ZIMBABWE SCHOOL EXAMINATIONS COUNCIL

General Certificate of Education Advanced Level

MANAGEMENT OF BUSINESS 9198/2

PAPER 2

NOVEMBER 2004 SESSION 3 hours

 Section A Data Response [25 marks]

Answer all questions.

Read the passage below and answer the questions that follow.

Shasha Marketing (Pvt) Ltd

Shasha Marketing (Pvt) Ltd was formed in 1996. The young and vibrant company is
located in Bulawayo and specializes in manufacturing leather goods. The company is
currently serving the local market but intends to open more branches in other countries to
increase the firm’s market share. A research specialist has carried out research in three
different countries that the firm has shown interest in. The following information on the
three countries is provided:

Characteristics Country A Country B Country C

Population 5 million 11 million 3,5 million

Literacy rate 32% 74% 49%
Infrastructure Well developed Poor Poor
Political
environment Stable Unstable Unstable
Government policy Requires 50% stake Tax holidays for the
on foreign No clear – cut in all foreign owned first 5 years of
investment policy businesses investment

The information given on page 3 relates to the forecasts of the firm’s operations in its
first three years if it opens a branch in any of the countries. Costs relate to initial costs of
establishing a branch in each country.
Country Probability Pay off ($) Cost ($)
A Success 0,5 3 million 100 000
Failure 0,5 1 million
B Success 0,75 2 million 200 000
Failure 0,25 1 million
C Success 0,6 3 million 100 000
Failure 0,4 2 million

1. (a) If Shasha Marketing (Pvt) Ltd were to establish branches in all the three
countries, draw an organizational chart with levels of authority to illustrate its
new structure. [4]

(b) (i) With the aid of a decision tree diagram, advise the management of
Shasha Marketing (Pvt) Ltd the country in which they should open
a new branch. [6]

(ii) From your result in b(i) above, and any other information, would
you still advise the firm to locate in that country? Justify your
answer. [7]

(c) Evaluate the benefits likely to be enjoyed by Shasha Marketing (Pvt) Ltd
if it expands into other countries. [8]

Section B Essays [75 marks]

Answer any three questions from this section.

2. Evaluate the statement that ‘assisting small businesses is uneconomic because it

goes against economies of scale’. [25]

3. (a) Explain why and how the concept of market segmentation may be of value
to the marketing department of a large business. [10]

(b) Evaluate the importance of packaging in the marketing of a product. [15]

4. Evaluate the usefulness of any three investment appraisal techniques that might be
used by a firm when choosing between two investment projects. [25]
5. (a) In your opinion, is knowledge of price elasticity of demand of any
business relevance to farmers? [10]

(b) Evaluate the effectiveness of any three pricing strategies that can be used
by a marketing manager when launching a new product. [15]

6. A construction company has been contracted to build a factory shell in Gwanda.

How and to what extent can network analysis be useful in managing the project?
[25]

7. (a) Explain how leadership styles can affect communication in an

organization. [10]

(b) Evaluate the view that ‘financial incentives constitute the most important
factor in determining worker performance’. [15]

8. (a) Of what importance are the gearing ratios to the management team and
potential investors of a company? [10]

(b) A soft drink manufacturer wishes to acquire a new distribution truck.

Evaluate any three possible sources of finance that the firm can use to
acquire the truck. [15]

9. Assess the likely effects the following might have on reported profits:

(i) straight line and diminishing balance methods of depreciation, [9]

(ii) LIFO and FIFO methods of stock valuation, [9]

(iii) accruals concept. [7]

10. (a) Discuss the legal and ethical constraints experienced by businesses in your
country. [12]

(b) Evaluate the contribution made by multinational companies to the

economy of your country. [13]