Paper 2 : Oct/Nov 2024 – 22

Instructions:

• Carefully review all given instructions and past paper guidelines before starting each practice session.

• Attempt the past paper questions independently first, just as in an actual exam environment.

• Use a notebook or exam-style sheets to write your answers. Ensure your work is neat, clearly labeled with question numbers, and follows proper exam format.

• After completing each section, check your answers using the provided marking schemes and examiner reports (if available).

• Review your mistakes and rewrite incorrect answers to improve accuracy and exam technique.

• If you find any questions difficult or unclear, watch the video given below for that paper. In that video, each paper is discussed in detail.

• If you still face difficulties or have doubts after watching the video, note them down and discuss them with your instructor or course coordinator for clarification.

• Revise question-solving strategies and repeat similar past paper questions to strengthen your understanding and performance.

Click Here to download the Video Handout

Hello everyone. Today we are going to go through the Big Bikes Paper 2 case study. I will take you question by question, explain what the examiners expect, and show you how to write answers that earn maximum marks. By the end of this lesson, you will know exactly how to structure your responses and how to link your points to the business in the case.

Let’s begin with Question 1(a), which asks you to explain two advantages and two disadvantages of BB being a public limited company. This question carries 8 marks, so the marking is simple: one mark for identifying each point and one mark for explaining it in the context of BB. That means you need to write four clear mini paragraphs.

The first advantage is that BB can raise large amounts of capital by selling shares on the stock exchange. This gives the business access to huge funds that can be used to expand into new markets or build new factories abroad. The second advantage is that being a public limited company gives BB a strong reputation and status. This can build trust with customers and suppliers, making it easier for BB to secure contracts and partnerships.

Now for the disadvantages. One disadvantage is the risk of takeover. Because BB’s shares are publicly traded, another company could buy enough shares to take control, even if the founders do not want that. The second disadvantage is that being a public limited company means more legal and reporting requirements. BB has to publish its financial accounts and follow strict rules, which increases costs and reduces privacy. To get full marks, always explain each point and connect it clearly to BB’s situation.

Now let’s move to Question 1(b), which asks you to consider three ways BB could motivate its production workers: piece rate, teamworking, and job rotation. This question is worth 12 marks and uses a level-based marking system. Level 1 is for basic definitions, Level 2 for partial explanation, and Level 3 for a well-reasoned comparison and recommendation.

Let’s look at the options. Piece rate means workers are paid per unit produced. This can increase speed and output, but workers may rush and reduce quality, which is risky for a business that uses flow production like BB. Teamworking means employees work in groups with shared targets. This improves communication, problem-solving, and morale. It also encourages quality because workers rely on one another. The downside is that not everyone may contribute equally. Job rotation allows workers to switch tasks, which keeps work interesting and helps them learn new skills. However, productivity can drop at first while workers get used to new roles.

The best choice for BB is teamworking. It fits perfectly with flow production because it improves coordination and helps maintain product quality. Teamworking also makes workers feel valued, reducing turnover and increasing motivation. A top-level answer compares all three methods and then makes a justified recommendation like this, linking the choice directly to BB’s production style.

Next is Question 2(a), which asks about the effects of BB having a short chain of command. This is another 8-mark question, so two marks per effect with a clear explanation in context. A short chain of command means there are fewer levels of management. The first effect is faster decision-making. When fewer layers are involved, decisions from top managers can quickly reach production workers, which improves efficiency and response time. The second effect is better communication. With fewer levels, information is less likely to be misunderstood or delayed, and employees feel more connected to managers. You could also mention that this structure encourages workers to take more responsibility, which can increase motivation.

Now let’s move to Question 2(b), which is about extension strategies. BB’s best-selling product is in the maturity stage of its life cycle, and it needs to decide between three strategies: adding new features, selling in toy shops, or launching a television advertising campaign. This is a 12-mark question, so you need to evaluate all three and make a justified choice.

Adding new features can make the bicycle more attractive and different from competitors, but it can be expensive to develop and test. Selling in toy shops increases product visibility, especially since the product is aimed at children, and this can directly boost sales. The challenge is that BB might need to set up new distribution agreements. A television advertising campaign reaches a large audience and strengthens brand awareness, but it is costly and may not guarantee a big increase in sales.

In this case, the best option is to start selling in toy shops. This directly targets the right customers, children and parents, at a much lower cost than a television campaign. It also does not require new product development like adding features would. For Level 3 marks, always explain all options, weigh their pros and cons, and give a clear final recommendation supported by logic.

Now let’s go to Question 3(a), which asks about the effects of BB becoming a multinational on four stakeholder groups: shareholders, employees, suppliers, and the government. This question is worth 8 marks, so write one short paragraph for each stakeholder, identifying the effect and explaining it.

For shareholders, expansion abroad may lead to higher profits and therefore higher dividends, but it also comes with higher risk. For employees, becoming multinational could create new career opportunities and chances to work abroad, but it might also lead to redundancies if BB relocates some jobs overseas. For suppliers, the company’s growth might mean larger orders and more business, but it could also mean losing contracts if BB starts sourcing materials from cheaper international suppliers. For the government, BB could contribute to tax revenue and job creation, but the government might also face pressure to monitor BB’s overseas operations for environmental or ethical issues. Short, clear explanations like these get you full marks.

Next, Question 3(b) asks you to choose between Country A and Country B for BB’s new factory. This is another 12-mark question, so use the data from Appendix 2 to compare both countries. Country A has high raw material availability, a selling price of $1000 per bicycle, but high wages of $300 and many competitors. Country B has a lower selling price of $400, but wages are much lower at $100 and there are fewer competitors.

If you calculate roughly, the difference in wages alone saves BB $200 per bicycle, which could make a big difference when producing thousands of units. Although raw materials are less available in Country B, the lower labour cost and reduced competition make it a better long-term option. Therefore, the best recommendation is Country B, because it offers lower production costs, less competition, and higher profit margins for mass production. Always back your answer with numbers or data from the case that’s how you reach the top level.

Now we come to Question 4(a), which asks for two reasons why BB might want to sell its products in new markets. This is again 8 marks, so two points with full explanations. The first reason is that domestic sales might be slowing down. Expanding abroad helps BB find new customers and keep growing. The second reason is economies of scale. Selling in new markets allows BB to increase production, which spreads fixed costs over more units and lowers average cost. Both of these help the business stay competitive and profitable.

Finally, Question 4(b) asks you to compare BB’s financial performance with its main competitor using Appendix 3. Let’s quickly look at the figures. BB’s revenue is 120 million, while the competitor’s is 200 million. BB’s gross profit margin is 50 percent, but the competitor’s is higher at 60 percent. BB’s net profit margin is 5 percent, while the competitor’s is 20 percent. That means the competitor earns more from every sale. ROCE is 15 percent for BB compared to 30 percent for the competitor, showing that the competitor uses its capital more efficiently.

However, BB’s acid test ratio is 1.3, which is better than the competitor’s 0.67, meaning BB can easily cover short-term debts. BB also has only 10 million in long-term debt compared to the competitor’s 60 million, which means BB has lower financial risk. When you evaluate, don’t just focus on profit look at liquidity and stability too. The best conclusion is that the competitor is more profitable, but BB is financially more stable. BB should focus on improving efficiency and profit margins while maintaining its strong liquidity position.

Before we finish, remember this pattern for success. For 8-mark questions, always identify and explain in context. For 12-mark questions, compare the options, use data or examples, and end with a strong justified recommendation. Always link your answers to BB’s situation its flow production, short chain of command, and expansion plans because examiners reward application to the case.

To summarise, in this paper we covered ownership advantages, motivation, communication structure, product extension strategies, stakeholder impacts, international location decisions, market expansion, and financial comparison. Every question follows the same idea: explain clearly, apply to the business, and make a judgement. If you do that consistently, you will reach Level 3 and achieve top marks.

Press “Mark As Complete” Button To proceed

—————————————————————————————————————