2022 Paper 2

Question 1

Discuss the impact on a company of using retained profit as a source of finance for expansion.

Answer 1

Retained profit is often not large enough to be able to
fund the expansion plans of a business.

Other sources of finance will also need to be
used to fund the expansion plans which will either
increase fixed costs (bank loans) or dilute the ownership
of existing shareholders (share capital).

Question 2

Outline one drawback to Greggs of using batch production in its factories.

Answer 2

Batch production is less efficient than flow production.
Therefore, the cost of making a Vegan sausage roll may be higher
than it could be.

Question 3

Analyse the impact on Greggs from improving its logistics.

Answer 3

Increased efficiency
Could reduce costs