Business 0450 · IGCSE · Business and the international economy
Business and the international economy — practice question
NBV is an international company with operations in several countries. It produces building materials such as bricks. In the previous year, NBV’s financial accounts reported capital employed as $144 billion. NBV operates in 18 countries and has a total workforce of 400 000. NBV suffers from some diseconomies of scale. All raw materials are bought from the countries where it operates so that exchange rate problems are avoided. NBV intends to open a factory in Country B for the first time. Some people believe this choice will create only disadvantages for other businesses in country B.
(a)[2]
Explain what the term ‘exchange rate’ means.
(b)[2]
Explain the meaning of ‘capital employed’.
(c)[4]
Identify and explain two ways NBV’s managers could use its financial accounts to support decision-making.
(d)[6]
Identify and explain two diseconomies of scale that NBV may encounter.
(e)[6]
Do you think NBV’s decision to build a factory will only create drawbacks for other businesses in country B? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The value/price of one currency expressed in another currency” …