Business 0450 · IGCSE · Enterprise, business growth and size
Enterprise, business growth and size — practice question
KTF manufactures building materials, such as cement and bricks. In the last year, KTF achieved sales of $25bn. Since it was established 60 years ago, KTF’s objectives have frequently altered. The Managing Director wants KTF to grow. KTF plans to acquire one of its major rivals. The larger business will record combined sales of $40bn. The Managing Director remarked: ‘Many stakeholder groups will be affected by this decision.’ She is aware that a number of external influences shape business activity, including the business cycle, interest rates and laws that protect the environment.
(a)[2]
Define what is meant by ‘business cycle’.
(b)[2]
Identify two reasons why a business may alter its objectives.
(c)[4]
Outline one advantage and one disadvantage to KTF of acquiring the other business.
(d)[6]
Explain how two external stakeholder groups could be influenced by the takeover.
(e)[6]
Do you think firms will be more affected by new legal controls to protect the environment than by a rise in interest rates? 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: “Variations in economic activity over time” …