10

Business organisation

Activity (p. 116)

Students own answers.

Activity (p. 118)

Students own answers.
The aim of the activity is for students to investigate MNCs in their own country
and to use their understanding of MNCs to make a judgement about whether the
benefits outweigh the costs.

Exam practice (p. 118)

1 The characteristics of a multinational corporation include:
l headquarters in one country and branches/shops or offices in more than one
country
l often an internationally recognised brand name
l usually large in size.

Award 1 mark per characteristic to a maximum of 3.

2 The benefits of a MNC operating in the UAE include:
l There are employment opportunities for local citizens in shops, hotels,
engineering, and law and accountancy firms.
l The MNC may become a customer of local firms, e.g. internet services,
stationery for the firm, local suppliers of raw materials, advertising.
l The MNC may pay tax on its profits to the government of the host country.
l Workers employed in the firm may learn new skills which are transferable to
other businesses.
l The MNC may introduce new technology to the host country.
l The shops and hotels attract tourists to Dubai which increases exports.
l There is a greater choice of goods and services for consumers.

The costs of a MNC operating in Dubai include:

l The employment opportunities may be for mainly unskilled jobs and more
skilled jobs may be given to overseas workers from the host country and not to
locals.
l The MNC may use suppliers from their home country.
l The MNC may be powerful and cause the government to make decisions
about issues, e.g. road building and transport routes, which favour the MNC
over local people.
l The government may use tax revenue to pay for grants to encourage MNCs to
locate in the country.
l The MNC may damage local culture, e.g. McDonalds, Starbucks and clothing
chain stores.
Award 12 marks for an answer that shows limited understanding of the costs
and benefits of MNCs locating in Dubai.
Award 34 marks for an answer that displays good understanding, although lacks
detail in places. Award up to 4 marks for an unbalanced answer. Reference must
be made to the case study.
Award 56 marks for a detailed answer that is well balanced and clearly discusses
the benefits and costs of an MNC locating in Dubai.

Cambridge IGCSE and O Level Economics Hodder & Stoughton 2013 1

 10 Business organisation

Activity (p. 120)

Students own answers.
A useful website for this activity, from the International Cooperative Alliance: http://
ica.coop/en/get-involved/storiescoop
The aim of the exercise is for students to consider the differences between a co-
operative and a profit-making firm.

Activity (p. 122, both)

Students own answers.
The aim of the exercise is for students to investigate the size of the public sector
in their economy and the goods and services it provides. They can also consider
which goods are merit goods, which goods need to be provided by the public sector
because it is impossible to make a profit from their provision, e.g. street lighting
and road signs (public goods), and which goods can be provided by the private and
public sectors, e.g. education and health care, museums and parks.

Activity (p. 124)

Students own answers.
The aim of the exercise is to encourage students to analyse the types of business
organisation in their area. They need to think critically to decide which, if any, type of
organisation is dominant.

Exam practice (p. 124)

1 Aims of a private sector company include: to make a profit, to increase market
share, to become the market leader and to have a reputation as being the best in
the industry.
Aims of a public corporation include: to provide a good or service to the general
public.
2 Private sector houses will:
l differ in style and size and cater for a range of tastes
l range in price from low to high
l require buyers to take out a mortgage to purchase the property
l be on sale to anybody
l be owned by the buyer of the property.

Houses provided by housing co-operatives will:

l tend to be similar in style
l cater for those on lower incomes
l tend to be affordable to those on lower incomes
l be owned by members of the co-operative
l be owned by the co-operative.

Award 12 marks for an answer that shows limited understanding.

Award 34 marks for an answer that displays good understanding of both private
sector housing and that provided by a housing co-operative but may lack detail.
Award up to 4 marks for an unbalanced answer.
Award 56 marks for a well-balanced answer that clearly discusses how housing
provided by the private sector and by a housing co-operative may differ.

Cambridge IGCSE and O Level Economics Hodder & Stoughton 2013 2