IGCSE Business Studies Paper-1: Specimen Questions with Answers 13 - 14 of 14

Passage

Priya would use any extra capital to invest in new technology. This should benefit the business by cutting costs and improving efficiency. Some managers have told her that new technology often causes problems.

Question number: 13 (3 of 3 Based on Passage) Show Passage

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Essay Question▾

Describe in Detail

The government in Priya’s country has recently passed new laws concerning working conditions. These include Health and Safety at Work laws and a maximum number of hours that can be worked per week. Do you think that employees always benefit from such laws? Justify your answer.

Explanation

Employees are always benefited from the laws which take care of their health and safety.

-A well-managed health and safety organization.

-A positive and caring image.

-Improved staff morale.

-Reduced staff turnover.

-Reduced absenteeism.

-Increased productivity.

-Reduced health care/insurance costs.

-Reduced risk of fines and litigation.

-Lessened threat of legal action.

-Improved standing among suppliers and partners.

- Better reputation for corporate responsibility among investors, customers and communities.

-Increased productivity, because employees are healthier, happier and better motivated.

Passage

Priya has been General Manager of a business for a number of years. She has recently identified a business opportunity that would require a lot more capital. Her financial advisers recommend that she converts the business into a Public Limited Company.

Question number: 14 (1 of 1 Based on Passage) Show Passage

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Short Answer Question▾

Write in Short

Discuss the consequences to this business of the possible change to a Public Limited Company.

Explanation

Changing a company from private limited to public limited has both merits and demerits:

Merits:

  • Shares can be advertised.
  • Shares can be sold through the stock exchange.
  • Large places may find it easier to borrow from banks. ‎· Cheaper borrowing and bulk purchasing.
  • Shareholders have limited liability.
  • The business has separate legal entity. There is continuity even if any of the shareholders die.

Demerits:

  • Going public can be expensive.
  • Some places can grow so large that they may become difficult to ‎manage effectively.
  • Risk of takeover by rival companies who have bought shares in the ‎company.
  • In order to protect the interest of the ordinary investor there are strict controls and regulations to comply. These companies have to publish their accounts.