Business Management 1995 WASSCE-Past Questions and Answers-WAEC

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Business Management 1995 WASSCE
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WASSCE Past Questions and Answers for Business Management 1995 is a learning resource. This learning resource has been designed to help students to pass their exams in the above stated examining body. I believe you are imagining what our website can offer you? If so, then just wait and see. Read more.

 

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General Overview

WASSCE Past Questions and Answers for Business Management 1995 is a learning resource. This learning resource has been designed to help students to pass their exams in the above stated examining body. I believe you are imagining what our website can offer you? If so, then just wait and see. Also, have you had challenges trying to learn, write or pass your WAEC BM paper? If the answer is yes, then I can assure you that educareguide is here to help and guide you.

 

We are here to encourage you that you can easily pass this subject. Firstly, we have a lot of links to assist you to get enough details.  Truly, this will help you to gain enough knowledge and understanding to pass your examination. Secondly, we have materials on various topics, sub-topics relating to this subject area. Therefore, our site is very helpful to Senior High School Student across the West African sub-region. Notably, these countries are Nigeria, Ghana, Sierra Leone, The Gambia and Liberia.  Moreover, these students rely on our guide and pass the WASSCE Business Management Examination. In detail, check the questions and the answers just below.

 

 

The Nature of the Examination

There are two Papers in the examination, (and these are Paper 1 and Paper 2). In detail, there are two sections in the Paper 1 (i.e. Section A and Section B). Section A is an Objective Test and Section B is Theory Test. There are 50 questions in the Objective test, and there are 7 question in the theory Section. Consequently, there are 10 questions in the Paper 2. To explain more, the question 1 is a Case Study. To explain, there are some question under the case to test the student’s understanding. Finally, the other 9 theory questions are also theory questions.  They are asked to tests the student’s general understanding of the subject are.

 

The Summary of the Paper

The WASSCE Business management Paper for 1995 can summarized below:

  • 1995 WASSCE Business Management Paper One – Section A;
  • 1995 WASSCE Business Management Paper One – Section B;
  • 1995 WASSCE Business Management Paper Two

 

Business Management 1995 WASSCE-Past Questions and Answers Paper 1

 

Business Management 1995 WASSCE-Past Questions and Answers- Paper 1 – Section A

 

Let me show you how to find the answers to the Business Management Questions – Paper 1, Section A. To clarify that, when you read a question, just click on this symbol (˅) that follows the question. After doing so, the answer will drop down for you. In fact, it is a very simple task. However, for the purposes of evaluating yourself, you may want to answer the before reviewing the suggested answer (or solution)

 

  1. When a computer keeps data until it is required at a later date, it is performing the function of     
    C    is the answer -Business Management 1995 WASSCE
    1. Processing
    2. Receiving
    3. Storage
    4. Retrieval

 

  1. All the following form part of promotion of a product except

    B    is the answer -Business Management 1995 WASSCE

    1. advertising
    2. distribution channels
    3. personal selling
    4. publicity

 

  1.   Which of the following does not form part of the fringe benefits of a worker?
    D    is the answer -Business Management 1995 WASSCE
    1. Housing facilities
    2. Medical services
    3. Canteen services
    4. Wages and salaries

 

  1. In personnel management, the final choice of an applicant among the lot to fill a vacant position is referred to as   
    D   is the answer -Business Management 1995 WASSCE
    1. appraisal
    2. interview
    3. recruitment
    4. selection

 

  1. Which of the following is an aspect of the controlling function in a business?    
    A  is the answer -Business Management 1995 WASSCE
    1. Monitoring productive activity
    2. Making plans for future tasks
    3. Allocating duties to workers
    4. Ensuring that two different sections work in harmony

 

  1. All the following are applications of the computer in business except    
      A is the answer -Business Management 1995 WASSCE
    1. arranging business meetings
    2. word processing
    3. analysing information
    4. retrieving data

 

  1. Protective clothing for factory workers can be classified under     
    B   is the answer -Business Management 1995 WASSCE
    1. collective bargaining
    2. health and safety
    3. labour relations
    4. housing

 

  1. The last link in the distribution channel is the      
       C  is the answer -Business Management 1995 WASSCE
    1. manufacturer
    2. consumer
    3. retailer
    4. wholesaler

 

  1. Which of the following is the second stage in a product’s life cycle?   
     is the answer -Business Management 1995 WASSCE
    1. Growth
    2. Maturity
    3. Introduction
    4. Decline

 

  1. Which of the following is a short-term source of business finance?   
    C   is the answer -Business Management 1995 WASSCE
    1. Debentures
    2. Shares
    3. Bank overdraft
    4. Mortgage loans

 

  1. To which of the following does the printer of a computer belong?   
    D  is the answer -Business Management 1995 WASSCE
    1. Disk
    2. Input device
    3. Scanning device
    4. Output device

 

  1. The share of the market controlled by each firm is known as    
    is the answer -Business Management 1995 WASSCE
    1. market segment
    2. market position
    3. market sector
    4. market division

 

  1. All the following are functions of the retailer except   
    D  is the answer -Business Management 1995 WASSCE
    1. packaging
    2. breaking bulk
    3. after-sale service
    4. manufacturing products

 

  1. Which of the following are involved in the organizing function of business?   
    Aanswer -Business Management 1995 WASSCE
            1. Duties
            2. Authority
            3. Monitoring
            4. Responsibility
    1. I, II and W only
    2. II, III and IV only
    3. I, III and IV only
    4. I, II and III only

 

  1. In production, minerals and timber can be classified under   
    A answer -Business Management 1995 WASSCE
    1. land
    2. labour
    3. enterprise
    4. capital

 

  1. Under which form of production will mining of bauxite fall?   
    B  answer -Business Management 1995 WASSCE
    1. Constructive
    2. Manufacturing
    3. Extractive
    4. Commercial

 

  1. Mortgage is a source of  
      D  –   answer -Business Management 1995 WASSCE
    1. short-term finance
    2. medium-term finance
    3. perpetual finance
    4. long-term finance

 

  1. The form of business ownership in which every member is entitled to one vote irrespective of shares held is   
    answer -Business Management 1995 WASSCE
    1. partnership
    2. limited liability company
    3. co-operative society
    4. public corporation

 

  1. All the following are characteristics of a private joint-stock company except that   
    C  –    answer -Business Management 1995 WASSCE
    1. there is no public auditing of its accounts
    2. its shares are not transferable publicly
    3. it is required by law to publish its accounts
    4. it cannot advertise its shares to the public.

 

  1. Which of the following is an advantage of specialization?   
    D –   answer -Business Management 1995 WASSCE
    1. it brings goods to the doorsteps of consumers
    2. it ensures higher productivity at higher cost
    3. workers become less efficient in their work
    4. prices of goods get lower

 

  1. The main business of the Stock Exchange is to   
    Aanswer -Business Management 1995 WASSCE
    1. provide market for the sale and purchase of shares
    2. give business information to the general public
    3. bring the consumer and producer together
    4. regulate trade and commodities

 

  1. The amount of money which bank charges its customers for advancing credit facilities to them is known as   
    Banswer -Business Management 1995 WASSCE
    1. overdraft
    2. interest
    3. commission
    4. bank charge

 

  1. All the following are qualities of a Manager except that   
    Danswer -Business Management 1995 WASSCE
    1. he should be generally knowledgeable
    2. he must be flexible in order to accommodate diverse views
    3. he should be firm in his decisions
    4. he should always favour some employees

 

  1. Which of the following is not a form of organizational structure?    
    B answer -Business Management 1995 WASSCE
    1. Committee organization
    2. Straight organization
    3. Line organization
    4. Staff organization

 

  1. Communication between managers at the same level of authority is referred to as   
    Danswer -Business Management 1995 WASSCE
    1. diagonal communication
    2. internal communication
    3. vertical communication
    4. horizontal communication

 

  1. Specialization in business functions is to the same as   
    Banswer -Business Management 1995 WASSCE
    1. line of communication
    2. division of labour
    3. running specialized companies
    4. decentralization of business operations

 

  1. Which of the following steps comes first in arriving at a business decision?   
    A– answer -Business Management 1995 WASSCE
    1. Establishing objective
    2. Developing alternative course of action
    3. Evaluating alternatives
    4. Solving the problem

 

  1. Which of the business organizations below produces service only?   
    Canswer -Business Management 1995 WASSCE
    1. Mining company
    2. Road construction company
    3. The bank
    4. Sawmill

 

  1. Informal communication, the “grapevine” refers to
    A answer -Business Management 1995 WASSCE
    1. gossip and unofficial communication
    2. communication between employer and employee
    3. unauthorized communication
    4. unwritten communication

 

  1. Which of the following is a negotiable instrument?   
    Danswer -Business Management 1995 WASSCE
    1. Stamp
    2. Bank statement
    3. Insurance policy
    4. Bill of exchange

 

  1. Which of the following can be a barrier to effective communication?   
    Aanswer -Business Management 1995 WASSCE
    1. Use of poor language
    2. Decoding information correctly
    3. Use of simple language
    4. Use of telephone

 

  1. Making a choice in the decision-making process is essential because   
    Banswer -Business Management 1995 WASSCE
    1. business objective may be more than one
    2. there are various alternative courses of action
    3. decision making can be vertical, horizontal and diagonal
    4. decisions are taken at staff meetings

 

  1. An agreement is said to be made when   
    Danswer -Business Management 1995 WASSCE
    1. an offeree gives consideration
    2. the offeror and offeree are legally intended
    3. the parties to the agreement are businessmen
    4. an offer made is accepted by the offeree

 

  1. An aim which is common to all pressure groups in business is to    
     Danswer -Business Management 1995 WASSCE
    1. agitate for strikes and lock-outs
    2. make sure the leaders are well paid
    3. take their problem to the Board of Directors
    4. embark on good service conditions for their members

 

  1. One of the duties of an agent towards his principal is to   
    Aanswer -Business Management 1995 WASSCE
    1. render proper account and not to make secret profit
    2. see that the principal makes profit
    3. make sure the principal pays him all his agency dues
    4. exercise his right of lien at all times

 

  1. Which of the following is considered a problem of tax collection in Ghana?   
    Banswer -Business Management 1995 WASSCE
    1. The tax collection agencies are not many
    2. It is difficult to identify all the self-employed persons and their businesses
    3. Ghana’s borders are not well defined
    4. All tax payers do not keep proper books of account

 

  1. Who is entitled to dividends declared by a limited liability company?   
    Canswer -Business Management 1995 WASSCE
    1. Partner
    2. Shareholder
    3. Guarantor
    4. Debenture holder

 

  1. A person who operates a current account with a commercial bank may use   
    C answer -Business Management 1995 WASSCE
    1. Passbook
    2. cheque book
    3. dividend warrants
    4. counterfoils

 

  1. Utmost Good Faith is a principle commonly used in   
    Aanswer -Business Management 1995 WASSCE
    1. insurance contracts
    2. law of contract
    3. dividend warrants
    4. corporate analysts

 

  1. Money functions as a   
    D answer -Business Management 1995 WASSCE
            1. unit of account
            2. store of value
            3. standard for deferred payments
            4. medium of exchange of information
    1. I and II only
    2. II, III and IV only
    3. I, II and IV only
    4. I, II and III only

 

  1. Which of the following is not an obstacle to international trade?    
     Danswer -Business Management 1995 WASSCE
    1. Cultural differences
    2. Different trade regulations
    3. Currency restrictions
    4. Countries producing tertiary services

 

       42.  Which of the following is not a basic part of the computer?   

A answer -Business Management 1995 WASSCE

    1. Accelerating Cable
    2. Central processing unit
    3. The Monitor
    4. The keyboard

 

  1. A business is responsible to investors for   
    Banswer -Business Management 1995 WASSCE
    1. underpaying workers in order to return increased profits to investors
    2. ensuring that there is a reasonable return on the capital invested
    3. ignoring environmental problems in its area of operation
    4. understanding profits in order to pay less corporate taxes

 

  1. Which of the following is not a major cause of inflation?   
    B– answer -Business Management 1995 WASSCE
    1. Heavy government spending
    2. Low demand for bank loans
    3. Successful and continuous demand for higher wages
    4. Inflation psychology which makes people spend savings quickly.

 

  1. Which of the following is not a problem faced by developing countries?   
    C– answer -Business Management 1995 WASSCE
    1. Dependence on a single export crop
    2. Low population growth
    3. Shortage of highly trained manpower
    4. Lack of capital

 

  1. The government expects a business to   
    Canswer -Business Management 1995 WASSCE
    1. operate an endowment fund for the development of schools
    2. contribute to the maintenance of roads and harbours
    3. pay taxes due to the authorities promptly and honestly
    4. contribute to the central fund for running the political parties
  1. Government revenue in Ghana is obtained from all of the following sources except    
    Danswer -Business Management 1995 WASSCE
    1. loans and grants
    2. export earnings from cocoa and gold
    3. taxation
    4. export of Ghanaian labour abroad

 

  1. Which of the following does not form part of government expenditure?    
     Canswer -Business Management 1995 WASSCE
    1. Building schools, roads and hospitals
    2. Paying tuition fees for students in secondary schools
    3. Building Houses for retired civil servants
    4. Paying wages and salaries of public servants

 

  1. Which of the following is not a problem of tax collection in Ghana?   
    Danswer -Business Management 1995 WASSCE
    1. Collection of tax from self-employed persons
    2. Collection of excise duty from locally manufactured goods
    3. Collections of income tax from artisans
    4. Collection of income tax from civil servants

 

  1. Which of the following management functions is said to be an integral part of all other functions of   management? 
    Banswer -Business Management 1995 WASSCE
    1. Directing
    2. Organizing
    3. Decision making
    4. Controlling

 

 

You just saw the Business Management Paper 1 – Section A. The section A is an Objective test Paper and thus, carries lower marks as compared to the section B. Now its time for us to look of the Section B of the 1995 WASSCE Business Management Examination.

 

I’m sure you are going to evaluate your performance with regards to the objective questions above. Let me emphasize again that the answers to the objective questions can be found by clicking on the symbol (˅) just after the question.

Now let’s proceed to the Paper 1 – Section B just below:

 

Business Management 1995 WASSCE-Past Questions and Answers- Paper 1 – Section B

 

This section of the examination is made up of essay-type questions. That normally require you to mostly, state and explain your various points. As I have always said, it is better to first answer the questions on your own before referring to the answer from the drop-down symbol.

Let me show you how to find the answers to the Business Management Questions – Paper 1, Section B. When you read a question, just click on this symbol (˅) beside it, and the answer will drop down for you. It is a very simple task.

 

1   (a) Identify any five interest groups to which a business may be responsible. 

Suggested Answer:

The five interest groups include:-

  • (i) Customers/Consumers
  • (ii) Shareholders/Investors
  • (iii) Community
  • (iv) Employees
  • (v) Government

1   (b) What responsibilities does a business enterprise owe to each of the groups identified in (a) above?  

Suggested Answer:

  • Customers/Consumers: They are Individuals and organisations who buy from a business. The business organisation should manufacture or supply high quality products to its customers. These product should be offered to the customers and consumers at reasonable prices. It should be realized that, every business depends on the patronage of its customers for survival. The business should provide adequate education about their products to its customers.
  • Shareholders (investors): Shareholders are persons and organisations who invest their capital in a business in order to enjoy a share of the profit. Shareholders are joint owners of the business. The firm must pay attractive dividend to the shareholders for the capital they have invested. It is the responsibility of management to work hard in order to earn enough profit for shareholders. The business must disclose all relevant information information to the shareholders. The entity must thus protect shareholders investments.
  • Community: – It is the society with which the business operates. The firm should establish good relations with the society in order to contribute to their well-being. It should also produce goods and services for the community at reasonable prices. It should make sure it manages the waste and sound, such that it does not cause health problems to the community. The enterprise should also contribute to community development by providing social amenities such as construction of health posts, schools, etc. The firm should also provide employment opportunity to all people without attempting to discriminate.
  • Employees: – Employees are the people who are offering their services to help the business achieve its objectives. Every business organisation is required by law to treat its employees with dignity and respect. The organisation has the responsibility of providing employees with fair reward (Wages and Salaries), to provide employees with continuity of employment, to treat employees fairly without discrimination and to provide them with opportunities for training. Businesses are also required to safeguard the health, safety, welfare and interest of all employees as contained in the factories, offices and shops Act, 1970 (Act 328). Thus lighting, ventilation, fencing for dangerous machines as well as provision for all employers must provide protective clothing.
  • Government: It is the responsibility of every business enterprise to respect and abide by state laws and policies. They should also refrain from acts that can affect the economy negatively. They should also honour their tax obligations as required by the government of the country in which they operate.  

 

2   (a) Give two reasons why a business should make profit.   

Suggested Answer:

The following are the reason why a business must make profit:

  • A business should make profit in order to attract and retain investors and potential investors.
  • Profit is also basic to the attainment of growth. Without profit. a firm cannot survive and expand. It cannot purchase modern and improved technology to help it increase its competitiveness in the market.
  • Profit also enables a business to perform its social responsibilities towards the various interest groups, e.g., shareholders’ dividends, pay tax, build schools etc.  

2   (b) State and explain four managerial functions that are performed in any business organization.  

Suggested Answer:

The functions are:-

  • Planning: This is the first and the most basic of all elements of the management process. It involves setting objectives and showing how these objectives can be achieved. This involves selecting objectives and the strategies, policies, programmes and procedures for achieving the objectives. It therefore involves making decisions about what to do, when to do it, how to do it and by whom it should be done so as to achieve the objectives of the firm.
  • Organising: Organising may be defined as the division and grouping of activities of the enterprise and the allocation of duties, responsibilities and authority to carry them out. Simply defined, organizing is the management function concerned with assigning tasks to departments, and allocating resources to departments. It is a means of providing the firm with everything it needs to ensure effective performance.
  • Directing: This involves influencing the behaviour of the subordinates to work with zeal and confidence. Therefore making workers to do their work through communication, motivation, supervision, leading, guidance and discipline is termed as Directing. Directing is therefore the giving out of orders, instructions, rules and employing the necessary disciplinary measures and leadership skills to make people do things in the right manner.
  • Controlling: This is the last major function of management. It is the process through which management ensures that actual activities conform to planned activities. It involves establishing standards of performance, measuring performance against standards, comparing actual results against standards and taking corrective action to control deviations from the standards.  

 

3   (a) Distinguish between line and staff personnel in an organization, giving two examples in each case.  

Suggested Answer:

  • Line Personnel: – Line personnel refers to those members of an organization who contribute directly to the achievement of organizational objectives. Line personnel make and sell the products. They contribute directly to the provision of goods and services. For example, the marketing manager and production manager are line personnel.
  • Staff Personnel: – Staff personnel refers to those members of an organization who contribute indirectly to the production of goods and services by supporting the line personnel. Their main function is to provide advice, assistance and recommendations to facilitate the activities of line personnel. They are therefore placed in advisory position. For example, the personnel manager and legal advisor perform staff functions. 

3   (b) Explain the following terms and show how they are related in an organization.

  • Delegation
  • Responsibility
  • Authority 

Suggested Answer:

  • Delegation: – Delegation is the transfer of authority and responsibility from a superior to a subordinate to perform a specific task, without transferring accountability. Therefor the superior gives the subordinate a commensurate authority to the duties assigned, in order to carry the task well. The superior does not transfer accountability in the sense that, the superior would be held responsible by the organisation should anything go bad.
  • Responsibility: – It is an obligation to do something on behalf of the organization or for the organization. It is an obligation to use authority to ensure that duties are performed as required. It can also be described as duties, assignments and other tasks that must be performed by an individual or personnel of an organization.
  • Authority: – It is the right inherent in a managerial position to give orders and expect them to be obeyed. It is the legitimate power which enables managers to give orders and instructions to get things done through others. It is the right to take decisions and make sure that they are implemented.

The relationship that exists among the three is that when work is delegated, responsibility is given to the subordinate. The subordinate however, needs commensurate authority to be able to perform the delegated task effectively and efficiently. This means that the three are interrelated.  

 

4   (a) What is meant by consideration in a simple business contract?   

Suggested Answer:

Consideration is some benefit received or an act done by one party in return for another party’s’ promise. It has been defined as some benefit received by one party who gives a promise or performs an act in return. It was also defined by the court in Currie V. Misa (1875) as “some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other”. For example, if “A” gives an amount of $1,000 to “B” and “B” promises to deliver a 100 bags of cement to “A”, then the $1,000 is the consideration that “A” has given for the promise of “B”.   

4   (b) Mention and explain any five essentials of a valid consideration.   

Suggested Answer:

  • Consideration must move from the promisee. This rule means that a person seeking to enforce a simple contract in court must prove that he himself has given consideration in return for the promise he is seeking to enforce.
  • Consideration must be legal: – All illegal considerations make the contract illegal. The promise received must not be to commit an illegal act such as a crime. A consideration to perform an illegal act cannot be enforced.
  • Consideration must not be past: – A past consideration is one, which is wholly executed and finished before the other party makes a promise in return.
  • Consideration must be of some value but need not be adequate: – It has some value if one party is prepared to give up something for it. The value of the consideration need not be equal to the promise or act being received in exchange.
  • The performance of an existing legal duty is not consideration: – if the law states that the promisee must do something, that thing is already being done in exchange for a consideration from the government. If, however, the promisee performs more than his legal duty, the extra duty will constitute consideration in exchange for the promisors’ consideration.  

 

5   (a) Mention four duties of an agent toward his principal.   

Suggested Answer:

  • Non-delegation: – The agent must perform the work or duties personally. He has no right to delegate his duties to a sub-agent without the authority of his principal.
  • Secret profits: – The agent must not make any secret profit out of the performance of his duties as an agent or beyond the commission or the remuneration paid by his principal.
  • Duty to account: – The agent must pay to his principal all monies received. He is required to keep proper accounts and to produce them on demand.
  • Conflict of interest: – The agent must not allow his own interest to conflict with his obligations to his principal.
  • Due Diligence: – Generally the agent must exercise due diligence in the performance of his duties and to apply any special skill which he professes to have.  

5   (b) State any three rights of an agent towards his principal.   

Suggested Answer:

  • The right to receive the agreed remuneration or commission. The agent is entitled to his remuneration for the services he has rendered to the principal. The remuneration or commission to be received will depend on the terms of the contract.
  • An agent is also entitled .to indemnity from the principal. The principal must reimburse the agent for losses arising in the course of lawful dealings with third parties.
  • Finally, an agent has the right of lien over goods of his principal in respect of claims of his remuneration or to recover expenses and losses incurred whilst performing his duties.  

 

6   (a) Describe four functions performed by a commercial bank in Ghana.   

Suggested Answer:

The following functions are performed by Commercial banks in the development of Ghana’s economy:

  • Commercial Banks accept deposits from the general public including savings account, Deposit account and current account. They therefore provide a safe place for keeping customer’s money.
  • Commercial banks grant credit facilities to their customers in the forms of loans and overdrafts. They therefore provide businessmen with money to finance their activities.
  • Commercial banks apart from keeping money also keep customers valuables such as wills, certificates, life policies, securities as well as title deeds.
  • Commercial banks make payments on behalf of their customers upon the written consent of the customers. They also receive dividends and other monies on behalf of their customers.
  • Commercial banks serve as trustees and referees for their customers, recommending such customers when necessary to other banks.
  • Commercial banks also reduce unemployment by employing people.
  • They also provide export advice on investment and business opportunities to their customer.  

6   (b) State and explain three ways by which the Bank of Ghana controls the amount of money in circulation.   

Suggested Answer:

The Bank of Ghana uses the following tools to control the amount of money in circulation.

  • Bank Rate: The bank rate is the minimum rate of interest the Central Bank charges on loans granted to commercial banks. If the Bank of Ghana wants to reduce money supply, it raises the bank rate so that commercial banks will be discouraged from borrowing more. If the bank rate is high, commercial banks will also raise the interest rate on loans they grant to their customers and thus deter them from borrowing. On the other hand, if the Central bank wants to encourage borrowing or increase the money supply, the bank rate would be reduced.
  • Open Market Operation: This refers to the purchase and sale of bonds and other securities in the open market. To reduce the money supply, the Bank of Ghana sells securities to the commercial banks and the general public. The Bank of Ghana buys securities from the commercial banks if it wishes to increase money supply. By buying securities from the commercial banks, they get more money and thus increase the amount of money they give out as loans to their customers and investors.
  • Cash Ratio: This is the minimum percentage of commercial banks deposit. (Cash reserve requirements) which is expected to be kept with the Bank of Ghana. To reduce the amount of money in circulation, the Bank of Ghana raises the cash ratio so that commercial banks are unable to grant more credit to the public since they would be required to deposit a greater percentage of their cash with the Bank of Ghana. If the Bank of Ghana wishes to increase the amount of money in circulation, it would reduce the cash ratio.  

 

7   (a) What is a Limited Liability Company?   

Suggested Answer:

A Limited Liability Company is a kind of business ownership where a number of people come together to start business by each contributing shares to its initial capital. In a Limited Liability Company, the liability of shareholders is limited to fully paid up value of the shares each member holds, so that should the company go bankrupt and cannot meet the demands of its creditors, the shareholders lose only the amount used in purchasing the shares. There are two types of limited liability companies. The first is a company limited by shares (e.g. seen above) and a company limited by guarantee (i.e. members guarantee/pledge an amount they will contribute to the assets of a company if it should wind up).  

7   (b) Give five reasons why most small-scale business fail in Ghana.   

Suggested Answer:

  • Inadequate financial capital: – There is inadequate financial resources for small-scale business. Many of the small-scale businesses do not also have collateral security to qualify them for loans from the banks.
  • Obsolete Technology: – Many small-scale businesses rely on obsolete technology which retards productivity and sometimes lead to the production of shoddy goods and inferior services.
  • Inefficient management: – Lack of managerial knowledge and expertise can lead to the collapse of the business. Many owners of small scale business in Ghana are plagued by inefficient managerial skills.
  • Bad Judgement can lead to collapse of Business: – The success of the business depends mostly on how active the owner is. Sole responsibility of the business can lead to bad judgement/wrong decisions, which can result in losses to the owner, customers, creditors and employees of the business.
  • Inability to employ skilled Labour: – Lack of capital makes it impossible for owners of small-scale businesses to employ and keep skilled labour.  

 

Business Management 1995 WASSCE-Past Questions and Answers- Paper 2

 

CASE STUDY   

Read the following case carefully and answer the questions which follow: 

NEVER DESPAIR COMPANY LIMITED

In 1984, a group of concerned citizens of Ogakrom formed the Never Despair Company Limited with a capital outlay of 12 million cedis. The company obtained the Registrar’s certificate to commence business in public transportation. The Never Despair Company could deal in vehicle spare parts, the construction of freeways and access roads in and around Ogakrom City. The intellectual development of the citizens of Ogakrom through the award of scholarships to study in institutions of higher learning was parambunt in the object clauses of the company.

One source of income of the company was the occasional loans raised from other citizens and the public, as well as private bodies for the execution of its objectives.

The end of 1990 marked a turning point in the fortunes of the company. Two gigantic commercial activities, one undertaken by the government and the other by a foreign company, commenced. The population of 800,000 people rose to 1,200,000 by 1991. The geographical area of Ogakrom grew from an area of 56 square kilometres to more than 140 square kilometres. To take the advantage of the new developments, a number of investments were undertaken. The length of existing routes has increased considerably. In many cases, new routes were constructed and maintained, some to places not commercially viable though the routes made public transportation more convenient.

Prior to 1990 however, there had been a continued spiral of rising costs and subsequent fare increases in general. It was observed that, in the wake of changing conditions, if the company should discharge its existing obligations, then it should operate to make profit. The company had however resisted any attempt to increase the fares on its routes.

In 1991 alone, the Never Despair Company granted scholarships totalling of 47.85 million to citizens. In the same year, it was decided to purchase some additional vehicles to augment the existing fleet. Most of the equipment was worn out and overdue for replacement. Equipment breakdown became rampant. Replacement programmes were however not executed owing to lack of funds.

A new management team for the company had been appointed to look into the problems and suggest appropriate solutions.  

 

1   (a) State four main objectives that the Never Despair Company Limited was incorporated to undertake.   

Suggested Answer:

The four main objectives for the company’s incorporation are:

  • To buy and sell vehicle spare parts
  • To assist in constructing public roads and other minor or trunk roads to ensure free movement of people and traffic in and around Ogakrom.
  • To help in educating the citizens of Ogakrom by giving scholarship awards to deserving citizens to undertake higher studies.
  • To operate public transportation business.  

1   (b) Identify and explain briefly four causes of the Company’s problems   

Suggested Answer:

The causes of the company’s problems include:

  • There was excessive use of equipment without repairs being made on them. This led to breakdown of the equipment and vehicles.
  • Long routes to places not commercially viable were constructed and this brought a serious drain on the company’s resources.
  • There was a sudden increase in running transportation business coupled with the company’s refusal to increase its fares put a serious stress on it.
  • The company was unable to execute its replacement programmes due to the huge scholarship awards which stood at C7.85 million.  

1   (c) As a member of a new management team, what advice will you give to help solve the problems facing the company?   

Suggested Answer:

The following suggestions can be made to solve the Company’s problems:

  • There should be immediate stoppage on plying on all long and unprofitable routes until those routes become profitable. This is to reduce the cost of running the transportation business.
  • The worn-out vehicles should be replaced or serviced. Those found not serviceable should be replaced.
  • The size of scholarship awards should be reduced to conserve cash for other purposes.
  • The fares charged should be revised upward to reflect the high cost of running transportation in line with what other transport operators have done.  

 

2   State and explain briefly four activities involved in organizing as a process of management.   

Suggested Answer:

Activities involved in organizing as a process of management include: –

  • Detailing or defining the various functions or assignments that must be performed to achieve the objectives of the organization.
  • Defining the various positions, their levels, relationships and getting the right or qualified people to take up or occupy these positions.
  • The manager should state the responsibility and the accompanying authority that is attached to each position.
  • The job should be assigned to individuals, groups and departments so that the combined effort will produce the desired results.
  • Communication or channels should be well defined. This may be upward, downward, vertical, horizontal or diagonal.  

 

3   (a) State Six factors that a Manager may consider in promoting a member of staff to a higher grade.   

Suggested Answer:

Some of the factors that a Manager may consider in promoting a staff to a higher position include the following: –

  • A member of staff may be promoted to a higher position based on his experience on the job.
  • Promotion may also be based on the member of staff’s ability to accept and discharge extra responsibilities efficiently.
  • Promotion may also be based on a member’s level of education and that is his knowledge of the job.
  • Promotion may also be based on the general attitude and loyalty of an an employee may also be promoted to a higher grade based on his reliability, intelligence, trust, honesty, etc.
  • An employee may also be promoted based on how effective and efficient he performs his job.  

3   (b) Choose any three factors stated above and say briefly why each of them is necessary in considering the promotion (Nov, 1995)   

Suggested Answer:

  • Promotion based on education and qualification encourages employees to obtain the necessary knowledge and skill for their jobs in order to be promoted.
  • Effectiveness and efficiency in job performance ensures that employees meet high productivity at all times.
  • Promotion based on experience encourages employees to stay on the job for a very long time.  

 

4   The Welfare of workers must be of major concern to any work place management. What four provisions should a manager put in place to safeguard the welfare of Workers.   

 

Suggested Answer:

The factories, offices and shops Act of 1970 has made the following provisions with regards to safeguarding the welfare of workers.

  • Good drinking water. There must be adequate supply of good drinking water. The water should be prevented from contamination.
  • Canteen facilities. Food served in the canteen at the business premises must be under hygienic condition.
  • Sitting facilities – Employees must be provided with comfortable and suitable seats to sit and do their work.
  • First Aid – Provisions must also be made for first aid boxes or clinics to cater for minor injuries and ailments.
  • Economic and Welfare facilities – This include the provision of cash benefits such as incentive allowance, credit facilities, pension, annual bonus, social security, etc.
  • Recreational facilities – Some employers also provide libraries, sports and indoor games as recreational facilities for their employees.  

 

5   Promotion is one of the variables of the marketing mix. Briefly explain four basic objectives of promotion.  

Suggested Answer:

Promotion is the company’s attempt to stimulate sales by directing persuasive communications to the buyers. The four main objectives of promotion in marketing include:

  • To inform people about the availability of goods or services on the market and arouse an interest in the product or service by the consumer. This is important where the product or service is new on the market.
  • The second objective of promotion is to persuade the consumer to purchase the product. It tries to convince the public to buy the product.
  • Promotion is also meant to remind. Since customers forget easily, the promotional strategy may be used to remind customers and this would lead the consumer to reinforce previously satisfactory behaviour.
  • Promotion is also meant to educate existing and potential customers about the use of the product.    

 

6   State and explain six reasons why the retailer should be retained in the channel of distribution.   

Suggested Answer:

The retailer should be retained in the channel of distribution because of the following reasons;

  • Breaking bulk: – retailers save their customers money by buying in bulk from wholesalers and breaking them into convenient sizes and shapes. They therefore make goods available at reasonable prices.
  • Financing: retailers finance their customers by giving them credit. Reliable customers enjoy the product before paying.
  • Warehousing: retailers hold inventories, thereby reducing the inventory costs and risks of wholesalers and suppliers.
  • Selling and promoting – the retailer helps the wholesaler or manufacturer to reach many small customers at a low cost. The retailer has more contacts and is often better trusted by the buyer than the wholesaler or manufacturer.
  • Market information – The retailer plays an important role by collecting market information from the customers to the manufacturer. He gives information about competitors, new products and price developments.
  • Buying and assortment building: The retailer can select items and build assortment needed by his customers, thus saving the consumers much work.  

 

7   Write short notes on the following pricing policies.

(a)      Unit pricing                 (b)    Flexible pricing                  (c)      Skimming pricing.   

Suggested Answer:

  1. Unit pricing is a pricing policy where all customers who buy goods under the same conditions and in the same quantity are offered the same price. Firms use this pricing policy mainly for administrative convenience and to maintain goodwill among customers.
  2. Flexible pricing policy is the offering of varying prices for different customers under different conditions. That is, prices would be increased for those customers who could afford to pay higher and reduced prices charged to poorer customers instead of driving them away and losing the small margin. It may also depend on the bargaining power of the buyer or the type of relationship he/she has with the seller.
  3. Skimming pricing policy refers to the practice of selling a new product at a higher price with a view to taking the cream of the market before reducing the price later. This technique is normally adopted by giant companies who have distinguished themselves in the market either because of the quality of their products or goodwill. It however works in a situation where competitors cannot come in to reduce the prices of the pioneer company, where consumers do not react to price and where the product is new and unique.  

 

8   (a) What is Job Evaluation?    

Suggested Answer:

Job evaluation is the method by which work is divided into grades or separated into levels according to which wages are given to the different grades. The grades with less responsibility get the lowest wage whilst those with the greater responsibility get the highest wage.

Thus, job evaluation is the calculation of the responsibility in each job, taking into consideration the danger involved, training, skill, physical and mental effort so that wages are calculated and paid according to the value of such work.  

8   (b) Identify and Explain four purposes of Job Evaluation  

Suggested Answer:

The main purposes of job evaluation include the following:

  • It helps in the determination of the relative monetary value of a particular job or work. This is to enable management to fix relative remuneration for the different groups of workers in the organization.
  • For the purpose of developing an equitable pay structure. That is to say it helps in the development of equitable pay structure which will relate direct to the survival of the organization or output.
  • Another purpose for job evaluation is to write up job specification and description. Job evaluation is done to help write up job specification and description which must be taken into consideration before employing personnel.
  • It is also for the purpose of comparison. It helps to compare different jobs in different departments in the organization.  

 

9   (a) What is market segmentation?  

Suggested Answer:

Market segmentation is a process of subdividing a market into sub-group with the aim of targeting each group with marketing mix that suits them. When a market is segmented, each section can be given an appropriate product that corresponds to their needs. Thus, an organisation may sell toys to kids and at the same time sell cars to adults. In this case, each segment’s need would be catted for. 

9   (b) Explain any four bases that may be used in market segmentation.  

Suggested Answer:

Markets may be segmented based on the following:

  • Geographic factors: This is where the market is segmented or divided into different geographic units such as regions, cities, districts, climate, density, population size etc.
  • Demographic factors: This consists of dividing the, market into groups based on demographic variables such as age, sex. income, education, occupation, religion, race and nationality.
  • Psychographic factors: Here buyers are divided into different groups based on social class, lifestyle, personality characteristics, consumption and purchasing behaviours of individuals.
  • Behaviouristic factors: In behaviouristic segmentation buyers are divided into groups based on the benefit sought, user status, purchase occasion, usage rate, etc.  

 

10   (a) Identify and explain three sources of long-term finance available to a limited liability company.   

Suggested Answer:

The sources include: –

  • Shares: This is a major source of finance for large business organizations like companies. Shares are units of a company’s capital and investors who buy them are referred to as shareholders. Firms who wish to raise funds to finance their activities may float shares in the stock exchange market. Individuals become shareholders by buying these shares and therefore becoming members of the company and share in their yearly dividends.
  • Profit: Shares may carry fixed rates or not. Preference shareholders are those who have a fixed rate of dividends irrespective of the amount of profit realised whilst ordinary shareholders are those who receive dividends depending on the amount of profits. They are likely to be paid high dividends when the firm’s operations are profitable.
  • Debentures: This is another long-term source of business finance. Debentures are secured transferable loan stock and are usually secured against an asset of a company so that should the business fail to pay them back, they can lay claim to the asset. Unlike shareholders, debenture holders are creditors and not members of the company and interest on their debentures are fixed. They are paid interest at a specified rate every year irrespective of whether the company makes profit or not. Debenture holders receive interest whilst shareholders. receive dividends.
  • Sale and Lease Back: A company in need of finance can sell its buildings or assets for a capital sum and at the same time, lease the asset back for its own use from the purchasing institution for a long term at a specific rent.  

10   (b) State and explain two sources of long-term finance available to partnership.   

Suggested Answer:

  • Long-term loans lasting for 10 years or more.
  • Members contribution can also serve as a relatively long-term source of finance.  

 

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