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FORM TP 2014230 TESTCODE02233010

MAY/JUNE 2014
CARIBBEAN EXAMINATIONS COUNCIL
CARIBBEAN ADVANCED PROFICIENCY EXAMINATION®
MANAGEMENT OF BUSINESS

Unit 2- Paper 01

1 hour 30 minutes

( 27 MAY 2014 (a.m.) )

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This test consists of 45 items. You will have 1 hour and 30 minutes to answer them .
2. In addition to this test booklet, you should have an answer sheet.
3. Do not be concerned that the answer sheet provides spaces for more answers than there are
items in this test.
4. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item
you are about to answer and decide which choice is best.
5. On your answer sheet, find the number which corresponds to your item and shade the space
having the same letter as the answer you have chosen. Look at the sample item below.

Sample Item

Which of the following actions CANNOT be taken by a trade union?

Sample Answer
(A) Picket
(B)
(C)
Strike
Go slow
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(D) Lock out

The best answer to this item is "Lock out", so answer space (D) has been shaded.

6. If you want to change your answer, be sure to erase it completely before you fill in your new
choice.
7. When you are told to begin, turn the page and work as quickly and as carefully as you can.
If you cannot answer an item, omit it and go on to the next one. Your score will be the total
number of correct answers.
-
i iiiiii 8. You may do any rough work in this booklet.

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9. You may use silent non-programmable calculators to answer questions.

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- 02233010/CAPE 2014
Copyright © 2011 Caribbean Examinations Council
All rights reserved.
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1. The term 'modularization' refers to the 6. Which of the following is a disadvantage

of job production?
(A) last stage of product development
(B) sharing of common data and. (A) Labour costs will be high if
processes production is labour intensive.
(C) designing of products in sections (B) Workers tend to be less motivated
and components because of repetition of work.
(D) small scale production for (C) It is not possible to offer a wide
mechanical and electronic variety of goods to meet
devices consumers ' needs.
(D) There will be high levels of stock
in the form of unfinished goods
2. The type of forecast that projects a
at each stage of the process.
company's sales over a period oftime can
be classified as
7. By introducing a new design in an effort
(A) demand
to make a product more efficient while
(B) technical
maintaining or increasing consumer appeal,
(C) economic
a manufacturer is actually adding
(D) production
(A) cost
3. The term ' Labour turnover ' may BEST be (B) value
defined as the (C) viability
(D) competition
(A) recruitment and selection of
workers
(B) number of workers who enter a firm 8. Which of the following is the MOST
(C) rate of redundancy in an organisation appropriate method for measuring efficiency
(D) rate at which workers enter and ofproduction ina capital-intensive industry?
leave an organization
(A) Profit per employee
4. Which of the following techniques would (B) Sales per employee
improve quality in a business without (C) Output per machine
directly involving the business' employees? (D) Output per employee

(A) Kaisen
(B) Outsourcing 9. Which of the following are advantages of
(C) Quality circles a Just-in-Time Production System?
(D) Research and Development
I. Better work flow
II. Reduced inventory and set-up time
5. The term 'productivity ' is BEST defined as III. Quick responses to changes in
the demand

(A) level of output of goods (A) I and II only

(B) amount of goods manufactured (B) I and III only
(C) rate of production of goods in a firm (C) II and III only
(D) ratio of the scale of production to (D) I, II and III
a level of irwut

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10. Which of the following layouts is MOST 11 . A product is measured by its conformity to
suitable for the printing of primary school
textbooks? (A) product standards
(B) producers' standards
(A) Process (C) a variety of features
(B) Cellular (D) customer expectations
(C) Production
(D) Fixed position

Item 12 refers to the network diagram below.

E
3

3IF

D
4

12. Which ofthe following is the MOST appropriate method for measuring efficiency of production
in a capital-intensive industry?

(A) Output per machine

(B) Sales per employee
(C) Profit per employee
(D) Output per employee

13. Which of the following forecasting 15. The fact that an employee can quickly
techniques uses a group process that allows remove and replace the ink cartridge of
experts to make forecasts? a printer is a result of the design strategy
known as
(A) Delphi method
(B) Consumer surveys (A) integration
(C) Sales force composite (B) disassembly
(D) Least square regression (C) miniaturization
(D) modularization

14 . Which ofthe following is NOTa dimension

of quality? 16 . A segment of the population selected to
.l
representthe population as a whole is called
(A) Reliability
(B) Durability (A) a census
(C) Affordability (B) a survey
(D) Conformance, (C) a sample
(D) an experiment

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17. 'Perfume Palace ' recently sent its sales staff 22. Which of the following is NOT a function
into nearby districts to distribute leaflets of the marketing communication of a
offering discounts and buy-one-get-one free company?
on several of its products. This marketing
action is BEST described as (A) Differentiating its product or
service
(A) publicity (B) Informing about its products and
(B) personal selling services
(C) sales promotion (C) Stimulating demand for its products
(D) media advertising and services
(D) Informing about competitors'
products and services
18. Penetration pricing refers to

(A) adding a percentage of profits to 23. The pricing method that uses the buyer's
the total cost point of view regarding the worth of a
(B) following the pricing strategies of product is called
the market leader
(C) charging more than competitors for (A) cost-plus pricing
a status product (B) going-rate pricing
(D) reducing the price of a product to (C) break-even pricing
attract customers (D) value-based pricing

19. Which of the following is NOT a Item 24 refers to the following diagram of
characteristic of a service? a Product Life Cycle.
(A) Uniformity Sales
(B) Intangibility $ III
(C) Perishability
(D) Inseparability
IV

20 . The collection of businesses and products

held by a company is known as

(A) strategic planning 24. What stage of the product is indicated by

(B) portfolio analyses III?
(C) a business portfolio
(D) a strategic business unit (A) Growth
(B) Decline
(C) Maturity
21. When a business sets very low prices, (D) Introduction
which of the following pricing objectives
is it seeking to achieve?

(A) Business survival

(B) Market share leadership
(C) Product quality leadership
(D) Current profit maximization

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25. Which of the following variables is the 30 . A consumer goods manufacturer who used
EASIEST to measure? a one-level channel is MORE likely to be
using which types of intermediary?
(A) Geographic
(B) Behavioural (A) Retailer
(C) Demographic (B) Distributor
(D) Psychographic (C) Wholesaler
(D) Commission agent

26. At which stage of the product life cycle

31. John, a small business operator, IS
does a product experience rapid market
organizing his financial records . In
acceptance and increasing profits?
recording transactions, the accounts of
his creditors are placed in which of the
(A) Growth
following ledgers?
(B) Maturity
(C) Introduction
(A) Cash
(D) Product development
(B) Sales
(C) General
(D) Purchases
27 . In addition to selling appliances, Delmar 's
Furniture Ltd offers delivery, installation
and repair services, warranties, showrooms 32. Which of the following is NOT a
and waiting areas . Which of the following characteristic of a successful entrepreneur?
types of product BEST describes this offer?
(A) High energy level
(A) Core (B) Fear of the unknown
(B) Actual (C) Internal locus of control
(C) Hybrid (D) Tolerance for ambiguity
(D) Augmented
33. Small firms that are organized as sole traders
may find it difficult to access much needed
28. Observations, experiments, focus groups
capital mainly because
and surveys are all examples of
(A) they do not have limited liability
(A) desk research
(B) their workforce is usually inefficient
(B) test marketing
(C) primary research (C) they do not keep accurate records
of their activities
(D) secondary research
(D) customers prefer to purchase goods
from larger firms
29 . The type of sampling whereby every
member of the population has a known 34 . Which of the following documents of a
chance of selection is called 'start-up' business would beofGREATEST
interest to a commercial bank?
(A) probability sampling
(B) non-random sampling (A) Balance Sheet
(C) convenience sampling (B) General Journal
(D) non-probability sampling (C) Income Statement
(D) Cash flow Statement

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35. One primary risk associated with bonds is Items 39-40 refer to the following scenario.

(A) investment Shelly has recently acquired an inheritance.

(B) interest rate She has always wanted to establish her own
(C) loan payment mini-mart and finally has the necessary
(D) insurance premium finances . However, she is undecided
whether to start her own or purchase an
existing one which is for sale in her town.
36. The Intellectual Property Rights provision
that covers areas relating to musical pieces 39. One MOST likely advantage to Shelly of
and technical drawing is called buying the existing business is that it

(A) patent (A) requires less finance

(B) copyright (B) has existing customers
(C) trademark (C) will be more profitable
(D) industrial design (D) will be easier to manage

37. The term 'entrepreneurship' is BEST 40. One risk that Shelly might encounter is
defined as
(A) shorter start-up time
(A) accessing capital (B) poor reputation of the business
(B) making profits at all cost (C) the need to register the business
(C) identifying the factors of production (D) existing structure ofthe business
(D) using scarce resources to establish
business entities
41. By conducting sales forecasting, an
entrepreneur is seeking to determine
38. Patents represent a strategic asset to a
business by (A) how much of a product will be sold
(B) how successful the business will be
(A) protecting an innovative new (C) if there is sufficient demand for a
product product
(B) advertising an innovative new (D) if the product will be popular
product among the users
(C) reducing the cost of an innovative
new product
(D) allowing another business to copy
an innovative new product

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Items 42-43 refer to the following scenario. 44. The MAIN benefit of e-commerce to the
entrepreneur is
Mrs Chang has recently opened a small
restaurant. At the end of the first week of (A) access to a larger market
operations, she realises that she does not (B) higher levels of profitability
have sufficient cash to pay her two workers. (C) reduction in production costs
(D) improvement in product quality
42 . The scenario above illustrates a
!
\ (A)
(B)
high gearing position
low rate of stock turn
45. Which ofthe following is anADVANTAGE
of a franchise agreement to a franchisee?
(C) low return on investment
(D) working capital deficiency (A) Skilled workforce
(B) High market share
(C) Payment of royalties
43. The BEST way for Mrs Chang to improve (D) A recognised product
her situation is to

(A) seek a bank overdraft

(B) mortgage the restaurant building
(C) sell shares on the stock exchange
(D) approach a bank for a long term
loan

END OF TEST

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

0223301 0/CAPE 2014