Commerce Revision

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1. Which service can be used to hold a face-to-face meeting between people in
different places?
A fax
B radio paging
C telephone
D video conferencing

2. A company plans to introduce a new product.
Which method of communication should reach the greatest number of people?
A creating a website on the internet
B sending a circular letter to existing customers
C talking to interested people at a trade exhibition
D telephoning retailers and wholesalers

3. Two groups of people are linked by telephone.
What is this meeting called?
A teleconference
B teletext
C videoconference
D voicemail

4. Mrs Virji employs ten staff in her business and she wishes to discuss with them a
new bonus payment scheme.
What method of communication is she most likely to use?
A e-mail
B staff meeting
C staff notice-board
D telephone

5. Which postal service would give compensation for a gold necklace lost in the post?
A business reply service
B letter post
C parcel post
D registered post

6. Smoking may be harmful to your health
Which type of advertising does this statement represent?
A comparative
B competitive
C informative
D persuasive
7. How does a computer assist communication and trade in the global economy?
A It allows a communication network to be established within a multinational
company.
B It enables rapid communication between traders using email.
C It encourages trade between buyers and sellers in the same country.
D It provides a means of delivering goods to many parts of the world.
8. The diagram shows a method of communication.

Which method of communication is it?
A email
B fax
C intercom
D telephone
9. A parcel is sent by ordinary post.
On what is the charge based?
A bulk
B shape
C value
D weight

10. What is the aim of most advertising?
A to create employment
B to persuade customers to buy
C to provide consumer choice
D to reduce costs








11. This advertisement is for sports shoes.

Which method of appeal would be best for this advertisement?
A ambition
B friendship
C hero worship
D social acceptance
12. What is the main reason for the growth of advertising on the Internet?
A Advertisers’ websites are very cheap to set up.
B Consumers can order goods any time using the Internet.
C Every household has access to the Internet.
D Internet users like watching the advertisements.
13. Why are communications important in the global economy?
A for speed of transmission
B for using satellite links
C to keep efficient records
D to send email attachments
14. Which person would be most likely to use the postal service called Poste Restante?
A. a clerk on a month’s leave at home
B. a city mayor on a holiday weekend
C. a doctor visiting a patient at her home
D. a salesperson working in an outlying area for a month
15. Which method of transport would be used to send oil from an inland well to a port
located 500 km from it?
A pipeline
B rail
C road
D waterway
16. What is meant by ‘a bill of lading is a quasi-negotiable instrument’?
A Goods do not belong to any one person.
B Goods have been paid for and collected.
C Ownership of the goods is transferable.
D The importer has claimed the goods.

17. What is a responsibility of a port authority?
A checking the movement of people coming into and going out of the
country
B maintaining runways and hangars for aircraft
C providing office space and warehouses
D supervising the movement of imported and exported goods

Hartzell Associates is a public limited company that owns livestock farms and meat
processing factories in several countries.
(a) Explain two benefits to Hartzell Associates of being a public limited company. [4]
(b) Hartzell Associates needs communication between its head office and its farms. In
what circumstances would the company’s staff make use of:
(i) telephone rather than email [2]
(ii) video-conferencing? [2]
(c) Hartzell Associates makes use of both collective advertising and persuasive advertising
when selling its meat. Explain the differences between these two types of advertising. [4]
(d) How important is protection of the consumer to Hartzell Associates? Give reasons for
your opinion. [4]
(e) Hartzell Associates’ accountant has reported that there is insufficient working capital.
(i) State two purposes of working capital. [2]
(ii) State two ways in which the amount of working capital available might be increased.
[2]

Possible answers
(a) Any two benefits explained x 2 marks:
• limited liability for shareholders – personal assets protected
• access to large amounts of capital – anyone can invest through stock exchange
• no upper limit to number of shareholders so easier to raise capital
• continuity of existence although ownership of shares may change
• controls imposed e.g. by stock exchanges make investors more willing to invest in
them
• legal entity so directors could not be sued personally.
Any other relevant benefit explained. [4]

(b) (i) Any two points x 1 mark each or one circumstance described x 2 marks:
• when a discussion is needed
• when decisions need to be made quickly/immediate feedback is required
• when a particular person is required quickly/give urgent message
• when email is not available/not working
• for personal calls.
Any other relevant circumstance/example. [2]

(ii) Any two points x 1 mark each or one circumstance described x 2 marks:
• when a meeting is needed involving people in several different places
• when there is insufficient time for travelling
• when decisions need to be made involving several people in different places
• when costs of travel/accommodation need to be saved
• so that the body language of participants can be observed.
Any other relevant circumstance/example. [2]

(c) Any four points x 1 mark each that shows the differences:
• collective advertising is advertising of a particular product e.g. meat
• by all the producers acting together to promote that particular product
• persuasive advertising is advertising of a particular brand or product + example
• to persuade the consumer to buy that product rather than another product or
brand.
Any other relevant point. [4]
NB 2 marks max for each type of advertising.

(d) Level 2 (3–4 marks)
Has shown the level of importance of the protection of the consumer in context and
presented a reasoned argument.
(If a candidate has considered consumer protection with no context or not shown the
level of importance, award 3 marks max)

The consumer is very important to Hartzell Associates as the consumer is the person who
buys the meat and without which there would be no sales and no profits.
Hartzell Associates needs to make sure that consumers are protected against poor quality
meat,
mis-description and incorrect weights, otherwise they will complain and will not buy the
products.
Consumer protection is, therefore, very important, otherwise consumers will buy
elsewhere.
Level 1 (1–2 marks)
Has commented on the importance of the consumer and/or consumer protection in/not
in context.
Hartzell Associates needs consumers. They buy the products. These consumers need to
be protected. HA is not involved in this. Consumers should look after themselves. [4]

(e) (i) Any two purposes of working capital x 1 mark each:
• definition = 0 marks
• to maintain cash flow
• to pay for daily expenses/day to day running + example (2)
• to meet unexpected payments
• to take account of seasonal fluctuations in HA’s sales revenue.
Any other relevant point. [2]

(ii) Any two ways x 1 mark each:
• try not to overstock/holding too much feed
• be more efficient
• have less wastage
• reduce the time given for payments by debtors
• try to extend the time taken to pay creditors
• reduce short-term borrowing/reduce overdraft
• improve sales – more income
• sell off assets.
Any other relevant way. [2]

Mrs Hartzell owns a small computer business. She sells computers and software, and
offers a repairs and maintenance service. She needs to advertise and promote her
business.
(a) Distinguish between advertising and sales promotion. [4]
(b) Mrs Hartzell could use television advertising or advertisements in local newspapers to
increase trade. Which would you recommend? Give reasons for your answer. [6]
(c) Should Mrs Hartzell create a website on the Internet for her business? Give reasons for
your answer. [3]
(d) Mrs Hartzell needs to communicate with her customers. Name one method of
communication and explain why she would use this. [3]
(e) Mrs Hartzell receives trade discount from her suppliers and gives cash discount to her
customers.
Explain the benefits of these two types of discount to Mrs Hartzell. [4]

(a) Any four points x 1 mark each or 2 well developed points –
advertising is part of sales promotion
advertising is the spreading of information using the most persuasive methods
sales promotion is any attempt to boost sales either during a special occasion or for
a limited
period of time
it may be used to launch a new product/counter competition/counter falling sales
worthwhile example of either advertising or sales promotion
Any other relevant point [4]

(b) Level 3 (5-6 marks)
Has discussed the arguments for local newspapers and against using television and
has given a reasoned recommendation.
E.g. Mrs Hartzell owns a small business so television would not be appropriate as it
is very expensive and appeals to a mass audience.
Mrs Hartzell’s business probably operates in a small area and offers various
services.
She needs an advertising method that is reasonably priced as she is likely to be on a
limited budget.
She wants to be able to give information about the services
she provides so that people can refer to the information when they want to.
She may also consider other advertising media which are also cheap such as
leaflets.

Level 2 (3-4 marks)
Has given the advantages/disadvantages of using television and/or local
newspapers with a
recommendation. NB Max. L2 if chosen television.

E.g. Television is very expensive.
It would give visual display of Mrs Hartzell’s services.
I would recommend local newspapers.
They cover the area where Mrs Hartzell is located.
They are cheaper than television.
She can advertise regularly.
Level 1 (1-2 marks)

Has made some comments on using newspapers/television (no context).
E.g. Television is expensive.
The advert would be seen for only a few seconds.
Newspaper adverts give details.
They may be grouped on a particular page. [6]


(c) Any three points x 1 mark each either for or against or both –
Arguments for having a website –
Will help her to become better known
Should have a website as she operates a computer business
Competitors may have websites
Many of the customers use the Internet
Can give details of the services she offers
Increases sales
Email opportunities
Arguments against –
May not have the skills to set it up
May be costly to set up
Customers may not use it
Competitors can access it to see what Mrs Hartzell is offering
Increases complaints
Any other relevant point [3]
(d) Any one method of communication x 1 mark + two marks for reasons for use –
(NB Speed, ease of use, cheapness, 0 marks unless qualified)
email – computer business, most customers likely to be on-line
fax – may want to send invoices to customers, produces a replica of document
mobile phone – enables her to contact people while she is out of the shop, can
send text messages
telephone - may want to discuss a problem with a customer, immediate contact
letter – provides written evidence, can give detailed information
oral
Any other relevant method of communication [3]

(e) Any four benefits x 1 mark each or two benefits well developed x 2 marks each –
(NB candidates must score at least one mark on cash or trade discount to obtain
full marks)
trade discount – enables her to make a profit by selling at an increased price
not reliant on paying promptly
encourages her to make bulk purchases
cash discount – encourages prompt payment from her customers
enables her to improve her cash flow
allows her to take advantage of cash discount offered by her suppliers
may reduce danger of bad debts
may encourage customers to use her business rather than another

Any other relevant point including definitions 1 mark each [4]

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