TEST CODE 01240032

FORM TP 2013110 MAY/JUNE 2013

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

EXAMINATION

PRINCIPLES OF BUSINESS

Paper 032 – General Proficiency

1 hour 15 minutes

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. Answer ALL questions.

2. All answers must be written in this booklet.

3. You are advised to take some time to read through the paper and
plan your answer.

4. The use of non-programmable, scientific calculators is allowed

for this paper.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2011 Caribbean Examinations Council

All rights reserved.
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INSTRUCTION: This paper consists of a case study and a template for a business plan. Use the
information from the case to complete the business plan.

CASE STUDY

Kitchen Tool & Time Saver

SECTION A

Max and his sister Emma work with their mother, Sonia, in her catering business. The demands of having to
go to school and assist with the catering business have led the brother and sister to develop ways of working
more efficiently and spurred their creativity and innovation. Max and Emma have designed a five-in-one
kitchen utensil that they call the Kitchen Tool & Time Saver. They have decided to start mass producing the
item for sale but will outsource the production of the Kitchen Tool & Time Saver until they can afford their
own factory. Max and Emma will co-own and manage the business with advice from Sonia. They plan to
employ one administrative assistant and one marketing officer to assist in the operation of the new business.

Complete the following Business Plan using the information from the case.

BUSINESS PLAN

OPERATIONAL PLAN

1. Nature and Type of Business

(a) Classify the business based on the ownership style.

_____________________________________________________________________
(1 mark )

(b) State ONE likely reason for Max and Emma wanting to establish this business.

_____________________________________________________________________

_____________________________________________________________________
(1 mark )

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2. Internal Organization Environment

Complete the organizational chart below to show the proposed structure of the new business.

Administrative Assistant

(3 marks)

3. Management Functions

(a) Identify TWO management functions that Max and Emma must perform in their new
business.

_____________________________________________________________________

_____________________________________________________________________
(2 marks)

(b) State the role that Sonia will perform in the new business.

_____________________________________________________________________

_____________________________________________________________________
(1 mark )

(c) Identify TWO important activities, other than the construction of a business plan, which the
owners should undertake prior to establishing their new business.

_____________________________________________________________________

_____________________________________________________________________
(2 marks)
Total 10 marks

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SECTION B

Max and Emma intend to combine the marketing of their new kitchen tool with the catering services
provided by their mother. They are convinced that an infomercial that shows the tool being used and the
time it saves busy cooks and professionals who have stringent deadlines to meet, will be a good marketing
strategy. Consumers will be able to buy directly from them or from stores and supermarkets. Wholesaling
of the product will be done through Max and Emma’s office only.

Max and Emma are clear on the target market but must decide on other promotional activities that will
capture this market. The new all-in-one tool consist of a can opener, cork screw, scissors, vegetable peeler
and weighing scale.

Since production will be outsourced, care must be taken to ensure that the item is made to desired specifications
and quality and that the manufacturers accept and respect that Max and Emma own the product design.

MARKETING PLAN

4. Target Market

Identify the target market for the new product.

___________________________________________________________________________

___________________________________________________________________________
(1 mark)

5. Marketing Mix

(a) Identify TWO P’s of the Marketing Mix, that Max and Emma are considering.

________________________________________________________________________

________________________________________________________________________
(2 marks)

(b) List TWO other P’s of the Marketing Mix that Max and Emma should also consider.

________________________________________________________________________

________________________________________________________________________
(2 marks)
(c) Define the term ‘patent’.

________________________________________________________________________

________________________________________________________________________
(2 marks)

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6. Promotion

Identify THREE methods, other than infomercials, that can be used to promote the product.

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________
(3 marks)

7. Competition

Identify TWO possible competitors for the Kitchen Tool & Time Saver.

___________________________________________________________________________

___________________________________________________________________________
(2 marks)

8. Distribution Chain

Identify FOUR links in the distribution chain for the kitchen tool.

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________
(4 marks)

9. Consumer Behaviour

(a) Explain ONE consequence that the business is likely to face if the product does not meet
required quality standards.

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________
(2 marks)

(b) Outline ONE redress that dissatisfied consumers can seek.

_____________________________________________________________________

_____________________________________________________________________
(2 marks)
Total 20 marks

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SECTION C

Max and Emma plan to start the business with 4 000 kitchen tools. The cost of producing these is $2.00
per tool.

To operate the business for the first three months they will need money to cover the following expenses:

Rent - $1 500
Salaries - $15 000
Utilities - $1 200
Transportation - $2 400
Marketing - $5 000

Max and Emma estimate the sale of the 4 000 kitchen tools in the first three months at $15 per tool.

Together they have $15 000 of their own money. They hope to get the remainder from the bank.

FINANCIAL PLAN

10. Complete the projected Profit and Loss Statement below by inserting the missing values at (a), (b)
and (c).

Kitchen Tool & Time Saver

Profit and Loss Statement
For the (three-month) period ended 31 March 2013

$ $

Sales (a) ____________ (1 mark)

Less cost of goods sold ($2 × 4 000) 8 000

Gross profit 52 000

Less Expenses:

Rent 1 500

Utilities 1 200

Transportation 2 400

Salaries 15 000

Marketing 5 000

Total Expenses
(b) ____________ (1 mark)

Net profit/loss
(c) ____________ (1 mark)

(3 marks)

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11. (a) Identify TWO types of collateral that the business owners can offer the bank to secure the
loan.

______________________________________________________________________

______________________________________________________________________
(2 marks)

(b) List TWO other sources of capital that Emma and Max can use if the bank turns down their
loan application.

______________________________________________________________________

______________________________________________________________________
(2 marks)

12. Executive Summary

Write a brief summary of the case to include information from each section of the business plan.

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________
(3 marks)

Total 10 marks

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

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