BUSINESS ENVIRONMENT DECEMBER 2021 PAST PAPER

FRIDAY: 17 December 2021.   Time Allowed: 3 hours.

Answer any FIVE questions.       ALL questions carry equal marks.

QUESTION ONE

1.           Explain the meaning of the following terms:

Inflation.      (2 marks)

Economies of scale.     (2 marks)

Diseconomies of scale.       (2 marks)

Returns to scale.         (2 marks)

2.          Outline four forms of business entities that an investor could establish in Kenya.     (4 marks)

3.           Identify eight features of multinational enterprises (MNEs).   (8 marks)

(Total; 20 marks)

 

QUESTION TWO

1.          Discuss five benefits of analysing international environment to a company.    (10 marks)

2.          Describe three challenges that a company might face when adopting a new strategy.      (6 marks)

3.           Explain four elements of marketing mix.   (4 marks)

(Total: 20 marks)

 

QUESTION THREE

1.           Propose five reasons why organisations might require a conducive political environment.     (10 marks)

2.          Although Porter’s Five Forces Model was not developed from a risk analysis perspective, applying it to an individual business environment does give insights into the forces that might positively or negatively affect the business’s revenue and profitability in the future.

Required:

As a credit analyst, advise your credit committee how the Porter’s Forces Model can be applied in credit assessment.  (10 marks)

(Total: 20 marks)

 

QUESTION FOUR

1.           Define the term “company analysis”.     (2 marks)

Explain four elements of company analysis.   (8 marks)

2.          Define the term “elasticity of demand”.    (2 marks)

Outline three variables that could affect elasticity of demand.  (3 marks)

3.           Highlight five factors that might influence currency exchange rates.    (5 marks)

(Total: 20 marks)

QUESTION FIVE

1.          Enumerate four international trade theories.     (4 marks)

Examine two advantages of comparative advantage theory.    (4 marks)

2.           Identify three roles of each of the following organisations:

International Monetary Fund (IMF).    (6 marks)

World Bank.    (6 marks)

(Total: 20 marks)

 

QUESTION SIX

1.          Highlight five factors that might determine market structure.       (5 marks)

2.         Describe four categories of economic market structures.       (8 marks)

3.         The Central Bank of Kenya’s mandate is discharged through various functions.

Highlight seven of these functions.         (7 marks)

(Total: 20 marks)

 

QUESTION SEVEN

1.           Distinguish between “marketing concept” and “selling concept”.     (4 marks)

2.          In the context of balance of payments:

Assess the significance of balance of payments to a country.   (4 marks)

Explain three components of the capital account of balance of payments.   (6 marks)

3.           Summarise six characteristics of strategic business decisions.      (6 marks)

(Total: 20 marks)

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