Business 0450 · IGCSE · Enterprise, business growth and size
Enterprise, business growth and size — practice question
Ramford is a private limited company. The business runs four factories that produce a broad mix of food items, including breakfast cereal and ice cream. Its Finance Director is concerned about the company’s financial performance. She has read that many businesses failed during the last year. ‘I think we are suffering from diseconomies of scale’ she said. Ramford’s directors have decided to reduce the number of different products it makes from 80 to 10.
(a)[2]
What is the meaning of a ‘private limited company’?
(b)[2]
Identify two reasons why a business may fail.
(c)[4]
Identify and explain two diseconomies of scale that Ramford may be facing.
(d)[6]
Identify and explain two factors that Ramford should take into account when deciding which products to take out of its product range.
(e)[6]
Do you think the Finance Director is justified in being worried about Ramford’s financial performance in 2014? Support your answer with the data in Table 2 and the appropriate ratios.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A business whose shares are not offered for sale to the general public” …