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Business Studies Paper 2


i) Expose them to modern/new/efficient developments/trends in managing/running/operating businesses.
ii) Educate them on how to identify business opportunities.
iii) Expose them to problems facing businesses/solutions to problems facing businesses.
iv) Educate them on proper business ethics/accept examples of ethics.
v) Educate them on how to (best) use available resources/maximize profits/minimize losses.
vi) Inform them of available business opportunities in the country/other countries.
vii) Expose them to govt policies that affect business in the country.

b) Roles that intermediary play in distribution of goods.
i) Provides a link between producers and consumers/reduces the
Number of transactions between producers and consumers/producers are linked to various
consumers/consumers are linked to various producers.
ii) Breaks bulk to allow consumers buy/get goods in convenient sizes/on behalf
of producers.
iii) Accumulates bulk from various (small-scale) producers/that is convenient to large-scale consumers.
iv) Provides transport to producers/consumers.
v) Stores goods for producers/until required by consumers.
vi) Provides a variety of goods to consumers/from various producers/at one place.
vii) Provides finance to the producer by promptly paying the producer.
viii) Carries out product promotion on behalf of producers/by passing relevant information about products to consumers.
ix) Assist in market research by passing information about the market to producers.
x) Take up risks in distribution of goods by Possessing/transporting/storing of goods/on behalf of producers.
2 © BGM 2012 565/2
xi) Availing goods to consumers at convenient locations/by ensuring steady supply of goods to consumers.
xii) Prepare goods for sale by sorting/grading/branding/accept any example of preparation for sale as explanation.

20 marks


. a) Why many Kenyans are shopping in supermarkets.
i) Goods are sold at lower prices due buying in bulk/leading to savings for the buyer.
ii)Variety of goods therefore the buyer can get most of what he needs/saves time looking for what one needs.
iii)Quick/fast shopping since prices are fixed/no time is wasted on bargaining/prices are shown on the goods/there is self-service/orderly arrangement of goods.
iv)Goods are packed for the customer to make it easy to carry.
v) Additional benefits to the customer from the promotional methods used by the supermarkets, e.g. shopping/smart cards, gifts, free samples, prize winning competitions, special price offers, etc.
vi)Convenient to shop in due to their location (at the centre of town)/private shopping/one can easily notice what he needs.
vii) Its prestigious/fashionable since it can be used as a form of recreation.
viii) (Many supermarkets) accept alternative forms of payment that are more convenient/safe to use (than money)/such as credit/debit cards/accept example of means of payment as explanation.
6 x 2 = 12 mks
1 mk - mention, 2 mks - otherwise.
2. b) Benefits of the new port at Lamu.
i) Employment to people during construction of the port/provision of services at the
port/resulting from developments around the port. ii) Open up the area around the port for development/accept examples of development as explanation/roads/electricity/water/schools/hospitals/etc.
iii)Cheap to import goods through sea transport/leading to reduced prices of imports.
iv) Cheap/easy to export goods through sea/making exports affordable.
v) Ease congestion at the port of Mombasa leading to faster flow/processing of goods on transit.
vi) Help connect the country to other countries (in the hinterland)/South Sudan/Ethiopia leading to wider market for the country's products/raw materials for industries in the country.
vii) Encourage development in the northern part of the country that will utilize resources in the region/through more/improved infrastructure/accept examples of infrastructure as explanation/pipeline/railway line/airports/roads/etc.
viii) Earn the revenue for govt from handling exports/imports of other countries/South Sudan/Ethiopia/taxation of imports/exports.
ix) Establishing of settlement schemes for indigenous people/people displaced by the port/proper land ownership.
x) Supply of power to the residents around the port.
xi) Enhanced security against theft/robbery/terrorism/that encourages establishment of businesses/tourism.
xii) Establishment of social amenities/public utilities that benefit the residents/such as schools/hospitals/recreation places/ etc.

20 marks


a) Advantages of public limited company.
i) Wide range of capital/large capital base making it easy to expand/from the many shareholders/accept examples of sources of capital as explanation.
ii)(Shareholders) have limited liability - owners can only lose the capital contributed/their private property cannot be used to pay business debts.
iii)Specialized/efficient management since they can afford to employ qualified/experienced managers.
iv) Shares/ownership is freely transferable without affecting the capital of the company/which attracts investors/without seeking permission from other shareholders.
v) Continuity of the company even where there's death/insanity/bankruptcy/withdrawal of shareholders.
vi) (Enjoys) economies of scale due to large size/operation/since most are large/accept examples of economies of scale as a naming.
vii) Employees are efficient/(highly) productive since the company can afford motivation (schemes)/which leads to high quality goods/services/accept examples of motivation as explanation.
viii) Has a separate legal existence from the owner/(since) it can own property/enter into legal contracts/agreements/sue in its own name.
ix) Shareholders participate in the running/operations of the company through making major decisions (during the AGM).

20 marks


a) Principles of taxation.
i) Equity - the tax should be charged according to ability to pay.
ii) Certainty - the tax to be paid should be clearly defined/the tax payer should be informed about the rate of the tax/time of payment/amount to pay/etc.
iii) Convenience - collection/payment of tax should not be cumbersome/mode of payment/collection should be comfortable to tax payer/collector.
iv) Economy - administration cost of the tax should not exceed revenue from the tax/lower cost of collection compared to amount collected (from the tax).
v) Flexibility - it should be possible to revise/vary/change/adjust the tax easily to be in line with changing economic situations/prevailing conditions.
vi) Diversity - there should be a wide variety of taxes applied to yield enough/sufficient revenue/cover entire (taxable) population/suit different tax payers/ensure equity.
vii) Elasticity - the tax revenue/collected should be able to respond to changes in national income/realize more income when economy is booming.
viii) Simplicity - (tax system) should be easy to understand/know how it works/easy to apply.
ix) Not oppressive - the tax should not be too high as to discourage (hard) work.
5 x 2 = 10 mks 1mk - mention, 2 mks = otherwise
. 4. b) Measures to improve productivity of labour.
i) Provision of training/education/capacity-building to improve efficiency of the workers/improve their ability to perform their duties.
ii) Competitive/increased remuneration/salaries/wages/allowances to be in line with similar businesses/ to cover increased standards of living.
iii) Provision of efficient/modern Tools/equipments/machinery/technology that leads to improved quality of work/makes work easier /smooth iv) Improving working conditions that makes working comfortable/enjoyable/workers to produce more/better.
v) Improving working relations amongst the workers/between workers and management.
vi) Allowing workers to be part owners by buying shares/ownership in the business/so as to create interest in the success of the business.

vii) Giving incentives/rewards that boost the work output/such as paid holidays, certificates/commendation letters, material/financial rewards/etc/for improved performance.

20 marks


a) Ways in which the price of a product can be determined in a market.
i) (Forces of) demand and supply - the willingness /ability of buyers/consumers to buy and the willingness/ability of sellers/producers to sell/the quantity demanded and the quantity supplied sets the equilibrium/exchange price/the price at which the quantity demanded equals the quantity supplied.
ii) Auctioning/bidding - where buyers bid/compete for the product (by suggesting the prices they are willing to pay) and the product is sold to the highest bidder/at the highest price.
iii) Haggling/bargaining - sellers and buyers argue/bargain/haggle/discuss various possible prices until they agree/compromise on the price at which the product is exchanged/sold.
iv) Tendering - prospective sellers quote/suggest the price at which they are willing/able to sell and the buyer selects the lowest/appropriate price (at which he buys the product).
v) Price fixing by the producer/seller - the producer/seller fixes/sets/recommends the price at which the product should be sold.
vi) Price fixing by the govt - the govt sets the price at which all sellers offer the product to the market/buyer.
5 x 2 - 10 mks
1 mk - mention, 2 mks - otherwise.
5. b) Benefits of mobile phone money transfer services.
i) Confidentiality - a secret PIN is used to access information on the account
ii) Ease of use - as the agent assists in carrying out the transaction/can is used even by illiterate people/easy to understand.
iii) Fast transfer of money to the receiver/without delay.
iv) Convenience - the agents (where money can be deposited/withdrawn) are located close to the user/the service is easily accessible to the users/agents/phones are found throughout the country/even in remote places/one can send/receive money at any place.
v) Affordability - the charges for sending/receiving money is low/affordable.
vi) Security/safety - sending money is quite safe/reliable (so long as the correct pin/receivers phone number is used)/its more safe than carrying cash/one needs a pin to send/receive money.
vii) Acceptability - many people accept it as a way of transferring money/means of payment.

viii) Facilitates m-banking - money can be withdrawn/transferred the mobile phone through bank ATM machines/transferred to/from bank accounts.
ix) No account maintenance fee for keeping money in the mobile phone.
x) Short/simple procedure to register for the service.

20 marks


20 marks

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