AQA A-level BUSINESS Paper 2 2020 QP Business 2.

AQA A-level BUSINESS Paper 2 2020 QP Business 2. Materials For this paper you must have: • a calculator. Instructions • Use black ink or black ball-point pen. • Fill in the boxes at the top of this page. • Answer all questions. • You must answer the questions in the spaces provided. Do not write outside the box around each page or on blank pages. • Do all rough work in this answer book. Cross through any work you do not want to be marked. Information • The marks for questions are shown in brackets. • The maximum mark for this paper is 100. Please write clearly in block capitals. Centre number Candidate number Surname Forename(s) Candidate signature I declare this is my own work. A-level BUSINESS Paper 2 Business 2 2 *02* IB/G/Jun20/7132/2 Do not write outside the Answer all questions in the spaces provided. box 0 1 Read the information below and then answer the questions that follow. Drake Hotels PLC owns 20 budget hotels in the UK. Each one is located in a different city. The industry is very competitive and Drake’s managers all have an objective to help the business to be as efficient as possible. Drake Hotels PLC’s operating profit for the financial year 2019–20 was £18 million. Last month the company appointed a new Chief Executive, Mary Myers, to increase the profitability of the business. Mary was previously the Marketing Manager of an upmarket hotel chain. Mary is already considering an investment proposal for a luxury hotel in Oxford. This hotel would target overseas visitors who might want to visit the city. Drake Hotels has found a suitable building but needs to invest to develop it. Appendix A Investment appraisal results for the proposed investment into a new hotel in Oxford (based on net inflows for first eight years). Average rate of return 12% per year Net Present Value £25 million Source: Chief Executive Appendix B Sensitivity analysis for the new Oxford hotel investment proposal Two possible changes in the economy that might affect the investment appraisal results in Appendix A Estimated probability of this change happening The value of the pound against other currencies is 10% higher than originally forecasted. 20% The average GDP growth in overseas countries is 1.5% higher than originally forecasted. 30% Source: Chief Executive Appendix C Selected financial data for Drake Hotels PLC £ million as at 1 May 2020 Current assets 15 Current liabilities 18 Total equity 170 Non-current liabilities 280 3 *03* Turn over ► IB/G/Jun20/7132/2 Do not write outside the Appendix D Forecasted data for Drake Hotels PLC’s new Oxford hotel box investment proposal Initial investment required Estimated income elasticity of demand £20 million +2 Percentage of customers visiting from overseas 70% Estimated cost of borrowing for this investment 8% per annum Appendix E Room bookings by month and day of the week in Drake Hotels PLC’s budget hotels 2019 4 *04* IB/G/Jun20/7132/2 Do not write outside the box 0 1 . 1 Using the data in Appendix C, calculate the following ratios for Drake Hotels PLC in 2020. [6 marks] Current ratio Gearing ratio 0 1 . 2 Use Appendix B to explain one reason why Drake Hotels PLC has used sensitivity analysis for the investment proposal. [4 marks] 6 4 5 *05* Turn over ► IB/G/Jun20/7132/2 Do not write outside the box 0 1 . 3 Analyse the challenges the Human Resource manager faces as a result of the patterns of room bookings in Appendix E. [9 marks] Extra space 9 6 *06* IB/G/Jun20/7132/2 Do not write outside the box 0 1 . 4 Using the data, recommend whether Drake Hotels PLC should go ahead with the proposed investment. Justify your answer. [16 marks] 7 *07* Turn over ► IB/G/Jun20/7132/2 Do not write outside the box Extra space 16 8 *08* IB/G/Jun20/7132/2 Do not write outside the 0 2 Read the information below and then answer the questions that follow. box Nari Nari is a mobile phone manufacturer based in Asia. Although its brand name is not as strong as the Apple iPhone, Nari’s phones sell at much lower prices which make them competitive. Nari adds new features to its phones and develops new models every few months. The company has an objective of 95% of sales from products launched in the last year. It has relatively low profit margins but high sales volumes. To win business, Nari promises the retailers that sell its phones a lead time of 48 hours; any delay results in a major discount for the retailers on the products they have ordered. To achieve low prices and still be profitable, the company focuses on being more efficient than its rivals. The company has a ‘Just in Time' approach to manufacturing. It has a global supply chain with hundreds of different suppliers of components based in more than 50 countries. These components are delivered using a variety of transportation methods every few hours from all over the world to its assembly factories in China. Some of Nari’s suppliers have factories based in emerging economies. The managers of a number of these suppliers use Taylor’s motivation theory to motivate their employees. The company invests heavily in projects to help local communities where it is based. It contributes some of its profits every year to charities and provides significant finance for initiatives to protect the environment. Nari has recently experienced protectionism in its European markets as governments have limited the number of phones it can sell in their countries. Regional breakdown of Nari’s global sales in 2019 % USA 5 Asia 55 Europe 30 Rest of the world 10 .