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Candidate surname Other names

Centre Number Candidate Number

Pearson Edexcel International GCSE

Time 1 hour 30 minutes
Paper
reference 4BS1/02
Business
PAPER 2: Investigating large businesses

You do not need any other materials. Total Marks

Instructions
• Use black ink or ball-point pen.
• centrethe
Fill in boxes at the top of this page with your name,
number and candidate number.
• Answer all questions.
• Answer the questions in the spaces provided
– there may be more space than you need.

Information
• The total mark for this paper is 80.
• The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
• Read each question carefully before you start to answer it.
• Try to answer every question.
• your answers if you have time at the end.
Check

Turn over

P69551A
©2022 Pearson Education Ltd.

Q:1/1/1/1/1
*P69551A0120*
 FORMULAE FOR INTERNATIONAL GCSE BUSINESS

Gross profit margin:

Gross profit = revenue – cost of sales

Gross profit margin = gross profit ×100

revenue

Operating profit margin:

Operating profit = gross profit – other operating expenses

Operating profit margin = operating profit ×100

revenue

Markup:

Markup = profit per item ×100

cost per item

Return on capital employed (ROCE):

ROCE = operating profit ×100

capital employed

Current ratio:

Current ratio = current assets

current liabilities

Acid test ratio:

Acid test ratio = current assets − inventory

current liabilities

2
1 DD02652
1/
*P69551A0220*
©2021 Pearson Education Ltd.

 Answer ALL questions. Write your answers in the spaces provided.
Some questions must be answered with a cross in a box . If you change your mind about an
answer, put a line through the box and then mark your new answer with a cross .
1 The LEGO Group is a privately-owned business in Denmark. The business was founded
in 1932 by the Kristiansen family. The family still owns it. The name LEGO is an
abbreviation of two Danish words, ‘leg godt’ which means ‘play well’. It is now one of
the world’s largest manufacturers of toys with 15 factories and over 18,000 employees
around the world.
LEGO manufactures toys, games and art materials for boys and girls of all ages, and
products from films such as Star Wars and Harry Potter. It believes that children are the
role models of the future and playing with LEGO can support children in a developing
and complex world.
(a) (i) Which one of the following shows money coming in and money going out of
a business?
Select one answer.
(1)
A A mortgage
B Break-even

C Cash flow

D Profit and loss

(ii) Which one of the following could a person complete when applying for a job?
Select one answer.
(1)
A Application form
B Shortlisting

C Job description

D Person specification

3
 *P69551A0320* Turn over
 Figure 1 shows financial information for one of LEGO’s suppliers in
Danish Krone (DKK).
4 850 000
4 250 000

1150 000

Fixed costs Variable costs Revenue

Figure 1
(iii) Which one of the following is the correct statement?
Select one answer.
(1)
A Total costs of 10 250 000

B Cash inflow of 3 100 000

C Loss of 550 000

D Profit of 600 000

(iv) Which one of the following is a benefit of being a franchisee?
Select one answer.
(1)
A Being able to choose your own suppliers

B Selling an established brand

C Not having to pay interest on a bank loan

D Having complete control of the business

4
*P69551A0420* 
 LEGO’s revenue in 2019 was 38.5 billion DKK. In 2020 it was 40.81 billion DKK.
(v) Which one of the following is the percentage increase from 2019 to 2020?
Select one answer.
(1)
A 0.06%

B 1.06%

C 2.31%

D 6%
(vi) Which one of the following functional areas could help employees who had
a problem with their wage?
Select one answer.
(1)
A Production

B Finance
C Marketing

D Sales
(b) Define the term break-even.
(1)
Break even is =Fixed costs/(Selling Price - Variable costs)
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

(c) Define the term public corporation.

(1)

Businesses operated by local or national government that aims to serve the population, the aim
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

isn’t profit.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

(d) State one benefit for LEGO of having a short span of control.
(1)
One benefit is the improve in communication, less people that ie. the Lego Production
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .
department has to comunicate to, meaning that there will be better communication
inside the lego factory ensuring less mistakes of producing a lego set.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

5
 *P69551A0520* Turn over
 LEGO sells pineapple pencil holders for 148.00 DKK. The markup is 15%.
(e) Calculate, to two decimal places, the cost of making the pineapple pencil holders.
You are advised to show your working.
(2)

148x1.15= 1.702

1.70
............................................................ .. DKK

(f) Explain one disadvantage of using questionnaires as a method of market research.

(3)

One disadvantage of using questionnaires as a method of market research is the responders

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .
might not be willing to respond, or the responders might give not useful data. For example,
. . . . . . . . .if
. . .. .. a
.. .. ..questionnaire
.. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .is
. . . . . .asked
. . . . . . . . . . . . . . . . . .through the phone, the responder might not like being phoned ..by
. . . . . . . . . . . . . . . . . . ......................................................................................................................................................... ....................

the business. This means that resources and time can be wasted conducting these market
. . . . . . . . .research
. . .. .. .. .. .. .. .. .. .. .. . . . . since
. . . . . . . . . . . . . . . .they
. . . . . . . . . . . . . . did
. . . . . . . . . . .not
. . . . . . . . . . give
. . . . . . . . . . . . .any useful data when they could’ve used this time and .. . . . . . . . . . . . . . . . . . . . .
. . .........................................................................................................................................................

resource somewhere else such as methods of secondary resources instead.

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

6
*P69551A0620* 
 (g) Analyse the benefits for LEGO of being a multinational business.
(6)
One benefit of LEGO becoming a multinational business means the access to larger markets.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .
LEGO sets are mostly based on cartoons and movies, like harry potter and the marvels
universe, is recognized and known throughout the worlds and known in most country, meaning
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .
that there will likely be demand everywhere around the world. This means that LEGO can
. .access
. . . . . . . . . .. .. .. .. .. more
.. .. .. .. .. . . . . . .demand,
. . . . . . . . . . . . . . . . . . . . . . . . allowing
. . . . . . . . . . . . . . . . . . . . . . . .lego
. . . . . . . . . . . . to have more sales.
. . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

Another benefit is that LEGO can gain access to benefits of being in other countries, like
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

cheaper labour. Some countries labour are cheaper than others, for example, labour in china is
a lot cheaper than in denmark. This means that LEGO can save costs of manufacturing the
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

plastic building blocks. This can lead to LEGO using this saved costs to grow the business
further in other countries.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................................................................................................................................... .. . . . . . . . . . . . . . . . . . . . .

(Total for Question 1 = 20 marks)

7
 *P69551A0720* Turn over
2 All 18,000 LEGO employees are full-time.
(a) State one financial objective for LEGO.
(1)
One financial objective for LEGO could be growing in market share, to expand further and
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
employ even more employees to produce their plastic building blocks.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(b) State one possible reason why LEGO does not recruit casual employees.
(1)

The casual employee can call in sick at any moment, even last minute, meaning that if an
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
employee is missing in a part of the production line, it could cause problems for the
. . . . . . . . . . production
. .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . .of
. . . . . . . the
. . . . . . . . . . . .toy
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(c) Explain one reason why a business would pay its employees above the minimum
wage.
(3)

One reason is the business can be seemed as more ethical. This lead to a better brand reputation,
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

since customers will be pleased to know that the product they’re buying isn’t from a business that
.exploits
. . . . . . . . . . .. .. .. .. .. .. ..it’s
.. .. .. . . . .workers.
. . . . . . . . . . . . . . . . . . . . . . . . . This
. . . . . . . . . . . . . .lead
. . . . . . . . . . . . .to
. . . . . . . .the business having more demand since it’s perceived..............
. . . . . ............................................................................................................................................ better
.. . . . . . . .by
.............

the customers.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

8
*P69551A0820* 
 (d) Explain one reason why product trials are important to a business.
(3)

One reason is that it allows the business to gain knowledge on how the product would actually
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

perform. This means that the business can predict whether the product would become successful
. . . .or not,
. . . . . . . .. .. .. .. .. .. ..and
.. .. .. . . . . allows
. . . . . . . . . . . . . . . . . . the
. . . . . . . . . . . .business
. . . . . . . . . . . . . . . . . . . . . . . . .to
. . . . . . . learn if there are faults with the product. This lead..............
. . . ............................................................................................................................................ to the
.. . . . . . . . . . . . . . . . . . . . .

business avoiding costly recalls, and therefore avoiding reputation damage.

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

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. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(e) Explain one reason why a business complies with health and safety legislation.
(3)
One reason is to protect the employees in the business and ensure safety in the work
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
environment. This means that the employees can feel more safe and comfortable in their
. . . . . . .environment.
. . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . .This
. . . . . . . . . . . . . can
. . . . . . . . . . . lead
. . . . . . . . . . . . . to
. . . . . . . .the
. . . . . . . . . . . employees feeling more motivated at work, allowing..............
............................................................................................................................................ an increase
.. . . . . . . . . . . . . . . . . . . . .

in productivity for the business.

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

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. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

9
 *P69551A0920* Turn over
 LEGO is constantly introducing new toys to the market to keep its customers buying.
It is planning to introduce a new Star Wars Princess Leia toy. It is considering the
following two pricing strategies to launch the toy.
Option 1: cost plus
Option 2: skimming.
(f ) Justify which one of these two options LEGO should choose.
(9)

One benefit of LEGO choosing cost plus pricing is that it is a simple method of pricing toys while
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

ensuring that the price is enough to make a profit. This means that LEGO can save time and
. . .costs,
. . . . . . . . .. .. .. .. .. since
.. .. .. .. .. . . . . . .changing
. . . . . . . . . . . . . . . . . . . . . . . . . prices
. . . . . . . . . . . . . . . . . . .of
. . . . . . . .a. . . . .product can be time consuming and costly, because LEGO
. . . . . . ............................................................................................................................................ ..............has
.. . . . . . . . .a............

lot of toys and different series of products. This lead to LEGO saving costs, and they can use
. . .this
. . . . . . . . .. .. ..saved
.. .. .. .. .. .. .. . .costs
. . . . . . . . . . . . . . . . to
. . . . . . . .advertise
. . . . . . . . . . . . . . . . . . . . . . . . . . . .their new product instead. However, this method doesn’t..............
. . . . . . . . . . . . . . . ............................................................................................................................................ take.. .into ...................

account of the fluctuating market. This means that if the prices of competitors like COBI’s
products lowers, but LEGO’s remains the same, demand for LEGO can be lower, leading to a fall
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

in sales revenue.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

A benefit of LEGO choosing price skimming is that it allows high amount of sales revenue right
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
away since the price of the new Star Wars Princess Leia toy is set high. Since LEGO already has
good brand image, demand will still likely be high even if the price is high. This lead to LEGO
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
gaining more profit with the new set. However, if the demand for the Star Wars lineup isn’t
. . .high,
. . . . . . . . .. .. .. ..demand
.. .. .. .. .. .. . . . . . . . . . .might
. . . . . . . . . . . . . . . . . be
. . . . . . . . .low
. . . . . . . . . . due
. . . . . . . . . . . .to
. . . . . . . .the high price turning off the customers. This can lead
. . . ............................................................................................................................................ to.. . .less
.............. ..................

sales, which can lead to the failure of the product.

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

LEGO should use cost plus pricing due to it’s simplicity, and the fluctuation of the market isn’t
likely anyways. Due to the nature of the business, LEGO releases new toy often, so cost plus
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

avoids the difficulty of changing prices throughout the product’s life.

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

10
*P69551A01020* 
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . . .

(Total for Question 2 = 20 marks)

11
 *P69551A01120* Turn over
3 LEGO ensures its employees are fully prepared to carry out the tasks they are
employed for. It looks after and encourages its employees to develop and improve
their own skills.
(a) Define the term delegation.
(1)
Allowing employees of a lower rank in the business to make decisions instead.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(b) Outline one benefit to LEGO of being a privately-owned family business.

(2)

One benefit to LEGO is the owners, since they are from the same family, are likely to trust
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

and believe in each other more. This avoids conflict of interest when LEGO releases new
. lineup,
. . . . . . . . . . .. .. .. .. ..like
.. .. .. .. .. .the
. . . . . . . . . . . barbie
. . . . . . . . . . . . . . . . . . . .toys,
. . . . . . . . . . . . . . .saving
. . . . . . . . . . . . . . . . . . .time and resources.
. . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

An employee working in the offices earns 150 000 DKK. In 2020 LEGO gave its
employees a 4.5% pay increase.
(c) Calculate the employee’s new salary. You are advised to show your working.
(2)

150000 x 1.045 = 156750

156750.00
............................................................ .. DKK

12
*P69551A01220* 
 (d) Analyse how LEGO could use a Statement of Comprehensive Income when
considering the development of new toys.
(6)
Lego can use the SOCI to determine how the business should invest. This can lead to LEGO
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
deciding that it can invest more, if an increasing trend in profit is seen over the years. This can
. .lead
. . . . . . . . . .. ..to
.. .. .. ..influence
.. .. .. .. . . . . . . . . . . . . . . . . . . .in
. . . . . .the
. . . . . . . . . . . development of new toys, since LEGO will likely to invest more ..............
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ into the .. . . . . . . . . . . . . . . . . . . . .

development of the new product. This can lead to a more advanced or complicated toy that could
. .attract
. . . . . . . . . .. .. .. .. .. .. ..more
.. .. .. . . . . . . . . .demand
. . . . . . . . . . . . . . . . . . . . . . for
. . . . . . . . . . .the
. . . . . . . . . . . business.
. . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

Lego can also use the SOCI to compare with competitors. IF LEGO determines competitors are
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

performing better than LEGO, LEGO will make decisions that results in them being more
competitive. This can lead to the new toy that LEGO will develop being different from
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

competitors, differentiating itself from the market. This can lead to more sales since the
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
product will be unique and isn’t offered by competitors.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

13
 *P69551A01320* Turn over
 Ensuring that all employees are fully trained is important to LEGO. LEGO makes sure
that all employees are fully trained and skilled to carry out the work. All employees
have induction training when they start at LEGO. Additional training is undertaken by
employees as they progress through the business. LEGO is considering the following
two options to carry out this additional training.
Option 1: on-the-job training
Option 2: off-the-job training.
(e) Justify which one of these two options LEGO should choose.
(9)
On the job training allows the new employee to familiarize themself with the workspace
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
rightaway. This means that the new employee and quickly feel comfortable and know their way
around the LEGO factory. This leads to the employees being able to operate machines like CAM
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
owned by LEGO, since they know their way around it already. This lead to the employee being able
. .to
. . . . . . . .start
. .. .. .. .. .. .. .. ..work
.. .. . . . . . . . . . .right
. . . . . . . . . . . . . . . away
. . . . . . . . . . . . . . . after
. . . . . . . . . . . . . . . . .the
. . . . . . . . . . .training is complete. This can save time for LEGO and
. ............................................................................................................................................ allows
.............. .. . . . . . . . . . . . . . . . . . . . .

useful output as soon as possible. However, if a mistake is made by the employee in training such
. .as
. . . . . . . .sorting
. .. .. .. .. .. .. .. .. .. ..wrong
. . . . . . . . . . . . . . . . . .color
. . . . . . . . . . . . . . . of
. . . . . . . . the
. . . . . . . . . . . .building bricks, it can lead to a bad brand image since the..............
. . . . . . . . . . . . . . . . ............................................................................................................................................ mistake .. . . . . . . . . . . .in
.........

the product will fail to meet expectations of the customer.

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

Off the job training has less distractions than on the job training. This lead to the employees
being more focused and learn more effectively off the job. This means that the employees can be
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

more skilled after the training since their training is more effective. However, once the
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
workplace is introduced to the employee, there is no established connection with any other
collegues yet compared to on the job training. This can hinder communications, and can lead to a
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
demotivated new employee.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
LEGO should use on the job training since the nature of their business is quite unique, and each
. .factories
. . . . . . . . . .. .. .. .. .. .. .. .. .. are
.. . . . . . . . . .different
. . . . . . . . . . . . . . . . . . . . . . . . . . . . so
. . . . . . . .it
. . . . . . is
. . . . . . .important the employees are familiar with their workplace.
. . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

14
*P69551A01420* 
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(Total for Question 3 = 20 marks)

15
 *P69551A01520* Turn over
4 In 2019 LEGO had current assets of 34 946 million DKK and current liabilities of
12 763 million DKK.
(a) Calculate, to two decimal places, the current ratio in 2019. You are advised to
show your working.
(2)

34946/12763 = 2.738

2.74
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...............

16
*P69551A01620* 
 Quality has always been one of LEGO’s main values. It wants everything that it makes
and sells to be the best so its toys can help children learn and develop. It has a motto
that ‘only the best is good enough’. The founder of LEGO set a company rule that ‘No
one must be able to do this, better than us’. He also stated that he wanted ‘only the
best people that money could buy’ to work at the business.
(b) Analyse the benefits to LEGO of increasing the use of robotics in the manufacture
of toys and games.
(6)
One benefits is that CIM and robots like the laser cutter, or 3d printers or more is more
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
accurate than precise than humans. This means that the products manufactured will be of
a lower tolerance. This lead to a better quality of the plastic blocks. This also allows the
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
owner of LEGO to meet one of his personal satisfaction aims.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

Another benefit is that in the longer term, the business can benefit from having to pay
. . . . . . . . . .less
. .. .. .. .. .. ..wages
.. .. .. .. . . . . . . . . .or
. . . . . . . .salaries.
. . . . . . . . . . . . . . . . . . . . . . . . This
. . . . . . . . . . . . . .means that the plastic manufacturing robots can replace.............. .. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . ............................................................................................................................................

LEGO’s workers and their force saved costs. This cost can be re-invested into new quality
. . . . . . . . . .control
. .. .. .. .. .. .. .. .. .. ..methods,
. . . . . . . . . . . . . . . . . . . . . . . . . . .even
. . . . . . . . . . . . . .Kaizen.
. . . . . . . . . . . . . . . . . . . . .This lead to a better quality toy as well.
. . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

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. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

17
 *P69551A01720* Turn over
 LEGO has progressed from a small carpenter’s shop to a global enterprise and has
been named ‘Toy of the Century’ twice.
(c) Evaluate how LEGO has maintained a competitive advantage in the making of
toys and games. You should use the information provided as well as your own
knowledge of business.
(12)

One way LEGO has retained a competitive advantage over the years is seen in it’s motto,
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

“only best is good enough”. There are a lot of competitors, however, LEGO is able to
. . . . . . . . . . . .. differentiate
.. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . .itself
. . . . . . . . . . . . . . . . .from
. . . . . . . . . . . . . . . the
. . . . . . . . . . . .market by ensuring extremely high quality of their plastic
. . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

building blocks and various other products that they manufacture. This lead to LEGO
. . . . . . . . . . . .. being
.. .. .. .. .. .. .. .. ..more
. . . . . . . . . . . . . . unique
. . . . . . . . . . . . . . . . . . . and
. . . . . . . . . . . .standing out. This means that LEGO can access more demand,
. . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ since
.............. .. . . . . . . . . . . . . . . . . . . . .

there aren’t a lot of competitors that are similar to LEGO. This lead to LEGO retaining
it’s high marketshare over the years. However, this ideology of high quality leads to LEGO
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

having high costs, because a small defect can lead to a product being thrown away.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

Another way is that LEGO always follow and adapt to new changes in the market. LEGO is
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
produces toy based on famous movies and objects, and new movies and cartoons are
released often. LEGO releases new products to meet the trends, keeping up with changing
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
demand. This allows LEGO to access new markets. This leads to more demand for LEGO,
. . . . . . . . . . . .. which
.. .. .. .. .. .. .. .. ..can
. . . . . . . . . . .lead
. . . . . . . . . . . . .to
. . . . . . . more
. . . . . . . . . . . . . . . .sales.
. . . . . . . . . . . . . . . . .However, developing new products constantly comes with
. . . . . ............................................................................................................................................ ..............a.. . . . . . . . . . . . . . . . . . . . .

cost. Development costs in addition to quality control can lower the profits that LEGO can
. . . . . . . . . . . .. get.
.. .. .. .. .. .. ..This
.. .. . . . . . . . . can
. . . . . . . . . . . lead
. . . . . . . . . . . . . .to
. . . . . . .LEGO
. . . . . . . . . . . . . . . . . .not
. . . . . . . . . . being as successfull as it can be.
. ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

After careful evaluation, the main way that LEGO has maintained a competitive advantage
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

is by differentiating itself from competitors. Even though adapting to new trends help,
other competitors also do it. There aren’t many competitors that produce plastic building
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

block toys, and those that does has lower quality. This allows LEGO to have a higher
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .
market share than other competitors, keeping them advantageous.
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

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18
*P69551A01820* 
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

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. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

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. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(Total for Question 4 = 20 marks)

TOTAL FOR PAPER = 80 MARKS

19
 *P69551A01920*
 BLANK PAGE

Source:

[Link]

20
*P69551A02020* 