2010

Higher School Certificate

Preliminary Examination

Business Studies
Total marks 80
General Instructions

Reading time 5 minutes

Working time 2 hours

Board approved calculators may be

used

Write using black or blue pen

Write your student number and/or

name at the top of every page

Section I Pages 28
20 marks
Attempt Questions 120
Allow about 25 minutes for this section
Section II Pages 914
40 marks
Attempt Questions 2125
Allow about 1 hour for this section
Section III Page 15
20 marks
Attempt Question 26
Allow about 35 minutes for this section

This paper MUST NOT be removed from the examination room

STUDENT NUMBER/NAME: ..

STUDENT NUMBER/NAME: ..

Section I
20 marks
Attempt Questions 120
Allow about 25 minutes for this section
Select the alternative A, B, C or D that best answers the question and indicate your choice
with a cross (X) in the appropriate space on the grid below.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Page 2

STUDENT NUMBER/NAME: ..
1

Which of the following is a financial goal of a business?

(A)
(B)
(C)
(D)

Sense of achievement
Ethical business conduct
Provision of employment
Increase market share

Observe the following information.

Company
President

State Manager

Local Manager

Workers
Information flows from the top of the hierarchy to the bottom.
Which of the following illustrates this flow of information?
(A)
(B)
(C)
(D)

Span of control
Line management
Chain of command
Functional structures

Page 3

STUDENT NUMBER/NAME: ..

A chocolate bar, advertised as using no animal products, would be aimed at which

type of market?
(A) Mass market
(B)

Niche market

(C)

Industrial market

(D) Global market

4

Which of the following is NOT a type of equity finance?

(A)
(B)
(C)
(D)

Mortgage
Net profit
Owners contribution
Additional shareholders contribution

There are many parts to a business plan.

Which element of the business plan provides an overall view of its content?
(A)
(B)
(C)
(D)

Tactical plan
Vision statement
Mission statement
Executive summary

A fast-food business has developed a new burger. Management has gained

intellectual property rights, whereby no other company can copy this burger.
Which intellectual property right has been applied to protect this product?
(A)
(B)
(C)
(D)

Patent
Royalty
Copyright
Goodwill

A business determines their market segmentation based on the characteristics of the

population; such as age, gender and income.
Which factors of market segmentation are being applied?
Page 4

STUDENT NUMBER/NAME: ..

(A)
(B)
(C)
(D)
8

Which business structure is characterised by unlimited liability?

(A)
(B)
(C)
(D)

Behavioural factors
Demographic factors
Geographical factors
Psychographic factors

Trust
Cooperative
Partnership
Private company

In a SWOT analysis, conducted by a major car manufacturer, the results showed slow
market growth and a strong sales team.
Which TWO components of SWOT are these a feature of?
(A)
(B)
(C)
(D)

10

Threats and strengths

Threats and opportunities
Weaknesses and strengths
Weaknesses and opportunities

Which of the following would be considered a component of a long-term business

plan?
(A)
(B)
(C)
(D)

Formal plan
Tactical plan
Strategic plan
Operational plan

Page 5

STUDENT NUMBER/NAME: ..
11

Which of the following would be a result of economic downturn on a business?

(A)
(B)
(C)
(D)

12

Increase in consumer demand and a fall in production levels

Decrease in consumer demand and a rise in investment levels
Increase in employment levels and a fall in production levels
Decrease in consumer demand and a fall in production levels

Management at a tile company is attempting to maximise available space.

Their warehouse is overcrowded and some tiles have chipped and broken because of
the amount of stock within the warehouse. They are looking to introduce an inventory
control system which ensures they only order the stock necessary to meet the demands
of their clients and minimise their warehousing costs.
Management should implement which of the following inventory control systems, to
minimise storage costs?
(A)
(B)
(C)
(D)

13

Which regulatory body can take action against business conduct that restricts the
degree of competition in a market?
(A)
(B)
(C)
(D)

14

Kaizen
Just in time
Just in case
Total quality management

Australian Taxation Office

Department of Fair Trading
Australian Competition and Consumer Commission
Australian Securities and Investment Commission

A business aims to position its product as high quality.

Which pricing strategy would be most appropriate to achieve this goal?
(A)
(B)
(C)
(D)

Market skimming
Below the line
Penetration pricing
Meet the competitor

Page 6

STUDENT NUMBER/NAME: ..

15

Observe the following information.

As at May 12th 2009
Current Assets
Inventory
Cash
Accounts receivable

$
35 000
5 000
18 000

Non Current Asset

Factory
Machinery

260 000
80 000

Current Liabilities
Overdraft
Accounts payable
Non Current Liabilities
Mortgage
Owners Equity
Owners contribution
Net Profit

$
8 000
30 000

200 000
50 000
?

What is the total owners equity for this company?

(A)
(B)
(C)
(D)
16

$50 000
$110 000
$160 000
$398 000

Managers of a juice company have decided to pay a marketing company to develop an

advertising campaign for their new line of products.
This is an example of which of the following?
(A)
(B)
(C)
(D)

17

Integration
Outsourcing
Networking
Diversification

A picture frame company has total fixed costs of $15 000. The selling price of their photo
frames is $22. The variable cost is $7 per unit.
What is the break-even point for this company?
(A) 225 units
(B) 517 units
(C) 681 units
(D) 1000 units

18

What does management gain from using a value chain analysis?

Page 7

STUDENT NUMBER/NAME: ..
(A) Allows management to determine wage increases for employees, comparable to
(B)

other businesses
Allows management to increase span of control within production, thus

increasing efficiency
(C) Allows management to compare the actual and planned revenue for the
business
(D) Allows management to eliminate those activities in a business that provide little
or no benefit to output
19

Which of the following are TWO main reasons for business failure?
(A) Over-capitalisation and low interest rates
(B) High return on investment and high interest rates
(C) Lack of management skills and over-capitalisation
(D) Lack of management skills and low staff turnover

20

A manager of a large pharmaceutical company is comparing sales volume with the

industry average in an attempt to analyse company performance.
Which type of control is this manager applying?
(A)
(B)
(C)
(D)

Sales report
Market report
Budget control
Feed forward control

Section II
40 marks
Attempt Questions 2125
Page 8

STUDENT NUMBER/NAME: ..
Allow about 1 hour for this section
Answer the questions in the spaces provided.

Question 21 (6 marks)

Marks

Businesses operate in a complex and rapidly changing environment. All businesses

are influenced by changes in the environment in which they operate.
(a)

Identify ONE social role and ONE economic role of business.

2
Social: .................................................................................................................................
.............................................................................................................................................
Economic: ...........................................................................................................................
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(b)

Distinguish between unincorporated and incorporated enterprises AND give ONE

example of a legal structure found in each.
4
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Question 22 (6 marks)
(a)

Marks

Distinguish between a vision statement and a mission statement.

2
Page 9

STUDENT NUMBER/NAME: ..
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(b)

Identify TWO forecasting tools and discuss how they may be used by management to
create specific targets for a business.
4
(i)

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(ii)

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Question 23 (8 marks)

Marks

Page 10

STUDENT NUMBER/NAME: ..
Market research is a central part of the marketing function.
(a)

Outline the importance of market research for a business.

2
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(b)

Identify TWO factors which may be used by a business to identify its target market.
2

4
(i)

....................................................................................................................................
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(ii)

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(c)

Discuss TWO promotional strategies a business may use within its marketing mix.
(i)

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(ii)

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Page 11

STUDENT NUMBER/NAME: ..

Page 12

STUDENT NUMBER/NAME: ..
Question 24 (10 marks)

Marks

Observe the following information.

For year ending 30 June 2009
Sales Revenue

$
400 000

Opening Stock
Purchases
Closing Stock
Cost of Goods Sold

300 000
125 000
210 000
?

Gross Profit

Expenses:
Wages
Rent
Electricity
Advertising
Insurance

100 000
13 000
6 000
10 000
4 000

Net Profit
Additional Information:
2008 Gross Profit
2008 Net Profit
(a)

230 000
93 000

Calculate gross profit and net profit from the information.

Gross profit: ........................................................................................................................
Net profit: ...........................................................................................................................

(b)

Distinguish between a balance sheet and a profit and loss statement.

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(c)

Account for the change in net profit between 2008 and 2009.
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Question 24 continues on the next page
Page 13

STUDENT NUMBER/NAME: ..
Question 24 (continued)
(d)

Marks

Explain how a marketing plan can result in improved net profit levels.
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End of Question 24

Page 14

STUDENT NUMBER/NAME: ..
Question 25 (10 marks)

Marks

Not everyone can successfully operate a business. There are a number of personal
qualities individuals may possess that will enable them a greater chance of succeeding.
(a)

Identify TWO personal qualities that a new business owner needs, to increase their
chance of success.
(i)

....................................................................................................................................
....................................................................................................................................

(ii)

....................................................................................................................................
....................................................................................................................................

(b)

Describe TWO sources of finance available to a small business owner to fund a

business start-up.
(i)

....................................................................................................................................
....................................................................................................................................

(ii)

....................................................................................................................................
....................................................................................................................................

(c)

Discuss TWO strategies a business may implement in order to achieve a competitive

advantage.
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STUDENT NUMBER/NAME: ..

Section III
20 marks
Attempt Question 26
Allow about 35 minutes for this section
Answer the question on your own paper or in a writing booklet, if provided.
Expected length of response is approximately 800 words or 6 written pages.
In your answer you will be assessed on how well you:

demonstrate knowledge and understanding relevant to the question

use the information provided

communicate using relevant terminology and concepts

present a sustained, logical and cohesive response in the form of a business report

Question 26 (20 marks)

Privacy Blinds and Shutters Pty Ltd is a small business which has been operating for two
years. They are responsible for supplying and installing blinds, window fittings and shutters.
They are currently at the growth stage of the business life cycle and face a number of
challenges.
In an attempt to keep up with demand they have decided to employ more workers and reexamine the goals they have set for the business.
Assume that you have been hired by Privacy Blinds and Shutters Pty Ltd as a business
consultant and have been asked to prepare a report.
Write a report that addresses EACH of the following:
Outline the financial and social goals of a business
Discusses THREE challenges the business operations may encounter during the growth
stage of the business life cycle
Evaluates the importance of the human resource cycle when hiring new employees
AND the benefits the business can gain from training and developing these human
resources.

End of paper

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