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CERTIFICATE IN BUSINESS MANAGEMENT

2016

Instructions to candidates

You are allowed three (3) hours to answer this question paper.

You are strongly advised to carefully read ALL the question requirements before attempting

the question.

Paper consists of SEVEN (7) questions.

Answer Question 1 – COMPULSORY.

Answer ANY THREE (3) other questions of your choice.

Answers for Question 1 should be written on the question paper itself.

Answers for other questions should be written in the answer book.

Formula sheet(s) will be provided to you as a separate hand-out.

Use of a non-programmable calculator is permitted.

Marks for each question are shown in [ ]

Write your candidate number, course name, full name and date in the spaces provided on the

front of the answer book.

Candidate No

Candidate Name

Date

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Question 1 – Compulsory

Answer ALL questions (a-h)

Using the information in the following paragraphs answer the questions below:

a) NIVEA: Product launch for men

NIVEA is an established name in high quality skin and beauty care products. NIVEA VISAGE

Young is a skincare range in the Sri Lankan market designed to enhance the skin and beauty

of the teenage consumer rather than medicated to treat skin problems. As a result to bring the

range to the market the business has put together the marketing mix effectively. For instance,

they have used distribution through high street and promotions through social networking sites.

This is to make sure that the message of NIVEA VISAGE Young reaches the right people in

the right way.

Describe the components of the marketing mix and its contribution in achieving the objectives

of NIVEA VISAGE Young range. [5 marks]

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b) Innocent: Drinks which captured the globe

Richard Reed, Jon Wright and Adam Balon founded innocent drinks in 1998. The business

was launched after selling smoothies at a music festival. Today innocent is converted to be a

multimillion global company which has an average number of retailers of over 11,000 and sells

on average 2 million smoothies per week.

Identify and explain the factors that promote entrepreneurship such as Innocent. [5 marks]

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c) Apple Inc.: Reforming the corporate structure

Apple Inc. is the American multinational which leads world in innovation with iPhone, iPad,

Mac, Apple Watch and many more. Currently Apple is organised by function, so people are

hired and promoted for their ability in that function, not for their general management skills.

Discuss two (2) advantages and two (2) disadvantages of adapting a functional organisational

structure for a multinational corporate such as Apple Inc. [5 marks]

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d) Starbucks: Managing Internationally

Starbucks sells coffee, pastries, confectionery and coffee related accessories through over

18,000 retail stores – about 13,000 in the United States and 5,000 in more than 50 countries.

The company’s managers adapted the business to local tastes – such as offering curry puffs

and meat buns in Asia where people prefer to eat something while having coffee.

State three (3) elements of the external business environment and describe its impact on

Starbucks in overseas markets. [5 marks]

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e) Hayleys: Best corporate citizen in Sri Lanka Hayleys is committed to doing what is right in its business and place a greater emphasis on

the quality of its profits. Accordingly in practice Hayleys strive to uphold the trust of their

stakeholders by being ethical and transparent in their continuing pursuit of company vision

and mission.

Briefly explain three (3) benefits of business ethics for an organisation such as Hayleys.

[5 marks]

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f) Briefly explain two (2) accounting concepts of your choice. [5 marks]

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g) Motivation at McDonalds

McDonalds is the world’s largest chain of fast food restaurants serving around 68 million

customers daily in 119 countries. The success of the company is attributed to its employees.

Accordingly, management of McDonalds believe balancing of the work and life as essential for

the employees. Therefore, they offer a range of alternative arrangements to motivate the

employees such as vacation time and holidays, anniversary splash, short Fridays, child care,

matching gift programme, educational assistance and auto and home insurance programmes.

Using a motivational theory of your choice identify two (2) motivational techniques adapted

by McDonalds. [5 marks]

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h) The following information relates to MTI PLC forecast for 2016 operations.

Finished goods inventory at the end of each month is expected to be 20% of the budgeted

sales quantity for the following month from 2016 onwards. Opening finished goods inventory

was 2,700 units on January 2016. There would be no working progress at the end of any

month.

Produce the monthly production budget for the quarter one of year 2016. [5 marks]

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[Total 40 marks]

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

January February March April May

Forecasted sales for 2016

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Answer any THREE (3) questions of your choice.

Question 2

The following information relates to SIGMA PLC for the year ended 31st December 2015.

SIGMA PLC Income Statement for the year ended 31st December 2015

$’000 $’000

Sales (all on credit) 7,200

Less :Cost of sales

Opening stocks 200

Purchases (all on credit) 2,450

Less: Closing stocks (600) (2,050)

Gross profit 5,150

Less: Expenses 1,275

Net profit 3,875

SIGMA PLC Balance Sheet for the year ended 31st December 2015

$’000 $’000

ASSETS

NON-CURRENT ASSETS

Furniture, fittings and equipment 2,150

Land and buildings 1,750

Motor vehicles 600 4,500

CURRENT ASSETS

Inventory 600

Trade receivables 875

Other receivables 325

Cash at hand and bank 950 2,750

TOTAL ASSETS 7,250

EQUITY AND LIABILITIES

Ordinary share capital 1,500

Retained earnings 3,875 5,375

LIABILITIES

NONCURRENT LIABILITIES

5% loans 725 725

CURRENT LIABILITIES

Trade payables 800

Bank overdraft 350 1,150

TOTAL LIABILITIES 1,875

TOTAL EQUITY & LIABILITIES 7,250

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Required:

a) Using examples differentiate between capital and liabilities. [4 marks]

b) Describe the importance of qualitative characteristics such as reliability and relevance for

SIGMA PLC when preparing their annual accounts [4 marks]

c) Identify two users of accounting information of SIGMA PLC and state the reason behind

their interest. [6 marks]

d) Calculate the following accounting ratios for the year 2015.

i. Net profit ratio

ii. Gearing ratio

iii. Acid test ratio

iv. Return on capital employed

v. Debtors settlement period

vi. Gross profit margin [6 marks]

[Total 20 marks]

Question 3

a) Using examples describe the fundamental skills required of a manager [10 marks]

b) Briefly explain the different roles (managerial roles) which need to be carried out by

managers. [10 marks]

[Total 20 marks]

Question 4

Using a product of your choice briefly explain the meaning of segmentation, bases of

segmentation, and the importance of segmentation for the chosen organization.

[20 marks]

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Question 5

a) Distinguish between the terms ‘vision’ and ‘mission’ [6 marks]

b) Describe the meaning, three advantages and two challenges of corporate social

responsibility initiatives for a business organization of your choice. [14 marks]

[Total 20 marks]

Question 6

You are expected to make a presentation on the title ‘Economic Systems and Business

Organisation’ to a group of undergraduates. For this purpose, you are required to make slides

with bullet points. Your slides shall include the following.

a) The main economic systems [10 marks]

i. Different economic systems and their characteristics (3 slides)

ii. Advantages and disadvantages of each economic system (2 slides)

b) Different types of business organisations [10 marks]

i. Different types of organisations and their characteristics (3 slides)

ii. Merits and challenges of each type of business organisations (2 slides)

[Total 20 marks]

Question 7

Prepare a report on the following:

a) Marketing concept versus societal marketing concept

b) Product orientation versus production orientation. [10×2 = 20 marks]

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