This set has eleven original questions, ordered from easier to harder, covering all five lessons in growth, scale and ownership. Questions 1 to 4 check the basic ideas, 5 to 8 apply them to figures, and 9 to 11 are short case decisions.
Write each answer on paper in full sentences before you open the worked answer.
All businesses here are fictional. Check the current Cambridge syllabus for your exam year, because Business Studies 0450 and Business 0264 are separate specifications. You can log slips in the mistake log and retest queue.
Questions
1. Hana’s Nasi Kerabu, a stall in Kota Bharu, uses its own profit to open a second stall. Is this internal or external growth? Give a reason.
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Internal growth. The business expands using its own resources, and no other business is bought or joined.
2. Tan Brothers Hardware buys a smaller hardware shop in Taiping and runs it as a second branch. Is this internal or external growth? Give a reason.
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External growth. It acquires an existing business (a takeover) instead of building a new branch from scratch.
3. At Bayu Printing, Encik Bayu holds all the shares and runs the shop. He hires Cik Dina as a salaried manager so he can focus on finding new customers. Who is the owner and who is the manager now?
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Encik Bayu is the owner, because he holds the shares, provides the capital and receives the profit. Cik Dina is the manager, paid a salary to run daily operations. Earlier he did both jobs.
4. A student writes: “Cik Dina is the manager, so she receives a share of the company’s profit.” Is this correct, based on question 3?
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No. Cik Dina holds no shares and is paid a salary, so profit goes to the owner. The answer would change only if the case stated a bonus or profit-share scheme for her.
5. A company has 60,000 shares and declares a dividend of RM0.40 per share. Madam Chen holds 15,000 shares. How much does she receive, and what share of the total dividend is that?
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Total dividend = 60,000 × 0.40 = RM24,000. Madam Chen: 15,000 × 0.40 = RM6,000. Share = 6,000 ÷ 24,000 = 25%, which matches 15,000 ÷ 60,000 = 25%.
6. Two partners share profit in the ratio 3 : 1. This year’s profit is RM84,000. How much does each get?
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3 + 1 = 4 parts. One part = 84,000 ÷ 4 = RM21,000. Partners receive 3 × 21,000 = RM63,000 and 1 × 21,000 = RM21,000. Check: 63,000 + 21,000 = 84,000.
7. A bakery buys 2,000 packs of boxes at RM8.00 each when ordering in small lots. A supplier offers RM7.20 per pack if it orders all 2,000 at once. Find the saving in total and as a percentage of the old cost.
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Old cost = 2,000 × 8.00 = RM16,000. New cost = 2,000 × 7.20 = RM14,400. Saving = RM1,600. As a percentage: 1,600 ÷ 16,000 = 10%. Check: the price falls by RM0.80, and 0.80 ÷ 8.00 = 10%.
8. In question 7, storage for the larger delivery would cost the bakery RM450 extra over the same period. What is the net saving, and name one other limit to this benefit.
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Net saving = 1,600 − 450 = RM1,150. Another limit: money tied up in stock for longer, or boxes getting damaged in storage. Either one is a case-linked reason the saving may be smaller than it first looks.
9. The case states that a company’s owners “can lose only the money they invested”. Siti invested RM30,000. The company fails owing RM120,000. What is the most Siti can lose, and why can you not say more about legal rules?
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Her maximum loss is RM30,000, using the stated feature. You should not add specific laws or duties because the case gave none. Say that any further rules depend on the legal framework that applies.
10. Wira Cleaning has RM50,000 in cash. Option A: open a second branch itself for RM80,000, ready in 6 months. Option B: buy a small cleaning firm for RM95,000, ready in 1 month. The owner needs extra capacity in 3 months and wants to keep control of quality. Calculate each funding gap and recommend an option with a condition.
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Gap A = 80,000 − 50,000 = RM30,000 (37.5% of the cost, 30 ÷ 80). Gap B = 95,000 − 50,000 = RM45,000 (47.4% of the cost, 45 ÷ 95, to one decimal place).
Option A has the smaller gap and keeps control, but it is ready in 6 months and misses the 3-month need. Option B is ready in 1 month but has the larger gap and may weaken control.
Judgement: Option B is more suitable because it is the only option that meets the 3-month need, provided Wira can fund the RM45,000 gap without putting the current business at risk and can keep quality consistent. If the funding is not available, the owner should accept the later date and choose Option A.
11. Write a two-sentence case answer for this: “Mak Long Café, a sole trader, plans to join another café to share costs. Should it?” Use the idea of ownership and one limit.
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Sample: “Joining another café could reduce costs per cup by sharing orders and rent, but Mak Long would become part of a larger ownership with another owner and have to share decisions. It would suit her only if she is comfortable giving up some control in return for the saving.”
A good answer links the benefit to a cost, states the ownership change and gives a condition.
If you got these wrong
| Error type | Questions | Go back to |
|---|---|---|
| Mixed up internal and external growth | 1, 2 | Compare internal and external growth in a case |
| Benefit stated without cause or limit | 7, 8, 11 | Explain a scale benefit with its possible limit |
| Confused owner with manager, or dividends with salary | 3, 4, 5 | Distinguish ownership from management |
| Added legal rules or mis-split profit | 6, 9 | Use a stated ownership form without inventing legal obligations |
| Chose an option with no test against constraints | 10, 11 | Analyse a growth decision using case constraints |
Arithmetic slips in the figures, such as the percentage in question 7, are worth checking with the ratios tool. For cash timing, the cash versus profit bridge shows why paying now and earning later are different things.
What should you do next?
Retry any missed question after a few days with changed numbers. Move on to objectives and stakeholders when you can give a verdict, not just a list of points.
If you want a teacher to read your written answers and give feedback on the application, our online one-to-one Business tuition is built for that.