Cambridge IGCSE and O Level Business Studies Section 2 People in business

Exam-style case study answers

The answers have been written by the authors and aim to provide a summary of appropriate content for answering each question.
However, the suggestions provided are not intended to be a definitive guide to all acceptable answers; each response should be
assessed on its own merits.

Marking guidance for case study questions has been provided for Section 1 in the answers documents. However, this same
guidance can be followed when marking the case study below and the other case study questions from the coursebook or the
Cambridge Elevate enhanced edition. Please note, the way marks are awarded may differ in examination to the guidance provided
in this resource.

Case study: Precision Tooling (pages 136–137)

It is important that students apply their understanding of business concepts to the specific business scenario given in the case
study. For instance, they could make appropriate use of the following features: component manufacturer, one factory, division
of labour, hourly-rate method, bonus, production target, motivation, decrease in output, change of pay system, trade union,
recruitment of employees. There may be further examples of application which have not been included here, but for which
students could be credited.

Question 1a Explain two documents that the human resources manager might use in the recruitment
process.

Possible answers could Job description

include • outlines the main duties of the post – for example, supervise ten production employees; plan
and carry out marketing activities to agreed budgets and timescales
• identifies who the job holder is responsible for supervising/managing – supervising ten
employees
• identifies who the job holder reports to – accountable to the factory manager

Person specification
• identifies the type of qualifications, skills, experience and personal qualities the business is
looking for in applicants
• should attract only those applicants with the right skills, experience and personal qualities
• can help in the selection process

Sample explanation
The person specification lists the skills, experience and personal qualities that the business is
looking for. It will help Precision Tooling attract applicants with the right skills and experience for
the factory manager’s job. Only people with the required skills will apply. This will save time and
money in the recruitment process.

Question 1b The human resource manager is wondering whether she should use internal or external
recruitment methods for replacing the factory manager and the Section A supervisor. State the
advantages and disadvantages of each method of recruitment. Which method do you think the
human resource manager should choose? Justify your answer.

© Cambridge University Press 2018 Exam-style case study answers – Section 2

 Cambridge IGCSE and O Level Business Studies Section 2 People in business

Possible answers could Internal recruitment Advantages

include • the person already knows the business and how it
operates – so it may reduce training requirements
• might provide motivation for employees – prospects
for promotion

Disadvantages
• job requires skills and expertise that might not be
available from internal recruitment – don’t get the
best person for the job
• could lead to conflict – employees who apply for the
job but are not successful

External recruitment Advantages

• external recruitment will bring in new ideas – more
effective and efficient; improves quality

Disadvantages
• advertising costs will be more expensive – reduces
profits
• takes longer to fill vacancies – could reduce output in
the short-run
• training required – new employees will have to be
trained and this increases costs and could reduce
production in the short-run

Conclusion • internal recruitment – quicker and less costly, but

the business will not necessarily recruit the ‘best’
employees – perhaps more appropriate for recruiting
the supervisor than the factory manager
• external recruitment – will take longer to recruit and
is more costly e.g. advertising and training of new
employees – might be more appropriate for the
factory manager e.g. brings new expertise/ideas to
the business

Question 2a Explain two benefits for the production workers of Precision Tooling of trade union
membership.

Possible answers could Benefits

include • negotiation with employers to improve pay and conditions – collective bargaining
• conflict resolution
• legal support and advice
• membership benefits, e.g. pensions

Sample explanation
A trade union will negotiate with employers on behalf of its members. This will protect Precision
Tooling employees from exploitation and make sure they are not worse off with a change of pay
system. It is more effective for a trade union to represent all employees than for employees to do
this individually.

© Cambridge University Press 2018 Exam-style case study answers – Section 2

 Cambridge IGCSE and O Level Business Studies Section 2 People in business

Question 2b The operations director wants the new factory manager to ‘understand the functions of
management’. Explain the importance of each of the functions of management below for the
future success of Precision Tooling. Which function of management do you think is the most
important? Justify your answer.

Possible answers could Planning • looking at where the business is now and where it
include wants to be in the future – needs to have a clear idea
about the future direction of the company
• setting clear objectives and deciding on the actions
needed for these to be achieved – without clear
(SMART) objectives, the business will not know the
resources required and employees will not know what
they should be working towards

Organising • preparing and organising the resources needed to

achieve the planned goals and objectives at the
lowest possible cost to the business – if resources
are not available when needed, then this will delay
the achievement of objectives and could result in loss
of revenue and/or increased costs and hence lower
profits

Coordinating • making sure that all of the different parts of the

business are working together towards achieving
the business’s goals and corporate objectives – if
different functions are working towards different
goals and objectives, then there will be a waste of
resources and targets will not be met

Conclusion • planning – without careful planning, including setting

clear objectives, the business will not be successful
and marketing opportunities could be missed
• organising – without the resources, objectives will not
be achieved at the lowest possible cost – profit will
be lower than it might have been had resources been
available as and when required
• coordinating – marketing, operations, finance and
HRM must all work together to achieve company
goals and objectives – it is no good for one function
to work differently from the others as this is likely
to result in a waste of resources and targets not
achieved in the shortest possible time and at the
lowest cost

© Cambridge University Press 2018 Exam-style case study answers – Section 2

 Cambridge IGCSE and O Level Business Studies Section 2 People in business

Question 3a Other than improving productivity, explain two benefits to Precision Tooling of having a well-
motivated workforce.

Possible answers could Benefits

include • improved quality/reduced waste
• lower absenteeism
• lower labour turnover
• less conflict in the workplace/easier to manage

Sample explanation
A more motivated workforce may reduce labour turnover. Precision Tooling will not have to recruit
employees as often and will not lose skilled employees. A lower labour turnover will reduce
Precision Tooling’s costs.

Question 3b The operations director has suggested replacing the hourly-rate system with a piece-
rate system to improve the motivation of the production workers. State the advantages and
disadvantages of each system for Precision Tooling. Which system do you think they should use?
Justify your answer.

Possible answers could Hourly-rate system Advantages

include • Precision Tooling knows exactly how much its wage cost
will be – number of hours worked per worker × hourly
rate – this helps with budgeting wage costs
• only pay workers for the time worked

Disadvantages
• not dependent upon employee output – employees
receive a fixed amount per hour regardless of how many
they produce/how hard they work
• difficult to calculate unit cost of output which might be
needed for pricing decisions

Piece-rate system Advantages

• employees will work harder in order to increase their
wage – increases motivation

Disadvantages
• quality of output might be poor as employees work too
quickly to increase their pay – increases costs of waste
and could affect company reputation if poor quality
products are sold to customers

© Cambridge University Press 2018 Exam-style case study answers – Section 2

 Cambridge IGCSE and O Level Business Studies Section 2 People in business

Conclusion • hourly-rate – easier to budget and only pay workers for

time worked – however, it does not motivate employees
to increase productivity, so does not necessarily improve
labour productivity and reduce average costs – however,
quality of output might be better
• piece-rate – could motivate employees to work harder
and produce greater output – this increases labour
productivity and reduces average costs which increases
profit margins or helps the business to lower prices and
be more competitive – however, quality issues might
arise, increasing the costs of waste and customer
returns/complaints

Question 4a Explain two features of Precision Tooling’s organisational structure.

Possible answers could Features
include • chain of command – shows responsibility, accountability, formal communication channel,
delegation of authority
• span of control – number of subordinates, effectiveness of control

Sample explanation
Span of control shows how many subordinates a manager/supervisor is in charge of. A factory
manager has a narrow span of control. Supervisors have a span of control of ten employees each.
Spans of control are not too wide, so supervision should be effective.

Question 4b Explain the advantages and disadvantages of each of the following methods of communication
that might be used by Precision Tooling when communicating with employees.
Which method do you think would be most effective? Justify your answer.

Possible answers could Noticeboard Advantage

include • can be made available for all employees if placed on all noticeboards
in the company – everyone has access to the same message

Disadvantage
• no permanent record of the message – once removed from the
noticeboard employees do not have anything to refer back to
• not everyone reads noticeboard messages – communication may not
be effective
• notices might get covered up by other notices

Email Advantage
• quick and easy – all employees are sent the same message at the
same time
• provides a permanent copy of the message which can be referred
to later

Disadvantage
• some employees might not have email, or check it often – Precision
Tooling will not know who has received the message and who has not
• could end up as junk mail – not seen by some employees

© Cambridge University Press 2018 Exam-style case study answers – Section 2

 Cambridge IGCSE and O Level Business Studies Section 2 People in business

Letter Advantage
• all employees will get the same message at the same time and it is a
permanent record of the message – less chance of miscommunication

Disadvantage
• takes time to prepare and send letters – delays communication of the
message
• cost - expense of printing and postage

Conclusion • method chosen will depend on message to be communicated e.g.

noticeboard might be a good place to communicate information about
a job vacancy, but not about possible redundancies
• email and letters provide employees with a permanent record of the
message
• email is probably best for receiving confirmation that the message has
been received and understood i.e. easier for employees to reply to
email than the other two methods – effective communication

© Cambridge University Press 2018 Exam-style case study answers – Section 2