Cambridge IGCSE · 0450

Business Studies

People in business — Topic 2

Name: ____________________Date: November 12, 2026

1.
On an organisation chart, the number of people directly managed by one supervisor is called: A The chain of command B The span of control C Delegation D Job production
[1 mark] · no calculator
Worked explanation
1. Choose B, span of control: count the people reporting directly to that supervisor.
2. The chain of command follows authority through successive levels instead. Staff several levels below are not all part of one manager's direct span.
Common mistake: Direct reports differ from everyone lower in the hierarchy.
Marking points
- Selects B: span of control, the number of subordinates reporting directly to one manager.
Examiner tip: Span of control counts direct reports at one level; chain of command describes the full line of authority from top to bottom.
2.
Explain one advantage to a manager of delegating a task to a trusted employee.
[2 marks] · no calculator
Worked explanation
1. Delegating a routine task with appropriate authority frees the manager's time for planning or resolving higher-impact problems.
2. A trusted, trained employee needs less repeated instruction, but the manager still checks outcomes and retains overall accountability. Simply offloading work without resources can defeat the benefit.
Common mistake: Delegation does not remove the manager's overall accountability.
Marking points
- Identifies a benefit to the manager, such as time freed for strategic work or more capable staff.
- Develops that same benefit, for example freeing time for planning improves oversight, or employee skill development reduces the manager's future need to supervise. Do not require a separate employee benefit.
Examiner tip: Delegation passes authority for a task, not accountability for the overall outcome, which the manager still holds.
3.
Explain one advantage and one disadvantage to a business of recruiting a new manager internally rather than externally.
[2 marks] · no calculator
Worked explanation
1. An internal appointee already knows the business's systems, shortening induction and reducing immediate disruption.
2. The choice narrows the pool and may create a vacancy in the employee's former role. Knowing the business is not sufficient evidence that the person can manage it.
Common mistake: Internal recruitment can move rather than eliminate a vacancy.
Marking points
- States an advantage such as the candidate already knowing the business, saving induction time and cost, and motivating other staff who see promotion opportunities.
- States a disadvantage such as missing out on fresh ideas or a wider pool of external talent, and creating a new internal vacancy that still needs filling.
Examiner tip: Internal recruitment is usually faster and cheaper; external recruitment usually brings wider experience and new perspectives.
4.
Paying a sales assistant a fixed amount for each product sold, in addition to a basic wage, is an example of: A Salary B Fringe benefits C Commission D Job rotation
[1 mark] · no calculator
Worked explanation
1. Choose C, commission: the extra payment is linked to products sold.
2. It rewards the sales result on top of basic pay; it is not salary, which is periodic, or rotation, which changes tasks. Poorly designed commission may encourage unsuitable sales.
Common mistake: A sales-linked payment is not a fixed periodic salary.
Marking points
- Selects C: commission, a financial reward directly linked to the amount an employee sells.
Examiner tip: Commission and bonuses reward specific results directly; a salary is a fixed periodic payment regardless of individual output that day.
5.
Explain one way, other than pay, that a business could motivate its employees.
[2 marks] · no calculator
Worked explanation
1. Give an experienced employee responsibility for resolving routine customer problems within clear limits.
2. The autonomy can create achievement and recognition, increasing commitment without simply paying more. Training and manageable workload matter; responsibility without support may create stress instead.
Common mistake: Extra responsibility is not motivating when it is unsupported overload.
Marking points
- Identifies a non-financial method such as training, praise and recognition, job enrichment, or improved working conditions.
- Explains how this method could increase an employee's motivation or job satisfaction.
Examiner tip: Non-financial motivators work on job satisfaction and recognition rather than directly on income.
6.
A manager who makes all decisions alone and expects staff to follow instructions without consultation is using which leadership style? A Democratic B Autocratic C Laissez-faire D Delegative
[1 mark] · no calculator
Worked explanation
1. Choose B, autocratic: the manager decides without consulting staff.
2. Democratic leaders seek input, while laissez-faire gives much more discretion. The question identifies participation, not whether the decision ultimately succeeds.
Common mistake: Autocratic describes decision process, not a guaranteed bad outcome.
Marking points
- Selects B: autocratic leadership, where the manager retains control and does not consult employees before deciding.
Examiner tip: Autocratic leaders decide alone; democratic leaders consult staff; laissez-faire leaders let staff make most decisions themselves.
7.
Explain the difference between on-the-job training and off-the-job training.
[2 marks] · no calculator
Worked explanation
1. Learning while performing normal work under an experienced colleague is on-the-job training.
2. A protected course or simulation separate from productive duties is off-the-job, whether held on site or elsewhere. Both can be useful; the distinction is how learning relates to normal work.
Common mistake: Physical location alone does not classify the training.
Marking points
- States that on-the-job training takes place at the workplace while the employee continues working, often shadowing an experienced colleague.
- States that off-the-job training is separate from normal productive duties, for example a course or simulation; it may occur on the employer's premises or elsewhere.
Examiner tip: Distinguish training while doing normal work from training separate from productive duties, not simply inside versus outside the workplace.
8.
A factory has recently introduced strict, unpopular new rules with no employee input. Analyse two likely effects on employee motivation and productivity.
[3 marks] · no calculator
Worked explanation
1. Unpopular rules imposed without input may make employees feel distrusted, reducing commitment and willingness to suggest improvements.
2. Reduced effort or increased absence can then lower usable output and disrupt schedules. Effects depend also on the rules' content and enforcement; consultation failure is a plausible mechanism, not the only possible cause.
Common mistake: Do not assume motivation falls by a measurable amount without evidence.
Marking points
- Explains that employees may feel a lack of control or recognition, reducing job satisfaction and motivation.
- Explains a resulting consequence such as higher absenteeism, higher staff turnover, or reduced effort and output.
- Links this to the autocratic, non-consultative style of introducing the rules as the underlying cause.
Examiner tip: Link the stated lack of consultation to motivation and then to behaviour or output. Motivation can also depend on the content of rules, pay, workload and working conditions; process is not invariably the main cause.
9.
Discuss whether paying employees a higher basic wage is likely to be more effective than offering non-financial benefits, such as more responsibility and recognition, at motivating a skilled workforce.
[4 marks] · no calculator
Worked explanation
1. If skilled staff feel underpaid, a higher basic wage can relieve financial pressure and improve retention; recognition cannot pay overdue bills.
2. If pay is already fair, autonomy and advancement may better address boredom while a permanent wage rise raises costs. I would diagnose the unmet need first and combine fair pay with meaningful work rather than rank one reward universally best.
Common mistake: Skilled employees do not all have the same unmet needs.
Marking points
- Explains that higher pay directly addresses financial needs and can be a strong, immediate motivator for many employees.
- Explains that for skilled employees whose basic needs are already met, recognition and responsibility can motivate more strongly and more sustainably than pay alone.
- States a limitation, such as the cost to the business of a permanently higher wage bill, or the risk of pay increases being taken for granted over time.
- Reaches a judgement depending on employees' existing pay level, the nature of the work, and the business's ability to afford higher wages.
Examiner tip: Pay tends to matter most when income needs are unmet; recognition and responsibility often matter more once pay is already adequate.
10.
Explain one advantage to an employer of hiring a worker on a part-time contract rather than a full-time contract.
[1 mark] · no calculator
Worked explanation
1. A part-time worker can cover a predictable busy period without contracting for unnecessary quiet hours.
2. This may reduce idle paid time relative to a full-time appointment, provided handovers and recruitment costs do not outweigh the saving. Fewer hours do not imply a lower hourly wage.
Common mistake: Part-time does not necessarily mean cheaper per hour.
Marking points
- States an advantage such as lower total cost than a full-time salary, or the flexibility to cover only the specific hours when the business is busiest.
Examiner tip: Part-time contracts let an employer match staffing closely to busy periods without paying for hours that are not needed.
11.
Explain one way a trade union could benefit its members in negotiations with an employer.
[2 marks] · no calculator
Worked explanation
1. Collective negotiation lets a union present safety concerns with the backing of many members.
2. The employer may agree to better protective equipment because unresolved concerns risk workforce-wide disruption. The gain depends on evidence and negotiating strength, not membership alone.
Common mistake: Collective bargaining does not require an actual strike first.
Marking points
- Explains that a trade union negotiates collectively on behalf of many workers, giving them more bargaining power than an individual negotiating alone.
- States a specific benefit this could achieve, such as better pay, safer working conditions, or improved job security.
Examiner tip: A union's main source of power is numbers: employers must consider the whole workforce's response, not just one employee's.
12.
Explain one purpose of carrying out a regular staff appraisal.
[2 marks] · no calculator
Worked explanation
1. Appraisal compares performance evidence with agreed expectations, identifying where an employee needs support.
2. If errors cluster around one unfamiliar system, targeted training can address them and future reviews can test improvement. A useful appraisal guides action rather than merely assigning a score.
Common mistake: A rating without follow-up does not itself improve performance.
Marking points
- Explains that an appraisal reviews an employee's performance against agreed objectives or standards.
- Explains that this identifies training needs or strengths, helping to improve future performance or inform decisions such as promotion.
Examiner tip: Appraisal looks back at performance to inform forward-looking decisions about development, reward or promotion.