§

Business Studies
Year 2022

Study Guide - Specialization Test

Business Studies Teachers

 Table of Contents
Test Overview……………………………………………………………………….……Page 2

Test specifications………………………………………………………………….……Page 3

Sample Questions ………………………………………………………………………Page 15

Answer Key……………………………………………………………………………….Page 28

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 Educational Professions Licensure

Business Studies Study Guide

The Teacher Licensing System in the Ministry of Education of the United Arab Emirates is one of the educational
priorities that aim at optimizing investment in teachers in order to help them to achieve the objectives of the
ministry and to improve educational outcomes.

The Business Studies Test for teachers is one of the Professional teacher’s license requirements for all teachers
in the UAE teaching Business Studies.

Test Overview

Test Name Business Studies Test

Number of questions 80
Test Duration 2 hours
Format of questions Multiple Choice questions
Test Delivery Computer delivered

Approximate Approximate
Section Content Domain Percentage of Number of
Test Questions
BUSINESS STUDIES
I. Finance and
25% 20
accounting
Section 1:
Business II.: Operations
15% 12
Studies - core Management I V
management
content
III. Marketing 15% 12

II
Section 2 IV. People in IV
20% 16
Business Business
Studies – III
Human
resources and
associated
V. External
environmental Domain I: Domain II: Domain III:
Business 25% 20
factors
Environment Domain IV: Domain V

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PART 1: Test Specifications
Section 1: Business Studies core management content

This section tests the examinee’s knowledge in core theoretocal prinicple domains pertaining to business studies
such as finances, accounting, operations management and marketing

Domain 1: Finance and Accounting

This section tests the examinee’s knowledge and understanding of financial management, account analysis and
the assessment of business financial performance.

Candidates should be able to demonstrate conceptual case-based evaluative judgement, theoretical knowledge
and practical understanding of the associated areas:

1.1 FINANCIAL OBJECTIVES

1.1.1 Managing financial objectives
• Demonstrate the ability to set well thought out financial business objectives
• Evaluate how objectives are used by a business to achieve their specified aims

1.2 FINANCIAL MANAGEMENT AND BUSINESS ACCOUNTING

1.2.1 Principles and Methods of Financial Management
• Demonstrate understanding of principles and terminology associated with financial management and
business accounting.
• Assess financial operations in raising and managing finance, and measuring business performance
• Demonstrate understanding of decision-making ethical processes to improve financial performance
• Evaluate budgets and how they impact the quality of performance within business functions
1.2.2 Management accounting: the interpretation and use of financial statements
• Evaluate the accounting cycle, accounting processes and regulatory accounting principles (RAP)
• Interpret Statements of Standard Accounting Practice (SSAP) and the use of financial statements
• Analyse calculations of profitability ratios to assess business performance
• Demonstrate the purpose and understanding of different budgets such as (but not limited to) historical
figures, zero based)
• Assess difficulties of budgets
1.2.3 Investment appraisal
• Demonstrate understanding of the time value of money
• Analyse risks involved in investment appraisal decision making processes
• Interpret payback period of investments in years and months
• Quantitively assess average rate of return (ARR), discounted cashflow (DCF), net present value (NPV)
1.2.4 Ratio Analysis and Financial Performance
• Calculate and interpret components of financial statements
• Demonstrate qualitative and quantitative understanding of different types of ratios include (but not
limited to): liquidity ratios, activity ratios, shareholder ratios, profitability ratios, current ratios, acid test
ratios, gearing ratio (long-term liabilities).

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 • Evaluate financial performance measures and investment appraisals.
• Analyse and interpret return on capital employed (ROCE)
1.2.5 Profitability
• Demonstrate understanding and knowledge of the concept of profit in relation to financial management
• Analyze financial performance with relevance to the importance of profitability
• Interpret and calculate gross profit and net profits and respective profit margin ratios
1.2.6 Credit Control
• Demonstrate understanding of concepts and regulations pertaining to credit, taxes, and bankruptcy
• Evaluate financial decisions in sourcing finance and assessing credit performance
1.2.7 Working capital
• Demonstrate understanding and knowledge of the concept of working capital in relation to financial
management and business trading operations
• Evaluate working capital in relation to components such as (but not limited to) cash/cash equivalents,
accounts receivable (AR), accounts payable (AP), inventories, liquidity, asset management
1.2.8 Financial accounting
• Demonstrate understanding of cashflow forecast strategies and their purpose in business
• Evaluate the relationship between investment, profit and cashflow
• Analyse financial performance and window dressing manipulation
• Interpret cashflow forecasts and components of account income statements
• Recognize methods of depreciation such as (but not limited to) straight line, declining balance)
1.2.9 Sources of Finance
• Recognise types of finance sources with relation to concepts and regulatory agencies involved in banking
and financial security
• Demonstrate qualitative and quantitative understanding of different sources of finance such as (but not
limited to), leases, sales, shares, trade credits, debentures, business angels, subsidies, short, medium,
and long-term bank overdrafts, loans, and grants
1.2.10 Revenue and Costs
• Distinguish between concepts of business revenue, costs and profit and demonstrate qualitatitative and
quantitative understanding of these concepts
• Identify different types of business costs such as (but not limited to) fixed, variable, semi-variable, direct,
indirect, overhead, and total costs
• Interpret and calculate different revenue and costs analysis strategies such as (but not limited to) break-
even and variance analysis

1.3 PERSONAL AND BUSINESS FINANCE

1.3.1 Financial planning
• Demonstrate understanding of financial services offered by banks and other financial institutions
• Analyze various types of credit and strategies for managing credit
• Evaluate various types of investment and retirement options and estate planning methods
1.3.2 Credit Management
• Demonstrate understanding of managing credit with relevance to personal and business finance
recognising and recognise associated risk factors
1.3.3 Financial Institutions
• Recognise types and characteristics of financial institutions
• Outline concepts and regulatory agencies related to banking and financial security
1.3.4 Risk Management

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 • Demonstrate understanding of different types of risks in business management such as (but not limited
to) financial, strategic, compliance, operational and regulatory
• Apply understanding of strategies for assessing and managing risk in various business contexts

1.4 BUSINESS MATH

1.4.1 Basic computational skills
• Apply basic mathematical and computational skills to solve quantitative problems in various business
management
1.4.2 Graphs and charts
• Interpret quantitative visual information releated to business intelligence such as (but not limited to)
break-even graphs, decision trees, pie charts, historgrams lines of best fit, bar charts, scatter diagrams

Domain 2: Operations Management

This section tests the examinee’s knowledge and understanding of how organizations manage their operations,
looking at different production methods, implications and how they are organized.

Candidates should be able to demonstrate conceptual case-based evaluative judgement, theoretical knowledge
and practical understanding of the associated areas:

2.1 OPERATIONAL OBJECTIVES

2.1.1 Cost v Quality, efficiency, productivity, waste reduction, satisficing
• Demonstrate understanding of the nature and breadth of operations and principles of business
management
• Analyse business operations under performance objectives of quality, costs, speed of response,
flexibility and dependability and environmental factors
2.1.2 Stages of production
• Identify business economies under primary, secondary, and tertiary industry sector production
classifications

2.2 PRODUCTION AND PRODUCTIVITY

2.2.1 Methods of production, transforming inputs to outputs
• Demonstrate understanding of different production processes of goods and services including (but not
limited to) job, batch and flow, lean production
• Evaluate factors that affect productivity such as (but not limited to) technological innovation, division of
and specialization
2.2.2 Production efficiency
• Demonstrate understanding of concepts, techniques and philosophies used to improve and streamline
production effiency. Examples include Kaizen, Kanban, Just in Time (JIT), benchmarking automation, lean
production
2.2.3 Ways to improve productivity
• Demonstrate understanding of the term productivity and ways of measuring it in business management
• Evaluate the significance of productivity and select appropriate method(s) of production in each context
• Analyse how information technology such as computer aided design (CAD) and computer aided
manufacturing (CAM) can be used by businesses to improve productivity
2.2.4 Labor productivity

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 • Demonstrate understanding of how labour productivity measures the amount of output per worker
• Analyse operational performance factors that influence labor productivity such as (but not limited to)
division of labour, motivation, technology, investment, skills, and experience of the workforce.

2.3 PRODUCTION PLANNING

2.3.1 Break-even analysis
• Recognise break-even states within business production
• Demonstrate how break-even analysis can support business planning operations
• Evaluate break-even graph and chart diagrams
• Interpret and calculate break-even points
• Apply principles and methods of probability and statistics to evaluations of break-even analysis
2.3.2 Planning Operations, deciding how a project will be carried out
• Demonstrate understanding of the relationship between business objectives and corporate strategy
• Recognise the need for strategic implementation of project management in business operations
• Analyse reasons for and impact of project failure
• Apply the use of project analysis strategies and management tools such as (but not limited to) network
analysis, critical path analysis
2.3.3 Inventory control
• Demonstrate understanding of the concept of stock control, and associated methods of operational
decisions to improve performance
• Recognise the importnace of managing inventory and supply chains
• Analyse micro business environments of cash and credit stock control
2.3.4 Capacity utilization
• Demonstrate the understanding of capacity utilization for operational performance
• Interpet and calculate capacity utilization as a production function
• Distinguish between effiiciency, productivity and capacity utilisation

2.4 QUALITY PRODUCTION

2.4.1 Quality control, maintaining consistent levels of quality
• Demonstrate understanding of Demings’ 14 points of total quality management (TQM)
• Recognise the four stages of quality control used to maintain consistent levels of quality in production
operations
• Analyse ISO9000 standards and guidelines of quality management with relevance to product quality and
business success
2.4.2 Quality assurance
• Demonstrate understanding of inspection and statistical analysis processes involved in TQM to certify
quality in the success of business operations.

Domain 3: Marketing

This section tests the examinee’s knowledge and understanding of relevant marketing concepts, strategies,
models and functions for business competitiveness.

Candidates should be able to demonstrate conceptual case-based evaluative judgement, theoretical knowledge
and practical understanding of the associated areas:

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3.1 MARKETING OBJECTIVES
3.1.1 Sale growth, profitability, brand awareness
• Demonstrate understanding of the role of marketing in business management
• Recognise marketing functions and strategies used to achieve business aims
• Assess how organizations differentiate themselves and their products/services from competitors

3.2 MARKETING PRINCIPLES

3.2.1 Marketing plan and strategies
• Demonstrate understanding of business-related unique selling proposition (USP), sales forecasting an
strategies for differentiation.
• Recognize constituent elements of a marketing plan
• Distinguish between various market entities such as (but not limited to) target markets, market
segments, niche markets, mass markets
3.2.2 Marketing Mix/ 4Ps/7Ps
• Demonstrate understanding of how to recognise the marketing mix of organisations
• Recognize the 4Ps (product, price, promotion, place) of the marketing mix of organizations
• Calculate quantitative elements of the marketing mix principles such as price elasticity of demand (PED),
selling price using the cost-plus pricing method, return on marketing investment (ROMI)
• Recognize the 7Ps in a service-based market (product, price, promotion, place, people, processes,
physical evidence)
• Demonstrate understanding of methods of entry into international markets and strategic/operational
implications
• Recognize cultural differences in international marketing
• Outline features of promotion strategies, branding and advertising,
• Evaluate types of e-commerce, strategies for planning, developing, and establishing an internet-based
business
• Demonstrate understanding of procedures involved in designing, maintaining, and managing a business
website
• Analyze the effects of technology and e-commerce on the marketing mix
• Assess the use of digital technology in marketing mix strategies

3.3 MARKET ANALYSIS AND INTERPRETATION

3.3.1 Sales forecasting and marketing analysis
• Demonstrate understanding of quantitative and qualitative sales forecasting and marketing analaysis
techniques such as (but not limited to) market research surveys, interviews, time series analysis, SWOT
analysis, Delphi method, Boston matrix
• Evaluate the use of sales forecasting to anticipate business revenue at a prospective time period
3.3.2 Market research
• Demonstrate understanding of primary market research techniques such as (but not limited to) surveys,
interviews, focus groups, observations
• Demonstrate understanding of secondary market research techniques (but not limited to) academic
journal papers, government policy publications, media articles
• Distinguish between qualitative and quantitative market research
• Recognize ethical considerations of market research
• Analyze marketing research and marketing data used in decision-making business processes

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Section 2: Business Studies – Human resources and associated environmental factors

This section tests the examinee’s knowledge in associated areas of business related to people in busines and the
external business environment.

Domain 4: People in Business

This section tests the examinee’s knowledge and understanding of how businesses develop policies, use
structures, systems and strategies related to people in business. This section includes content covering human
resource approaches to management and leadership, training and development, that influence business activity.

Candidates should be able to demonstrate conceptual case-based evaluative judgement, theoretical knowledge
and practical understanding of the associated areas:

4.1 HUMAN RESOURCE OBJECTIVES

4.1.1 Stakeholder concept vs Shareholder concept
Distinguish between the stakeholder and shareholder model components of a business company
Outline how stakeholders are categorised in a business and their respective roles
Evaluate the relationship between business objectives, people and organisational structure

4.2 ENTERPRISE AND ENTREPRENEURSHIP

4.2.1 Characteristics of entrepreneurs and types of business ownership
• Recognize the characteristics of entrepreneurs
• Outline the steps involved in starting a business
• Describe the types and characteristics of different categories of business ownership including (but not
limited to) sole proprietorships, partnerships, corporations, franchises, and cooperatives
• Recognize features of private limited and public limited companies, private, public sector, and non-profit
organizations
• Evaluate the impact of different features of ownerships impacts business practices.
• Assess the advantages and disadvantages of business ownership
• Assess the advantages and disadvantages of being an entrepreneur

4.3 LEADERSHIP AND MANAGEMENT

4.3.1 Factors affecting leadership style
• Demonstrate understanding of management theories, methods, skills, and management functions
relative to leadership style
• Analyze factors affecting different leadership and management styles such as (but not limited to)
autocratic, paternalistic, situational, democratic, theory X and theory Y, and laissez-faire
4.3.2 Organizational culture and hierarchy
• Demonstrate understanding of different organizational cultures
• Recognise different management ideologies and functions related to organizational structure such as
(but not limited to) Mintzberg and matrix structure
• Describe organizational design and outline features such as (but not limited to) hierarchy, chain of
command, span of control, delegation, centralisation, decentralisation and bureacracy
4.3.3 Change management
• Describe understanding of the importance to manage change effectively within business

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• Outline how methods such as SWOT analysis, Ansoff matrix and business process reengineering is used
in evaluating different business strategies and change management planning cycles
• Outline features of different model approaches to managing change including Diamond, Storey, Porters
Five Forces, Lewin, and Kotter
• Evaluate how marketplace changes such as (but not limited to) new competitors and negative publicity
can affect a business and methods used to manage these changes effectively
4.3.4 Contingency planning
• Demonstrate understanding of factors that impact on business decision making in relation to risk,
uncertainty, investment criteria and nonfinancial factors
• Analyse strategeies used by business to respond to challenges in business environments and production
disruptions such as (but not limited to) natural disasters, global pandemics, technology breakdown
• Evaluate contingency planning benefits and challenges based on factors such as (but not limited to) cost,
safety, time, and risks
• Distinguish between contingency planning and crisis management

4.3.5 Business objectives

• Demonstrate understanding of how SMART objectives are used by a business to meet its aims
• Analyse how effective business planning may assist with successful business growth
• Recognize categories upon which business objectives are devised such as (but not limited to)
profitability, growth, and survival

4.4 BUSINESS COMMUNICATION

4.4.1 Effective communication methods and channels
• Recognise the importance of effective communication
• Outline different methods and strategies for effective communication in the workplace
4.4.2 Principles and procedures of setting up a business
• Demonstrate understanding of principles and procedures related to buisness ownership
• Analyse structure of business plans and their underlying rationale.
• Outline processes for setting up business franchises, contracts
4.4.3 Stakeholders
• Identify relevant stakeholders and their interests within a business
• Demonstrate the role and importnace of stakeholders within a business
• Evaluate the impact of stakeholder approaches on pressure groups, social responsibilities, and
environmental issues such as global warming and climate change

4.5 HUMAN RESOURCE MANAGEMENT

4.5.1 HR Objective
• Recognise the importance of setting appropriate HR objectives
• Demonstrate understanding of the relationship between HR objectives and business strategy
• Demonstrate understanding of the human resource cycle and functions of each cycle stage element
4.5.2 Effective human resource strategy
• Outline strategies and theories involved in team building and conflict resolution management
• Analyse the benefits and challenges involved in setting up effective human resource strategy

4.6 MOTIVATION
4.6.1 Motivation theory in business
• Explain motivation in relation to business performance objectives

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• Demonstrate understanding of motivation theories as put forward by. Taylor (scientific management), E.
Mayo (human relations), A. Maslow (hierarchy of needs), F. Herzberg (two factor motivation-hygiene
theory), Adams (equity theory), Pink (intrinsic motivation theory) V. Vroom, L. Porter and E. Lawler
(expectancy theories)
• Distinguish between the impacts of financial and non-financial rewards
• Recognize non-financial methods of motivation such as (but not limited to) consultation, job design, job
enlargement, job rotation, job enrichment
4.6.2 Employer/Employee Relationship
• Outline the employer/employee relationship and strategies for improvement
• Outline forms of participation in management such as (but not limited to) quality circles, works councils,
works committees and directors
• Analyse factors that influence individual and group behaviours in business relationships
• Evaluate factors that impact on team building, employee motivation and employee morale
4.6.3 Changes in working practices
• Demonstrate understanding of the relationship between organisational design and how changing
working practices impacts management of the human resource flow
• Outline varying changes to working practices such as (but not limited to) homeworking, zero hours
contracts, hot desking, and casualization
4.6.4 Workforce performance
• Demonstrate understanding of terminolgy related to workforce performance such as (but not limited to)
labor productivity, absenteeism, turnover
• Interpret and calculate labor productivity and labor turnover
4.6.5 Diversity in the workplace
• Demonstrate understanding of the importance of valuing diversity in the workplace
• Analyze techniques and applications of cross-cultural communication
• Evaluate the impact of equal opportunities on employers and employees

4.7 WORKFORCE PLANNING

4.7.1 Workforce types in an organization
• Demonstrate understanding of workforce planning
• Outline different forms of flexible workforce planning practices such as (but not limited to) flexible
hours, homeworking, part time, temporary, job sharing

4.8 RECRUITMENT AND TRAINING

4.8.1 Training and professional development
• Distinguish between different training models such as ‘on the job’ ‘off the job’ apprenticeships and
induction
• Evaluate the benefits and challenges involved in training employees
4.8.2 Recruitment
• Demonstrate understanding of procedures relating to recruitment such as (but not limited to) selection,
training, evaluation, and termination
• Explain principles and practices of collective bargaining and labor contract implementation
• Recognise quality involved in recruitment practices and be able to identify poor recruitment practices.
• Distinguish between internal and external recruitment process and evaluate their relevant effectiveness
• Analyze quality of different employee communication such as (but not limited to) applications,
résumés/curriculum vitaes and interview techniques
4.8.3 Workplace Health and Safety

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 • Demonstrate understanding of how employers fulfil their responsibilities to ensure a safe workplace
• Recognise legal implications and purposes of governmental laws and acts that pertain to workplace
health and safety
4.8.4 Performance management
• Demonstrate understanding of the role of performance management
• Outline how appraisals are used in practice and as a strategic tool to assess performance
• Analyse reward systems incorporated (financial and non-financial) in performance management
processes
• Evaluate different methods of appraisal such as (but not limited to) superior, peer, self and 360
assessment measures and feedback

Domain 5. The External Business Environment

This section tests the examinee’s knowledge and understanding of how economics and the external business
environment influence business performances. This section includes content covering legal, economic, social,
technological, environmental and ethical factors may influence business activity

Candidates should be able to demonstrate conceptual case-based evaluative judgement, theoretical knowledge
and practical understanding of the associated areas:

5.1 EXTERNAL BUSINESS INFLUENCES

5.1.1 Exogenous and Endogenous shocks
• Demonstrate understanding of examples of exogenous shocks and evaluate their impacts on business
pratices
• Demonstrate understanding of examples of endogenous shocks and evaluate their impacts on business
pratices
• Recognise the significance of exogenous and endogenous shocks
5.1.2 Economic systems
• Demonstrate characteristic understanding of different economic systems and allocation of resources
such as (but not limited to) free market, command, subsidised, privatised, mixed market
• Evaluate the roles of public and private sectors in the provision of goods and services
5.1.3 Market failure and government intervention
• Demonstrate understanding of laws and regulations related to product pricing, promotion, selling and
the regulation of competition
• Demonstrate understanding of the concept of market failure and different types such as (but not limited
to) public good, externalities, hidden information, and common property
5.1.4 Theories of competition
• Demonstrate understanding of features of perfect competition, monopolistic competition, monopoly,
and oligopoly
• Analyse the impact of current and political competition
• Evaluate different theories of competition and their impact on business behavior

5.2 GLOBALISATION
5.2.1 Multinationals and globalisation
• Demonstrate understanding of what is meant by globalisation and the nature of global markets and
multinationals

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 • Outline foundations, role, and impact of international business
• Explain the concept of footloose companies and evaluate their advantages and disadvantages
• Explain the concept of offshoring companies and evaluate their advantages and disadvantages
• Recognise factors that have contributed to globalisation
• Evaluate the importance of global marketing and global brands
• Analyse the arguments for and against outsourcing production
5.2.2 Implicatons of demographic change
• Demonstrate understanding of how demographic change factors such as (but not limited to) migration,
labour force, birth rates and ageing population impact business structures and performance
• Analyse how changes in demographics can influence the marketing of business products/services
5.2.3 PEST and PESTLE analysis and International business environment factors
• Recognise the individual elements of PEST and PESTLE analysis and the contribution the tool brings to an
making strategic decisions in an organisation
• Demonstrate understanding of procedures involved in carrying out PEST and PESTLE analysis
• Analyze ethical codes of practice and how they impact on international business operations and
marketing strategies

5.3 INTERNATIONAL TRADE

5.3.1 Reasons for international trade
• Demonstrate understanding of mechanisms for international trade and associated reasons for
international trade
• Explain comparative and absolute advantage as it relates to international trade
• Recognise the value of exchange rates and be able to interpret and make foreign currency calculations
• Analyse global exchange rates
5.3.2 Trading agreements
• Demonstrate understanding of the main features of trade agreements and trading partner agreements
• Analyse information related to imports, exports, trade barriers, free trade, and trading balance
• Recognise the role of national and international policies related to enterprise and trade
• Outline the role of regulators, business infrastructure and the environment on international trade
• Distinguish differences between open free trade and protectionism

5.4 ECONOMICS
5.4.1 Characterstics of economic systems and consequences of the central economic problem
• Recognise features of traditional, market, mixed and command economies
• Outline central problems of an economic system and associated consequences
• Demonstrate understanding of economic system concepts such as (but not limited to) scarcity, choice
and features of competitive market structures,
• Interpret and calculate capital opportunity costs
• Demonstrate understanding of economic influences such as (but not limited to) consumer confidence,
business confidence, interest rates

5.4.2 Factors affecting supply and demand

• Recognise factors that affect lead to a change in supply and demand operations
• Interpret quantitative data related to supply and demand economics such as (but not limited to)
elasticity of demand data, excesses, price equilibrium
• Be able to demonstrate understanding of extrapolation and confidence intervals when analyzing
economic data related to supply and demand

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 • Interpret marketing data and circular flow models of economic exchanges
• Interpet supply and demand diagrams
• Analyse and evaluate factors which affect demand and supply and equilibrium

5.5 ECONOMIES OF SCALE

5.5.1 Economies of scale factors and average cost relationships
• Demonstrate understanding of the advantages that can arise from increasing business
output/productivity/efficiency
• Demonstrate understanding of factors that affect productivity in relation to assessing a change in scale
• Recognise different types of internal and external economies of scale
• Distinguish between economies of scale and diseconomies of scale

5.6 THE NATIONAL ECONOMY

5.6.1 Macroeconomic objectives
• Recognize macroeconomic objectives and indicators used to achieve stable economic growth and
maximise national standards of living
• Demonstrate understanding of major economic theories such as (but not limited to) Keynesian
economics, classic economics, and their influence on the formation of public and business-related
policies

5.6.2 Aggregate supply and demand

• Distinguish between supply and demand and aggregate supply and demand
• Demonstrate understanding of components of aggregate demand
• Demonstrate understanding of components of aggregate supply
• Interpet data representing aggregate demand and supply curves
• Evaluate factors which may affect aggregate supply and demand
5.6.3 Economic growth
• Recognize component features of business cycles and the impact they have on economic growth
• Recognize component features of business inventory cycles and the impact they have on economic
growth
• Analyze quantitative and qualitative information on the relationship between component features of
inventory cycles and business cycles and their impact on economic growth performance
• Be able to identify positive and negative correlations in quantitative data indicating economic growth
performance
• Demonstrate understanding of how economic growth is measured within a business cycle (GDP, GNP)
• Distinguish between GNP and GDP and evaluate their influences on business operations and
performance
• Analyse information on external environments to assess opportunities and threats to economic changes
in business performance and management
5.6.4 Unemployment
• Demonstrate understanding of unemployment as it relates to business management
• Outline categoric features of unemployment such as (but not limited to) cyclical, seasonal, structural,
and frictional unemployment
• Analyse quantitative and qualitative data to interpret and calculate unemployment rates

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• Evaluate social issues related to unemployment and an unproductive labor force that may contribute to
and impact business performance and management
5.6.5 Inflation
• Demonstrate understanding of inflation and how it is caused and measured
• Distinguish between inflation, deflation, and disinflation
• Outline characteristic tenets of Keynesian macroeconomics as it relates to inflation measures in areas
such as (but not limited to) demand-pull, cost push, consumer price index (CPI), retail price index (RPI),
wage spiral inflation
5.6.6 Trade
• Demonstrate understanding of the importance of trade economics in business management
• Outline how different types of trade barriers impact markets for imported goods and services
• Recognise characteristics features of trade economics such as (but not limited to) visible and invisible
trade, trade deficits, trade surplus
• Analyse effects of different types of trade protection
5.6.7 Fiscal and Monetary policy
• Demonstrate understanding of how economic influences of fiscal and monetary policy can affect
financial markets in relation to business management
• Recognise the role of government in economic business performance and management
• Analyse how supply-side policies may affect economic growth rates and business cycles
• Evaluate how government regulation, taxation, interest rates, budgetary policies impact business
performance and management

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PART 2: Sample Questions

Choose the most correct answer:

Question 1

Which of the following business entities have no

restrictions on who shares can be sold to?

Sole trader

Private limited company

Public limited company

Partnership

Question 2

Which of the following describes the term ‘lean production’?

An approach to production that aim to minimize waste

When an item is transferred quickly from one process to another

Involving a small number of people and activities in the production process

When the number of process involved in production are limited by the number of individuals
involved

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Question 3

Which option below correctly shows how to calculate average unit costs?

Total costs/output

Fixed costs/profit

Total costs/profit

Variable costs/output

Question 4

Which option below most accurately describes a zero hours contract?

A contract for employees that complete work with more than one employer

A contract where the employee specifies their working hours

A contract that does not include paid work

A contract where employees are not guaranteed a specific number of hours

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Question 5

The term ‘margin of safety’ is used when considering business sales revenue. What is the formula to
calculate margin of safety?

Variable costs divided by total sales output

Projected sales output minus actual sales output

Actual sales output minus break-even sales output

Fixed costs minus break-even sales output

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Question 6

Amina has been managing her beauty business for two years. She purchases her goods directly from
manufacturers and stocks them in her store. The table below shows her income statements for each
of two years:
Year 1 Year 2
Sales revenue 86 500 97 750
Sales costing 36 850 48 350
Gross profit 51 550 54 750
Net profit (a) 33 500
Expenses 21 950 (b)
Which of the following are the correct answers for (a) and (b) below?

(a) 29 600 (b) 21 250

(a) 34 950 (b) 49 400

(a) 14 700 (b) 43 000

(a) 49 650 (b) 14 850

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Question 7

Playmotors Ltd is a manufacturer of toy vehicles for children and produces a range of toy vehicles
including cars and bikes. The company director was approached by a leading car brand company to
develop a range of toy cars and requested adaptations be made to the vehicles of including the car
company branded logo.
The original toy car was sold at 350 AED with a manufacturing cost per unit of 150 AED. Adaptations
will cost an extra 80 AED for each modified vehicle. The car brand company are offering to pay
425AED for the modified toy vehicle carrying their logo and are requesting 500 units of the toy
vehicle.

Which of the following is the total contribution that would be made if Playmotors Ltd decides to
develop the range of customized toy cars for the car brand company?

52500

97500

34000

68000

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Question 8

Which of the following is the most accurate description of the term ‘income elasticity of demand’?

A quantity range that reflects the dependance of business income on consumer demand

A measure of how the demand for a good or service changes relative to business sales

A measure of how the quantity demanded for a good or service changes with consumer’s real
income

A quantity range that indicates how net profits within a business changes with consumer demand

Question 9

An employee who works in the retail industry completed a performance appraisal. Information was
obtained from customer surveys, records of complaints and compliments. Punctuality records and
feedback from other colleagues and company stakeholders on the productivity and comfortability of
working with the employee. The employee also provided an account of the perceived quality of their
work and achievement of targets previously set.
Which of the options below correctly describes the type of performance appraisal for this employee?

A peer assessment appraisal

A 360 assessment appraisal

A superior assessment appraisal

A self assessment appraisal

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Question 10

A goal of any business is to bring their product or service to prospective customers through the
creation of distribution channels. Which of the following is not a type of distribution channel used by
business operators?

Applied

Multichannel

Modern

Direct

Question 11

Gearing ratio is a measure of a company’s financial leverage. A business has non-current liabilities of
300 000 AED. With an original gearing ratio of 40% the original capital employed is 750 000 AED If it
takes out a business bank loan of 100 000 AED what would be its new gearing ratio?

74%

55%

63%

47%

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Question 12

The marketing mix is a tool used to attract customers to an effective business. Which of the options
below correctly provides two elements of the marketing mix?

Practice and price

Product and promotion

Place and plan

Path and performance

Question 13

Which of the options below are correct in relation to the marketing strategy of ‘penetration pricing’?

Penetration pricing is used to maximize the profit margin on a product that has high popularity in the
market

Penetration pricing is based on raising the recommended retail price of a product

Penetration pricing has similarities with the marketing strategy of price skimming

Penetration pricing involves pricing a product at a lower price to competitors and then raising it once
a customer base is established.

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Question 14

What is the meaning of the term liquidation in relation to business management?

Liquidation is a process of purchasing company goods from competitors

Liquidation is a process involving the release of equity in a company to raise net profits

Liquidation is the process of making credit within a trading business available to shareholders

Liquidation is the process of bringing a business to a close and distributing its assests to claimants

Question 15

Which of the following is not a technique of financial management?

Cash analysis

Investment appraisal.

Trend ratios

Fund flow analysis

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Question 16

Which of the following is a false statement about co-operative businesses?

Co-operative businesses attract investment from large corporations

Co-operative businesses are owned by the people who benefit from the products or services of the
business.

Co-operative businesses are run by a board of directors

Co-operative businesses are primarily funded by retained profits.

Question 17

A shamrock organization is an established business management structure put forward by Charles

Handy (1989) that comprises three different classifications of workers. Which option below describes
a category of workers not involved in a shamrock organization?

Contract workers who provide skills for particular business tasks

Core workers who handle the daily business operations

Voluntary workers who support the social responsibility and business relations with the surrounding
community.

Peripheral workers who form a flexible workforce to maximise labor efficiency

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Question 18

A PESTLE/PESTEL analysis is an acronym for a management framework and diagnostic macro-

economic marketing analysis tool? What does the ‘S’ refer to in this acronym?

Sales

Social

Supply

Seasonal

Question 19

Which option shown is the best example of a business sector whereby the market is comprised of a
small number of large firms in a state of industry interdependence?

Computer technology sector

Pharmaceutical sector

Utility sector

Automobile sector

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Question 20

Which option below correctly lists the correct words of the acronym USP in business studies?

Unique Social Promotion

Unique Supply Position

Unique Strategy Pricing

Unique Selling Proposition

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Question 21

(taken from: ‘Inventories and the Business Cycle’ (Lowe and Flood 93))
A survey investigating industrial trends of a range of revealed data from 200 organizations regarding actual
and expected changes in shocks to orders placed and finished goods stocked over an extended time period of
30+ years. The graph above shows a representation of net balance figures of calculated shocks to orders and
finished goods stocks. The net balance figures represent the difference in the percentage of firms that report
an increase and the percentage of firms that report a decrease.
Which of the following options below indicate the clearest signs of negative correlation between shocks to
demand and inventories?

Sept 72- Sept 74

Sept 66- Sept 68

Sept 88- Sept 90

Sept 78- Sept 80

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Answer Key

Question 1 Question 11

The correct answer is “c”. The correct answer is “d”.

Public limited company. Gearing ratio = long term liabilities/original

capital employed
Original gearing = 40% = 300 000 / (x)
Therefore original capital employed (x) = 300
Question 2 000/0.40 = 750 000
The loan adds 100 000 to long term, non
The correct answer is “a”. current liabilities and capital employed
So new gearing ratio = 400 000/850 000 = 47%
An approach to production that aims to minimize
waste.
Question 12

The correct answer is “b”

Question 3
Product and promotion
The correct answer is “a”.
Question 13
Total costs/output
The correct answer is “d”.

Penetration pricing involves pricing a product at

Question 4 a lower price to competitors and then raising it
once a customer base is established.
The correct answer is “d”.
Question 14
A contract where employees are not guaranteed
a specific number of hours The correct answer is “d”.
Liquidation is the process of bringing a
business to a close and distributing its assests
to claimants

Question 5

The correct answer is “c”. Question 15

Actual sales output minus break-even sales
output The correct answer is “b”.

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Question 6 Investment appraisal

The correct answer is “a”.

Question 16
(a) 29 600 (b) 21 250
51550-21950 - a The correct answer is “a”.
54750-33500 - b
Co-operative businesses attract investment
from large corporations.
Question 7

The correct answer is “b”.

Question 17
(150+80) = 230 (425-230) = contribution cost per
unit = 195aed. Total contribution = 205x500 = The correct answer is “c”.
97500 Voluntary workers who support the social
responsibility and business relations with the
surrounding community
Question 8
Question 18
The correct answer is “c”.
The correct answer is “b”.
A measure of how the quantity demanded for a
good or service changes with consumer’s real
income. Social

Question 9 Question 19

The correct answer is “b”. The correct answer is “c”.

A 360 assessment appraisal Utility sector

Question 20
Question 10
The correct answer is “d”.
The correct answer is “a”.
Unique Selling Proposition
Applied
Question 21

The correct answer is “a”.

Sept 72- Sept 74

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