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Cambridge | Business 0450 | S 18 1 1 | 1 hour 30 minutes

Boards | Cambridge | Business 0450

Search By AI inside Business 0450 | Type Exam Code | Subject Code | keyword To Search

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SJD is in the private sector. It makes steel for construction businesses. SJD plans to make 3500 of its 9000 employees redundant. The Operations Director said: ‘Cheap steel imports and high business tax rates are affecting our business. There are also ethical issues that we must respond to. The Government should do more to help steel producers. Some of our competitors plan to close their factories and relocate to other countries. SJD may have to do the same.’

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(a)

Identify two situations in which downsizing the workforce might be necessary.

Situation 1:

Situation 2:

Identify two situations in which downsizing the workforce might be necessary.

Award one mark per situation Points might include:

· introduction of automation / new technology

· redesign work space / layout

· demand factors e.g. falling demand, changing tastes, end of product life cycle, recession / economic slump, more competition, less revenue

· factory closure

· relocation to another country

· business taken over / merger

· excess workforce / unnecessary workers

· financial problems e.g. lack of income, increase in costs, cash flow issues, cannot afford the workers,

· changes in law

delayering / restructuring

2

(b)

Identify two possible ethical issues that SJD might have to respond to.

Issue 1:

Issue 2:

Identify two possible ethical issues that SJD might have to respond to.

Award 1 mark per ethical issue. Points might include:

· protecting the environment

· fair wages to workers / pay above minimum wage

· pay fair prices to suppliers

· charge fair prices to consumers

not employing child labour

2

(c)

Identify and explain two possible problems for SJD if it decides to relocate its business.

Problem 1:

Explanation:

Problem 2:

Explanation:

Identify and explain two possible problems for SJD if it decides to relocate its business.

Award 1 mark for each problem identified Award 1 mark for each explanation in context

Points might include:

· access to / cost of available space [k] for steel production [app]

· legal controls / level of government support [k] in other countries [app]

· access to suitable / cost of workers [k] for private sector business [app]

· availability / cost of raw materials [k] such as iron [app]

· access to / cost of infrastructure e.g. transport and energy [k]

· level of competition [k]

· exchange rates / currency issues [k]

· cultural issues e.g. different working hours [k]

· language / communication difficulties [k]

trade restrictions / obtaining permits [k]

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(d)

Explain how each of the following factors might affect SJD’s business.

High business tax rates:

Explanation:

Cheap imports:

Explanation:

Explain how each of the following factors might affect SJD’s business.

Award 1 mark for each relevant point

Award 1 mark for each relevant reference made to this business Award 1 mark for each relevant explanation

Relevant points might include:

High business tax rates:

· reduces profit [k] so may need to make more workers redundant [app]

· increase prices [k] so may lead to lower demand [an] from construction businesses [app]

· increases costs [k] leading to less profit [an] for this private sector business [app]

Cheap imports:

· reduced demand [k] for steel [app] as its customers are able to buy from rivals [an]

· may reduce prices [k] so revenue is reduced [an]

· lower costs of production [k] as this is a producer [app] as raw materials may be cheaper [an]

reduce market share [k]

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(e)

Do you think the Government should help businesses like SJD? Justify your answer.

Do you think the Government should help businesses like SJD? Justify your answer.

Award 1 mark for identification of relevant point (s) [max 1] Award 1 mark for a relevant reference made to this business Award up to 2 marks for relevant development of point(s)

Award up to 2 marks for a justified decision made as to whether the Government should help businesses like SJD

Points for might include:

· protect jobs [k] as they plan to make 3500 redundant [app] which would increase unemployment [an] and the cost of paying unemployment benefits [an]

· protect the vital industry [k] of steel [app] to ensure supply in their own country [an]

· impact on other businesses [k] who need the material for construction [app]

· government could lose tax revenue if they fail [k]

Points against might include:

· there is an opportunity cost / helping businesses would require money from the government [k] money spent on helping SJD will reduce the money available for other projects [an]

· can obtain materials from other countries [k] as have access to cheap imports [app]

· environmental impact of business [k] as industry creates pollution [an]

· it is not the role of government [k] to help private sector business [app]

disincentive for businesses to be successful [k] this could lead to them being inefficient [an]

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