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TEST CODE 02133032

FORM TP 2012226 MAY/JUNE 2012

CARIBBEAN EXAMINATIONS COUNCIL

ADVANCED PROFICIENCY EXAMINATION
MANAGEMENT OF BUSINESS
UNITl-Paper032
7 hour 30 minutes

21 MAY 2012 (pm.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This paper consists of a case study and THREE questions, ONE from EACH module.

2. Candidates MUST answer the THREE questions.

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3. Begin EACH answer on a separate page.

4. Each question is worth 20 marks.

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Copyright @ 2OII Caribbean Examinations Council
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All rights reserved.
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INSTRUCTION: Read the case study and answer the questions that follow.
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CASE STUDY I

Reliable Removal Enterprise

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Reliable Removal Enterprise is a partnership business that is operated by two brothers, John and Mark. The
business started in January 2009 with a staffcomplement of three persons: one driver, one clerical assistant
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and one cashier. The business has two removal trucks and a small van. Both brothers operate as managers
as well as drivers.
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Two years after the business started, the financial records revealed that although the business was not
operating at a loss, it was not making the profit anticipated by the brothers. They have decided to formalize r'
their operations, by setting both longterm and short-term objectives and constructing a mission statement
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for the business.

In March 2011, the business was offered two contracts, one to deliver dry goods from a company's
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to its various branches and the other to deliver cement from the hardware to different
headquarters
construction sites. Both John and Mark were excited about the offers.

"This is a dream come true" said John, since they were contemplating accepting both offers.

Mark shook his head in acknowledgement. "If we are to perform effectively on these two contracts, we
would have to employ at least one more driver and either lease or buy another truck," said Mark.

"Let us call a meeting with the stafl and get their input before making a decision," replied John.

"Great idea" exclaimed Mark. "Our present staff is very creative, loves recoguition for work well done,
works well in teams and enjoys challenging tasks that gives them a sense of achievement".
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"I believe that is what has contributed to our success over the years," replied John.

"If we are going to accept these two offers, we will need additional finance," said Mark. "Hence, we need t
to ensure that our accounting records are in order".
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"That's true" replied John. *nl+Of
"We have to se U"t*Sdff*Uirt"Ql4 working capital, or seek venture L-
capitat.,,
"Venture capital may not be appropriate for out$usineseikrnar*ed-Mark. lj
The two brothers went in the direction of the small space which they share as an office, with the usual look
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of determination and willingness to accept any possible challenges. L,

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GO ON TO TI{E NEXT PAGE

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1. (a) State whether Reliable Removal Enterprise is engaged in primary secondary or tertiary level
economic activity, giving ONE reason for your answer. [2 marksl

(b) (i) Define the term'partnership'. [2 marksl

(ii) Outline ONE advantage and ONE disadvantage thatJohn and Mark may experience
from operating a partnership type of business. [4 marks]

(c) (D Define the term'mission statement'. [2 marks]

(ii) Outline TWO ways in which Reliable Removal Enterprise may benefit from having
a mission statement. [4 marks]

(d) Explain ONE way in which EACH of the following could negatively impact Reliable
Removal Enterprise if the firm accepts both contracts:

(i) Human resource constraints [3 marks]

(ii) Financial conshaints [3 marksl

Total20 marks

2. (a) (D Define the term'motivation' [2 marksl

(ii) Identiff THREE positive assumptions made by John and Mark about the workers
that could be classified as motivational factors according to Hertzberg's and
Maslow's Theory of motivation. [3 marksl

(b) Describe the levels of 'Maslow's hierarchy of need' which are associated with EACH
assumption identified in (a) (ii) above. [6 marksl

(c) Explain THREE ways in which Reliable Removal Enterprise could benefit from a team-
oriented approach. [9 marks]

Total20 marks

GO ON TO THE NEXT PAGE

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John had mentioned the possibility of increasing the working capital of the business or seeking
venture capital. i-
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(a) (i) Define EACH of the following terms:

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a) Venture capital [2 marks]
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b) Working capital [2 marks] t-'

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(ii) Identiff THREE components of working capital. [3 marks]

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(b) Identiff FOUR possible sources of finance that Reliable Removal Enterprise could consider t-
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for the pending contracts. [4 marks]
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(c) Explain THREE criteria thatthe firm should take into consideration when choosing a source I
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offinance for the pending contracts. [9 marksl

Total20 marks I
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END OF TEST

IFYOU FINISH BEFORE TIME IS CALLED, CHECKYOTJR WORK ON THIS TEST.

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