Exam questions

• Explain one reason why a business might use performance reviews with its employees.

  • Managers will discuss whether the employee has met their targets. As a result the employee is more likely to be focused on their job. This, the employee is more likely to be productive
  • It may provide the employee with the opportunity to give feedback to their line manager. therefore the business may be able to solve problems that frustrate the employee. As a result the employee may fell more valued by the business
• Explain one impact on a business of using flow production.

  • The business will be able to automate the production line. As a result, the productivity of the business may rise. Therefore, the unit cost of making each item should fall.
  • Production is less flexible. Therefore a standardised product must be made. As a result it is difficult to make different versions of the product to meet customer needs
• Explain one disadvantage to a business if using loan capital as a source of finance.

  • Interest will have to be paid on the loan. Therefore, the fixed costs of the business will increase. As a result, the profit of the business may fall
  • The loan will have to be repaid. Therefore, the business will incur larger cash outflows. As a result the business may be at a greater risk of insolvency or cash-flow problems
• Explain one reason why a business may decide to reduce the size of its workforce

  • The business may be suffering from a fall in demand for its product. As a result it may not have enough cash inflows to be able to pay its employee. Therefore, the business may have to reduce its workforce to prevent failure.
  • New technology may mean that an employee can be replaced by a machine. This is because a machine can produce items much faster than an employee. As a result, the productivity of the business may increase by reducing the workforce.
• Explain one disadvantage to a business of having a poor relationship with their suppliers

  • Deliveries of raw materials may be late. Therefore, production may be disrupted. Thus the business may not be able to meet the needs of its customers.
  • the business may not get good terms for trade credit. Therefore, they may have a pay cash to their suppliers earlier. As a result, net cash flow may fall.
• Explain one impact on a business if introducing job rotation

  • The workforce may become more flexible. This is because employees will now be trained in different jobs. Therefore, the business may experience an increase in productivity.
  • Employee motivation may increase. This is because job rotation makes their work more interesting. Therefore, the business may experience an increase in productivity
• Discuss the impact on a business from new tariffs being intro by countries it exports to.

  • Exported products will now become more expensive in the foreign market.
  • The business may try and find a way to reduce the cost of making each unit
  • Therefore demand for exported products in the foreign market could fall. As a result, revenue generated by the business from its foreign export market may fall
  • This is because it may allow the business to reduce its prices. As a result the tariff will have a minimal effect in the business.