CASE STUDY: SOLSTICE LIMITED
Solstice Ltd. is the name of a supermarket that has just been registered as a limited liability company. The company, which was formed by four brothers, plans to sell a wide range of brand and non-brand products.
When the supermarket opens next month, it will be selling goods, which will also carry the Solstice brand, as well as other brands.
Depending on the success of this initial venture, Solstice Ltd. Is considering opening other branches of the supermarket in various parts of the country over the next five years.
Solstice Ltd. has entered contracts with suppliers, both local and foreign. It has already recruited staff for the supermarket. It plans to have a very successful and impressive opening.
In spite of their expectations of success, the owners are anxious about the state of the economy at the moment. Also, the decline in tourist arrivals since September 11, 2001, is also cause for concern as Solstice Ltd. is opening its first supermarket in a large tourist resort area.
The owners of Solstice Ltd. expect that the social and economic policies of the Government will generate more employment. They are also optimistic that the incidence of crime will fall over the next five years.
PROFILE 1: ORGANISATIONAL PRINCIPLES
1. (a) What type of business is Solstice Ltd.? (1 mk)
(b) List two features of the business organisation to which Solstice Ltd belongs.
2. State four functions which the manager of Solstice Ltd. Is expected to perform. (4 mks)
3. Outline three benefits which Solstice Ltd. will enjoy if it installed a management information system in the supermarket chain. (3 mks)
4. (a) What type of industry is Solstice Ltd? (1 mk)
(b) Name ONE other type of business which belongs to the same type of industry. (1 mk)
Total 12 marks
PROFILE 2: PRODUCTION AND MARKETING
5. List two factors which could influence Solstice Ltd. in deciding where to set up new branches of the business. (2 mks)
6. Discuss three benefits which the company will enjoy by having a chain of supermarkets. (3 mks)
7. (a) List three methods which the company might use to promote the launch of its FIRST branch. (3 mks)
(b) Explain any one of the promotional methods you identified in (a) above. (1 mk)
8. (a) Discuss one benefit of Solstice Ltd. having its own brand name. (2 mks)
(b) Outline one difficulty relating to marketing which Solstice Ltd. might face. (1 mk)
Total 12 marks
PROFILE 3: FINANCE AND INTRODUCTION TO ECONOMICS
9. List three types of insurance which are relevant to Solstice’s business. (3 mks)
10. Identify two ways in which the company can contribute to the economy of the country. (4 mks)
11. Give one effect on the business of
(a) an increase in interest rates (1 mk)
(b) a decrease in interest rates (1 mk)
12. Outline two strategies which Solstice Ltd. might use to raise funds to expand the business. (2 mks)
13. List two transport documents which Solstice Ltd. is likely to use in the conduct of its business. (2 mks)
14. Identify three methods of payment which customers may use when making purchases from the company. (3 mks)
Total 16 marks
the private sector of the mixed economy.
1. (a) Distinguish between a partnership and a sole trader. (4 marks)
(b) Identify TWO advantages and TWO disadvantages of operating as a sole trader. (4 marks)
(c) Give TWO reasons why you would want to be a member of a partnership. (2 marks)
Total: 10 marks
2. Multinational corporations are often criticised for having a negative effect on a country’s economic development.
(a) Give TWO reasons why you would agree with the above statement, and TWO reasons why you would disagree. (4 marks)
(b) (i) Define the term ‘nationalisation’. (2 marks)
(ii) Discuss TWO reasons for nationalisation. (4 marks) Total: 10 marks
3. (a) Distinguish between the following:
(i) A conglomerate and a multinational company
(ii) Preference shares and debentures
(iii) Limited liability and unlimited liability. (6 marks)
(b)List THREE sources from which a private limited company may obtain financial capital. (3 marks)
(c) Explain any THREE co-operative principles. (6 marks)
(d) (i) What is meant by the term, ‘limited liability’ ? (2 marks)
(ii) Name THREE types of business enterprise to which the concept in (d)(i) applies. (3 marks)
Total: (20 marks)
4. ‘Franchising is one of the fastest-growing sectors of an economy. Over 20 per cent of retail sales are accounted for by this form of trading, and the trend is growing each year.’
(a)(i) What is a franchise? (2 marks)
(ii) Give TWO examples of this type of business from your own country. (2 marks)
(iii) Outline THREE features of a franchise. (6 marks)
(c) Outline TWO of the contents of EACH of the following documents:
(i)Memorandum of Association
(ii)Articles of Association
(c)(i) What do you understand by the phrase ‘lack of continuity’? (2 marks)
(ii) Name TWO types of business which display this feature. (2 marks)
June Palmer holds majority shares in Electronics and More plc. The company has been using the Stock Exchange for over five years.
(d)(i) What do the letters plc at the end of the company’s name stand for?
(ii) For what purpose has the business been using the Stock Exchange? (1 mark)
Total: 20 marks
CASE STUDY: SOLSTICE LIMITED