmenting the market. [6]

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only (c) (i) Briefly explain, with the use of an example, the process of batch production. [3]

(ii) Discuss the view that manufacturers, such as Iceland Foods Ltd, will always benefit from the introduction and use of flow production. [7]

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3. Many businesses in the UK are operating in an increasingly global economy. For some businesses, whether they are in the primary, secondary or tertiary sectors of the economy, this has created opportunities; but for others it has proven to be very challenging.

The number employed in the secondary sector has continued to decline, whilst the proportion of workers employed in the tertiary sector has continued to increase. These changes in employment patterns have shown little sign of slowing down in the last twenty years.

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Employment Structure for the UK 2013

PrimarySecondaryTertiary

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Explain why the number of people employed in the secondary sector over the last 20 years has continued to decline, whilst those employed in the tertiary sector have risen steadily. [6]

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only4. ‘The Interior’ partnership is formed

Anna Lewis, an interior designer, had worked from home as a sole trader since finishing her training. Three months ago she had a chance meeting with an interior decorator called Charlie Rolls at a local trade centre. They got chatting and Charlie asked Anna if she wanted to do some design work for a refurbishment project he was currently undertaking. She accepted the work and they both made a good profit from the job.

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To her surprise, Charlie called her three weeks later and suggested that they form a partnership. He had found a retail shop and small workshop for rent, which could be their new base –something which neither could have afforded to do if operating alone. By combining their skills, he felt they had a complete package to offer to both their new and existing customers.

Anna knew that she needed to give this some careful consideration and promised to let Charlie know her decision within the week.

Advise Anna whether she should enter into a partnership with Charlie or remain operating as a sole trader. [9]

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Additional page, if required.Write the question number(s) in the left-hand margin.

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