Business Management 1998 WASSCE-Past Questions and Answers-WAEC

WAEC
Business Management 1998 WASSCE

Business Management 1998 WASSCE past questions and answers – WAEC is study resource designed for students. Our electronic material has been designed with all levels of learners in mind.

This means that both students and adult, who want to understand the principles under business management can rely on our learning aid.  Read more.

Click on the links below to navigate to what you specifically want. You can always click on the back arrow [←] to come back to the table of content here:

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Table of Content

 

General Overview

Business Management 1998 WASSCE past questions and answers – WAEC is study resource designed for students.

Our electronic material has been designed with all levels of learners in mind. This means that the needs of both students and adults has been addressed.

When it comes to WASSCE pasco, then we are second to non. I must emphasize though that we may offer pdf download of certain education materials.

We will help you to understand the principles under business management as you count on us for your learning needs.

Also, when it comes to WAEC BM questions and solutions, you are covered. Educareguide is indeed your partner for life.

Furthermore, 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. For more about our site, read here. For now lets focus on this year’s wassce BM pasco 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 1998 can summarized below:

  • 1998 WASSCE Business Management Paper One – Section A;
  • 1998 WASSCE Business Management Paper One – Section B;
  • 1998 WASSCE Business Management Paper Two

 

Business Management 1998 WASSCE-Past Questions and Answers Paper 1

 

Business Management 1998 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. While managers may not directly be involved in production, they   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. direct the effort of others toward achieving organizational objectives
    2. are directly involved in the distribution of the products
    3. directly service the machines that are used for production
    4. are the sole contributors of capital for production

 

  1. One of the objectives of production is to   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. ensure very high market prices
    2. make use of the factors of production
    3. determine new human wants
    4. satisfy consumer demands

 

  1. Which of the following is a disadvantage of specialization?   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Greater skills of the worker
    2. Less fatigue and strain on workers
    3. Less time used in production
    4. Greater risk of unemployment

 

  1. One advantage of a sole proprietorship is   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. access to the stock exchange
    2. sharing of risk
    3. closer contact with customers
    4. joint decision making

 

  1. A partnership deed contains among other things   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. types of shapes to be issued
    2. the name of the business
    3. rate of corporate taxes
    4. how debentures will be issued

 

  1. A partnership may be dissolved   [expand title=””]   B  is the answer -Business Management 1998 WASSCE   [/expand]
    1. when a partner commits a crime
    2. upon the retirement of a partner
    3. when losses are made in a particular year
    4. when partners have no more personal funds

 

  1. One distinguishing characteristic of a public joint stock company is   [expand title=””]   B  is the answer -Business Management 1998 WASSCE   [/expand]
    1. It is subject to all laws passed by parliament
    2. It is governed by the Companies code 1963 (Act 179)
    3. It is formed to provide social services at minimal cost
    4. It can raise capital through bank loans and trade credit

 

  1. Which of the following relates to a company limited by guarantee?   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Members’ liability is limited to the value of unpaid shares
    2. Shareholders may use their private assets to pay the debts of the company
    3. Members pledge various sums of money toward the debts of the company
    4. Existing shareholders may restrict outsiders from acquiring the shares of the company.

 

  1. Profits of a co-operative society are usually shared according to   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. the Ghana Companies Code 1963 (Act 179)
    2. regulations made by the District Assembly
    3. the patronage by each member of its activities
    4. the part played by members in its management

 

  1. Which of the following is a reason why governments set up public corporations?   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. To control vital industries
    2. To compete with the private sector
    3. To provide social goods at a high cost
    4. To earn very high profits

 

  1. The profits of a public corporation belong to the   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Government
    2. Shareholders
    3. Guarantors
    4. Members

 

  1. Which of the following will make communication complete? When the   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. communication is in writing
    2. recipient does not ask any questions
    3. intended meaning is received
    4. communications between superior and subordinate

 

  1. Communication in an organization may take any of the following forms   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. written
    2. oral
    3. symbolic
    4. informal

 

  1. The grapevine may take the form of   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. memorandum
    2. circulars
    3. reports
    4. gossip

 

  1. Which of the following is true about routine decisions?   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. They are usually made by the Board of Directors only
    2. They are made repeatedly and related to the day to day running of the organization
    3. They are usually made by subordinates who cannot reach their superiors
    4. Once made, they are never changed for the entire life of an organization

 

  1. Which of the following is the last step of the decision-making process?   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Gathering information
    2. Making a choice
    3. Analysis of the problem
    4. Developing alternative courses of action

 

  1. One requirement of a negotiate instrument is that it must   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. be in writing
    2. contain a conditional promise
    3. be signed by the recipient
    4. not be payable on demand

 

  1. A principal may be bound by a contract   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. entered into by his agent even though the principal lacked contractual capacity
    2. which he had expressly forbidden his agent to enter into
    3. made by an agent who is acting on behalf of another principal
    4. made on his behalf by his agent without prior consent

 

Mr. Addow advertised a vaccine against fever with a 4500,000 reward for anybody who contracted fever after being vaccinated.

 

  1. If Mr. Bow is vaccinated against fever, he becomes the   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Promisor
    2. Agent
    3. Offeror
    4. Offeree

 

  1. One way Mr. Bow can communicate his acceptance of the advertisement is by   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. seeking audience with Mr. Addow
    2. sending the vaccine to the laboratory
    3. being vaccinated against fever
    4. providing Mr. Addow’s claim as false

 

  1. Long-term sources of finance include shares, 10-year bank loans and   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. trade credit
    2. overdraft
    3. debentures
    4. personal savings

 

Mr. Bortei had a current account with a rural bank. His balance at the beginning of a year was 4200,000. Through an overdraft granted by the Bank, he was able to withdraw 41,000,000 immediately, this balance was outstanding at the end of the year. The rural bank charged 20% interest on all loans.

 

  1. How much overdraft was granted to Mr. Bortei by the rural bank?   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. 4,200,000
    2. 4,800,000
    3. 41,000,000
    4. 41,200,000

 

  1. How much would Mr. Bortei pay as interest on the overdraft?   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. 4,800,000
    2. 200,000
    3. 4,160,000
    4. 440,000

 

  1. How much was Mr. Bortei’s total indebtedness to the Bank?   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. ¢1,200,000
    2. ¢1,000,000
    3. ¢960,000
    4. ¢200,000

 

  1. From an organizational chart, it can be deduced that   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. authority flows from top management to lower management
    2. once it is in place, an organization will always achieve its objectives
    3. the controlling function is performed from lower to top management
    4. businesses that do not display the chart will have problems with discipline

 

  1. An end point toward which all efforts are directed’. This refers to a/an   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. strategy
    2. objective
    3. policy
    4. rule

 

  1. Stimulating, motivating and guiding are all part of the management function of   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. directing
    2. planning
    3. controlling
    4. organizing

 

  1. If workers deviate from what they are expected to do, management draws their attention to this. This refers to:   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. co-ordination
    2. delegation
    3. controlling
    4. organizing

 

  1. Insurance may cover risks like   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. losses during war
    2. loss of a friend’s car
    3. speculation
    4. theft or burglary

 

  1. Which insurance principle is referred to in the following statement? “Mr. A can insure his house against fire but cannot do so for Mr. B’s house”.   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Utmost good faith
    2. Contribution
    3. Insurable interest
    4. Subrogation

 

  1. When the Bank of Ghana wishes to reduce the amount of money in circulation, it usually   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. sells securities in open market operations
    2. lowers the bank lending rate
    3. repays commercial bank special deposits
    4. reduces the commercial bank reserve requirements

 

 

  1. One important function of a commercial bank is to   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. act as custodian of valuable documents
    2. advise the government on inflation
    3. regulate the amount of money in circulation
    4. draw up the national budget

 

  1. Which of the following are qualities of money?   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
          1. Stabilizing of prices
          2. General acceptability
          3. Relative scarcity
          4. Creation of wealth
          5. Portability
    1. I, II and III only
    2. II, III and IV only
    3. II, III and V only
    4. III, IV and V only

 

  1. One advantage derived from the use of money is   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. governments can always print currency notes to pay workers
    2. trade by barter has ended completely throughout the world
    3. that, as more money is paid to workers living standards rise
    4. payments for goods and services can be postponed to a later date

 

  1. Which of the following is not a reason for international trade?   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Difference in natural endowments
    2. Enhancing national prestige
    3. Comparative advantage principle
    4. Differences in taste and preferences

 

  1. If more of Ghana’s cocoa is exchanged for the same quantity of petroleum from Gabon, it can be said that   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Gabon needs to pay more money to Ghana
    2. The terms of trade has become unfavourable for Ghana
    3. The balance of trade has become favourable for Ghana
    4. Gabon is no longer interested in trading with Ghana.

 

  1. Which of the following is not a characteristic of a developing economy?   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Low foreign debt
    2. Rapid population growth
    3. Unemployment
    4. Shortage of high-level manpower

 

  1. Personnel management ensures   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]
    1. the scheduling of production and sales to meet set targets
    2. that striking workers are immediately dismissed
    3. the proper utilization of human resources to optimal levels
    4. that the products of a company are made known to the public

 

  1. Which of the following may not be a type of industrial action?   [expand title=””]   D  is the answer -Business Management 1998 WASSCE   [/expand]
    1. Boycott
    2. Work-to-rule
    3. Picket
    4. Dialogue

 

  1. Welfare services and fringe benefits for workers will not include   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. wages and salaries
    2. vacation with pay
    3. transport facilities
    4. housing facilities

 

  1. Which of the following is not a problem facing ECOWAS?   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Political instability
    2. Different legal systems
    3. Cultural differences
    4. Desire to integrate

 

  1. Marketing begins with   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. selecting channels of distribution
    2. pricing a product
    3. employing marketing officers
    4. the conception of a product

 

  1. The elements of the marketing mix are   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Promotion, advertising, sales and distribution
    2. Production, procurement, sales and distribution
    3. Pricing, production, personnel and purchasing
    4. Product, price, promotion and place

 

  1. Which of the following is not a sales promotion tool?   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Free samples
    2. Advertising
    3. Temporary price reduction
    4. Gifts in packs

 

  1. Advertising which aims at giving facts about where the products can be obtained and how they can be used is referred to as   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. persuasive advertising
    2. informative advertising
    3. competitive advertising
    4. reminder advertising

 

  1. The annual revenue and expenditure of government are projected in the   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. budget statement
    2. balance of payments
    3. balance sheet
    4. gross domestic product

 

       48. The last stage in the chain of distribution is the   [expand title=””]   C   is the answer -Business Management 1998 WASSCE   [/expand]

    1. consumer
    2. manufacturer
    3. retailer
    4. wholesaler

 

  1. A democratic leader is one who   [expand title=””]   B   is the answer -Business Management 1998 WASSCE   [/expand]
    1. organised people to cast votes in an orderly manner
    2. solicits advice and involves subordinates in decision-making
    3. takes decisions which subordinates are to comply with without question
    4. takes decisions alone and later communicates to subordinates

 

  1. Which of the following is not an aim of the Economic Community of West African States?   [expand title=””]   A   is the answer -Business Management 1998 WASSCE   [/expand]
    1. Establishing more trade barriers
    2. Availability of larger capital
    3. Specialization and increased output
    4. Social and economic development

 

  1. A businessman operating a warehouse is said to be   [expand title=””]   D   is the answer -Business Management 1998 WASSCE   [/expand]
    1. a producer of personal services
    2. engaged in manufacturing
    3. in an extractive industry
    4. providing commercial services

 

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 1998 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.   All developing countries face common problems that affect the growth of  their Economies. Identify and explain four of the problems.

Suggested Answer:   [expand title=””]

NB: This question was also asked in 1993, Paper One, Question 5. Check out the answer from here.  [/expand]

 

2.   Distinguish between a Partnership and a Joint Stock Company using the following:

  • legal entity
  • formation
  • capital
  • ownership
  • share of profits to owners.

Suggested Answer:   [expand title=””]

  • Legal Entity:- A partnership is usually not a legal entity. However, if a particular partnership is registered under incorporated Private Partnership Act, 1962 Act 152, it becomes a legal entity, that is, an artificial person and thus can sue and be sued. On the other hand, a joint stock company must be formed and registered under the Companies Code 1963, Act 179 and thus regarded as a legal entity – that is, it assumes the status of an artificial person and can therefore sue and be sued.

  • Formation:- A partnership is formed when it satisfies all the requirements stipulated in the Incorporated Private Partnership Act (Act 152). It must have a minimum of 2 or more people. It must also have a profit objective or motive and must open an account with a bank. At registration, the following information must be provided – the name of the partnership, address and location of the partnership, type of business to be carried out and date of commencement of business. On the other hand, the full procedure for the formation of a Joint Stock company is governed by the Companies Code 1963, Act 179. A promoter undertakes the formation of a company. He is required by law to provide the Registrar-General of Companies with all the information which must be contained in the company’s regulations. Some of the information include:- name of the company with the word “limited” as the last word, the address of the company, objects of the company, amount of share capital to be issued and types of shares etc.

  • Capital:- A partnership may be financed through the following sources:-
    1. Loan from financial institutions
    2. Hire Purchase
    3. Trade Credit
    4. Retention of Profit
    5. Partners Contributions etc.

A company on the other hand, may be financed through the following sources:

    1. Trade Credit
    2. Hire Purchase
    3. Loan from financial institutions
    4. Lease
    5. Sale and lease back
    6. The issue and sale of shares
    7. Issue of debentures

  • Ownership:- Whiles a partnership is owned by partners who contribute the capital towards its operations, a company is owned by shareholders who contribute to the stock of the shares of the company.

  • Share of profits to Owners:- In a partnership profits a shared equally especially if there is no partnership deed or according to the profit made or loss incurred by the partnership. On the other hand, in a company, profit is shared in a form of dividends and retention.   [/expand]

 

3.   An agreement is said to be reached in law when there is an offer and acceptance. Discuss.

Suggested Answer:   [expand title=””]

An agreement is one of the essentials of a valid contrac.t One party (the offeror) must make an offer and the other party (offeree) must accept the offer. This leads to an agreement which is known as “consensus ad idem”, which means “the meeting of the minds”. The offeree must accept the offer without any conditions. 

 

An offer must be subject to the following conditions:

  • An offer can be revoked anytime before acceptance.
  • An offer must be communicated to the offeree before acceptance.
  • An offer must be made to a specified person, to a class of people or to the world at large.
  • An offer made to a specified person can only be accepted by that person and by no one else.
  • An acceptance must be positive and unequivocal.
  • An offer lapses when the time to accept it expires and it can no more be
  • An offer may be terminated by:
    1. complete rejection of the offer by the offeree.
    2. the offeree making a counter offer.

 

An acceptance must be subject to the following conditions condition.

  • Acceptance must be made expressly by word of mouth, written or by conduct.
  • Acceptance must take place before the offer is revoked.
  • Acceptance must be communicated by the offeror or someone with his authority.
  • Acceptance cannot be revoked.   [/expand]

 

4.   Discuss the relative importance of five main sources of revenue to the government of Ghana.  

Suggested Answer:   [expand title=””]

The main sources of revenue to the government of Ghana include: –

  • Taxation: This forms the main source of revenue to the government. It is a compulsory payment to the government for which there is no direct benefit or service to the tax payer. Taxes are classified into direct and indirect taxes. Direct taxes take the form of income tax, basic rate, company tax, etc. Indirect taxes also take the form of import duties, export duties, excise duties etc. This source of revenue, is important to the government because it is the largest source of revenue which provides the funds for the running of the day to day activities of the country.

  • Fees, Fines and licenses:- Government provides certain goods and services. The users of these goods and services pay certain fees which go to government as revenue. Some of these goods and services include bridges, hospitals, roads, courts and public tribunals. The importance of this source of revenue is that it is imposed on users of services, wrong doers of the society and it is usually not repayable.

  • Grants/Aids:- This forms part of government revenue. The government of  Ghana continues to receive grant in the form of food and money from countries like America, Japan, Canada, etc. The importance of this source of revenue is that the grant is normally given out free or on humanitarian grounds and is not repayable.

  • Loans:- This is another source of revenue to the government of Ghana. Then government may borrow from internal sources and external sources from institutions such as the World Bank, International Monetary Fund, Africa Development Bank, etc. to finance its activities. The importance of this source of revenue is that the government is given a number of months or years to make payment. It therefore uses the money to provide infrastructural services such as roads, schools, hospitals, drinking water, electricity, etc. all meant to improve the conditions of life of its people.

  • Profits from Public Enterprises:- This is a source of revenue where government engages in trade and other economic activities such as running of transport, railways, Ghana Airways, etc. Profits accruing from these activities enable the government to invest in other sectors of the country.   [/expand]

5.   Specialization brings in its trail, advantages as well as disadvantages. Explain.

Suggested Answer:   [expand title=””]

Specialisation is a system by which individuals, firms or countries channel their productive efforts to particular areas fields, and sectors. Consequently, this helps to  become more efficient or knowledgeable in the production of that item.

Advantages of Specialization Include:

  • Specialization brings about increased efficiency in performance. Repetition of the same task may lead to greater skills and experience.
  • Specialization also leads to increased output of goods and services
  • Specialization makes it possible to train people to perform one operation rather than all operations in the production processes. This leads to reduction in cost and time for trainings.

 

Disadvantages of Specialization include the following:

  • It leads to monotony of work.
  • A breakdown in one section affects the entire production process
  • Workers are likely to be unemployed when the demand for their services fall.   [/expand]

 

6.   Explain why most businesses in Ghana continue to process data manually despite the advantages of electronic data processing.

Suggested Answer:   [expand title=””]

Organizations continue to process data manually because of the following reasons:-

  • Lack of money for the acquisition and maintenance of the computer. Most organizations in Ghana lack the necessary funds to go into electronic data processing.

  • Processing data manually may be relatively cheaper or economical. Low consumption of electricity because the machines do not use too much current.

  • Lack of computer experts to man the system. Lack of personnel with the requisite qualification and experience to operate and maintain the machines.

  • Some organizations do not handle large data and information and thus do not need computers.

  • Lack of innovation on the part of some managers. Some managers feel reluctant or afraid to adopt new technology.   [/expand]

 

7.   (a) Mention and explain three types of insurance.

Suggested Answer:   [expand title=””]

  • Fire Insurance: This is an insurance policy taken to protect the insured against losses arising from destruction by fire to property such as homes, factories, office buildings, warehouses, fixtures and fittings, etc. In this context, the compensation paid enables the insured to re-equip or rebuild the damaged items. Examples of fire insurance policies include: Consequential loss insurance, household policies and fire insurance on domestic and business premises.

  • Accident Insurance: Accident Insurance provides insurance for injury, damage or loss resulting from an accident. Examples of accident insurance include: third party policy, (comprehensive policy, burglary insurance and aviation insurance).

  • Life Assurance: Under life assurance, an amount of money is paid as compensation on the death of the life assured or in the case of life endowment policy, on the death of the assured or at the lapse of an agreed period. The compensation is usually paid to the dependants of the assured. Examples of life Assurance policies include: whole life policy, Group Assurance policy, life endowment policy and health insurance policy.

  • Marine Insurance: It deals with all the risks connected with the sea, covering both ships and goods. It therefore covers perils on the sea. It is the oldest type of insurance where the insurer undertakes to compensate (indemnity) the insured against losses sustained by perils on the sea. Examples of marine insurance policies include: voyage policy, time policy, floating policy, mixed policy, fleet policy etc.   [/expand]

7.   (b) Discuss briefly four reasons why insurance is important to business.

Suggested Answer:   [expand title=””]

  • To the businessman, insurance provides a certain amount of money as compensation for any loss or damage that one suffers for a property that he has insured. Thus, insurance indemnifies the insured.

  • Insurance removes certain uncertainties in business and hence encourages businessmen to go into risky projects, which they would otherwise have hesitated.

  • To the businessman insurance policies may serve as collateral security for taking loans from banks and other financial institutions.

  • Insurance also provides the businessman with capital for investment. This they get out of premium payments.[/expand]

 

Business Management 1998 WASSCE-Past Questions and Answers- Paper 2

 

CASE STUDY

Read the following case carefully and answer the questions, which follow:   [expand title=””]

AWULEY COMPLEX LTD

Awuley Complex is owned solely by Mr. Awuley and his family. During the years immediately after its founding, growth was steady but not as rapidly as expected. The firm in its fifth year of operation became relatively large in the industry. It engaged in the development, manufacture and distribution of industrial and commercial goods.

The company sells directly to industrial consumers, its detergents, paints and weed killers. The commercial goods such as office stationery, however are distributed extensively through all the known channel members in the chain. The company has adequate sales and distribution facilities throughout the country and the sales personnel hardly complain about any lapses. The production and other factory personnel also rate the management of the company very high for their concern, especially for the provision of health and safety facilities at the workplace.

The sales force is among the highest paid in the industry, receiving 25% of total sales as commission, besides their normal salaries. Average annual sales are normally fifty million cedis representing 45% of the total market share. The company however intends to capture, in the next two years, 68% of the total market of the industry.

To further raise the general morale of the staff, a draft proposal on personnel policies has been submitted to the Board of Directors for discussion. Among the top issues addressed are wage related matters and employee benefit plans. The bases of determining these matters are not clear in the existing policies. The Board has however directed that all issues relating to conditions of work, rate of pay and terms of employment be first discussed by the appropriate standing committee charged with the responsibility. The consensus of this committee should then be forwarded to the Board for further consideration.

The marketing strategy has highlighted a number of steps which aim at increasing the demand for the company’s product. The scheme has charged the marketing department to formulate promotion policies using the three main methods which will change the total image of the company and its products which are now in the growth stage.[/expand]

1.   (a) What channel was used to distribute the

  • Industrial goods

  • Consumer goods

Suggested Answer:   [expand title=””]

  • The channel used was direct that is from producer (or manufacturer) to the consumer.
  • The channel used in distributing the consumer goods was from the producer to the wholesaler to the retailer and to the final consumer (Producer­-Wholesaler-Retailer-Consumer)[/expand]

1.   (b) Calculate showing your workings, the average total sales commission paid by the Company annually.

Suggested Answer:   [expand title=””]

Find 25% of 50 million

That will give you          0.25 x 50,000,000

                                         ¢12,500,000

Therefore, the average total sales commission paid by the Company annually is ¢12,500,000.[/expand]

 (ii) Suggest with one supporting reason, the name of the committee that was empowered to discuss the wage related matters.

Suggested Answer:   [expand title=””]

Welfare Committee – The Committee was responsible for issues relating to conditions of work, rate of pay and terms of employment.[/expand]

1.   (c) Explain three ways by which Awuley Complex Limited motivates its workers.

Suggested Answer:   [expand title=””]

  • The provision of health and safety facilities at the work place boost the morale of the workers. For instance, management provided the workers with protective clothing, lighting and heating, equipment, ventilation, safety measures, etc.
  • Management also motivates the sales personnel by paying them high sales commission. The 25% commission besides their normal salaries was enough to boost the morale of the sales personnel to deliver.
  • The good human relations and leadership qualities exhibited by management also boosted the morale of the work force.
  • Sales force work was further made easier through the provision of adequate distribution facilities.[/expand]

1.    (d) As a Marketing Manager, suggest and explain three appropriate promotion methods the company will apply to achieve its objectives.

Suggested Answer:   [expand title=””]

  • Personal Selling – It involves oral presentation in the form of conversation with one or two prospective buyers for the purpose of making sales.
  • Sales promotion – It is a short-term incentive to encourage purchase or sale of a product or service. Companies use sales promotional methods to create a stronger and quicker response, e.g. trade fairs, coupons, contests, demonstrations, etc.
  • Mass Selling – This is a marketing strategy which helps the marketing manager to communicate to a large number of customers and potential customers at the same time. The methods used include print media (newspapers, magazines) electronic media (Radio, television) and display media (Bill boards, posters).[/expand]

 

2.   What role does Capital play in the running of a business Enterprise?

Suggested Answer:   [expand title=””]

The role of Capital in running a business organization include the following:

  • Capital is used to establish or set up a business. It is used in the acquisition of all the necessary inputs for starting a business. Thus it is used to purchase fixed assets, machinery, vehicles, etc.

  • Capital is also required for the maintenance and replacement of obsolete machines or equipment of a business.

  • Capital is required for payment of wages and salaries of workers.

  • Capital is again required for the purchase of raw materials.

  • Capital is required to make the business grow, that is, it is needed for expansion of the business.[/expand]

 

3.   (a) State three objectives of promotion in marketing

Suggested Answer:   [expand title=””]

The objectives of promotion in marketing include:

  • To inform customers and potential customers about the availability of goods

    and services. That is to create awareness of the availability of the product or service on the market and to arouse an interest in the product by the customers.

  • The second objective of promotion is to persuade existing and potential customers to purchase that particular product in preference to all others.

  • Promotion is also meant to remind. A reminding objective would lead the customer to reinforce previously satisfactory behaviour.

  • To educate existing and potential consumers about the use of the product.[/expand]

3.   (b) Describe four ways by which a business enterprise may advertise its products.

Suggested Answer:   [expand title=””]

A business may advertise its products through one of the following ways:

  • Television: It is an electronic medium, which gives visual, oral and pictorial presentation of advertisement. It thus combines sight, sound and motion.

  • Radio: It is the most common and popular medium especially if the message is to be disseminated in the local languages.

  • The Press: This refers to newspapers, magazines, journals, bulletins and other Its effectiveness depends on the circulation of a particular press medium and literacy rate.

  • Direct mail: It is a medium of sending information on products to consumers and potential consumers by mail. It takes the form of postcards, catalogues, booklets, etc. sometimes found in post office letterboxes.[/expand]

 

4.   (a) State six means of employee recruitment in Ghana

Suggested Answer:   [expand title=””]

Some of the means of employee recruitment in Ghana include:

  • Labour Department
  • Private employment agencies
  • Schools and Colleges (Educational Institutions)
  • Professional bodies (e.g. Institute of Chartered Accountants, Chartered Institute of Marketing, Ghana)
  • Advertising
  • Ex-employees and employees referrals
  • Unsolicited applicants[/expand]

4.   (b) Explain four advantages of employment interviews

Suggested Answer:   [expand title=””]

  • It gives the employer an opportunity to obtain more information about the applicant and to assess his suitability for the job.

  • It provides the applicant an opportunity to know more about the organization, the job he has applied for and the employees of the organization.

  • It enables the employer to cross check the applicant’s original documents or educational certificates.

  • It enables the employer to have a critical view of the physical appearance of the applicant and his level of intelligence.[/expand]

 

5.   Explain the following terms as applied in business management.

  • Span of Control
  • Authority
  • Departmentation
  • Unity of Command

Suggested Answer:   [expand title=””]

  • Span of Control:

There is a limit to the number of people whose work a manager can supervise. Span of control refers to the number of subordinates who report directly to the manager or superior. It is thus the number of subordinates and units whose activities a manager directly supervises. A manager’s subordinates should be limited to a maximum of six where their work interlocks. However, it is the nature and complexity of the work, which determines the reality of the number. Span of control helps in ensuring better interaction, effective supervision, delegation and co-ordination in the company.

  • 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.

  • Departmentation

The process of grouping tasks and functions of an organization into logical and manageable units so that they can be effectively assigned to individuals,

groups or departments. Mostly, activities that are related are grouped together
under one department.

  • Unity of Command

This is the principle that a subordinate should have one and only one superior to whom he or she is directly responsible. This is to prevent confusion or conflict resulting when a subordinate receives orders or instructions in the same area from two or more managers or superiors.[/expand]

 

6.   Distinguish between the following pairs of pricing policies.

  • One price and flexible price
  • Skimming pricing and prestige pricing

Suggested Answer:   [expand title=””]

  • Under one price policy, the same price is offered to all customers who buy the product in the same quantity and under the same conditions. Whilst 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.
  • 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. Prestige pricing is a pricing strategy where the seller gives prestige and status to his product by charging prices well in excess of those charged by producers of similar products (or competitors). It is a psychological pricing strategy targeted at customers who seek status, prestige and recognition in society. Sellers thus appeal to those people by selling at high prices for them e.g. jewellery shop.[/expand]

 

7.   (a) What is an organisational structure?

Suggested Answer:   [expand title=””]

Organisational structure is a framework intended to link individuals in an established network of relationship so that authority, responsibility and communication can be controlled. It is the framework within which an organization’s activities are carried out. It groups together the tasks required to fulfil the objectives of the organization and allocate them to suitable individuals or groups and give them the authority required to perform the allocated functions.[/expand]

7.   (b) Explain four advantages that may be derived from a good organizational structure.

Suggested Answer:   [expand title=””]

  • It establishes a framework in which individuals and groups interact and work together to achieve organizational objectives.

  • It also establishes the network of relationship so that authority, responsibility and communication can be controlled.

  • It also spells out the formal communication channels in an organization. It shows the directions in which communication flows in the organization that is vertical, horizontal and diagonal channels.

  • The organizational structure provides a framework for determining who is a superior and who is a subordinate in the organization.

  • It helps to co-ordinate the objectives and activities of separate units (or departments) so that overall objectives are achieved.[/expand]

 

8.  Give two reasons each to show how an Organisation may sometimes want to

  • promote its personnel.

  • Demote its personnel

  • Terminate the appointment of its persnonnel

Suggested Answer:   [expand title=””]

Promotion of personnel:

An organization may want to promote its personnel for the following reasons:

  • Further education and training g. An employee may be promoted if he attains a higher educational qualification In and training than his initial qualification. He is then promoted to reflect his new qualification

  • To reflect seniority and long service. Organizational personnel can also be promoted to reflect seniority r, long service and to comply with collective bargaining agreement between the employer and his employees.

  • To fill vacant positions. Employees may also be promoted to fill vacancies created as a result of retirement Tits, transfers, resignations, dismissals or death of other senior members to en able the organization achieve its set objectives.

 

Demotion of personnel:

An organization may want to demote its personnel for these reasons:

  • An organization can demote its personnel for crimes committed which are so serious to merit dismissal. It is therefore a sort of punishment to deter others from committing such crimes.

  • Mistake might have been made during placement. Demotion can then be carried out to rectify such mistake.

  • Where an employee does not perform up to expectation or is a perpetual latecomer, he can be demoted.

 

Terminate the Appointment of personnel:

An organization may want to terminate the appointment of its personnel for these reasons:

  • Termination due to Resignation. Resignation comes from the employees themselves. It is the indication by the employee that he is no more interested in working with the organisation. If the resignation is accepted by management, then termination follows.

  • Termination as a result of Retirement. It is the act of stopping the work after attaining a certain age or expiry of the number of years of contract between the employer and employee.

  • Termination may be used to discourage certain acts which are either not allowed or which are termed criminal.[/expand]

 

 9.   (a) Explain two major characteristics of the introduction stage of a product life cycle.

Suggested Answer:   [expand title=””]

The features or characteristics of the introductory stage of a product life cycle include

  • High production cost
  • High promotional and distribution cost
  • Slow sales growth
  • Profits are non-existent[/expand]

 9.   (b) As a marketing officer, explain two things that you may do when a product enters the introductory stage of its life cycle.

Suggested Answer:   [expand title=””]

  • Promotion is needed to pioneer the acceptance of the product.
  • Potential target consumers must be told about the product existence, advantages, uses and the unique role it plays.
  • Penetration or skimming pricing strategy may be adopted depending on the distinctiveness of the product and the prevailing conditions in the market.[/expand]

 

10.   State and explain four factors that a Creditor may take into consideration before granting loans to his Customers.

Suggested Answer:   [expand title=””]

  • Collateral Security: The bank would first look at the asset base of customers as security for granting loans. Usually fixed assets are required to be used as collateral security for a loan, e.g. buildings.

  • Credit Worthiness of Customers: The bank will also consider the credit standing of their customer. They will also consider the ability and willingness of the borrower to pay the loan so granted. Thus the customer’s honesty is important for granting loans.

  • Capital: The Capital base of customers, which indicates their general financial position, may also be taken into consideration before granting a loan to a customer.

  • Competition: Competition in the business in which the customer operates is also taken into consideration before granting a loan. Where the competition is keen or strong, it is unlikely that the customer will make enough profit to service the loan.

  • Customer Relations: The customer’s relation with the bank or the creditor can go a long way to determine whether or not the loan should be granted.[/expand]

 

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