POB CSEC PAPER 2 SOLUTIONS, Principles of Business - CSEC - Paper 02


Learn how to answer CSEC CXC POB PAST PAPERS – Principles of Business (POB) 2018 Past Paper Questions. Please see the ๐Ÿ†“ Suggested Answers for the CXC CSEC Principles of Business (POB) June 2018- Paper 02 Question Paper. These answers could be incorporated into your Principles of Business Notes for effective studying.

Disclaimer: Kindly note that these should be used as a guide. Also, you may want to get familiar which changes to the CSEC Principles of Business Exam, check out the post on CSEC Principles of Business Exam Format. Should you have any questions or suggestions, feel free to let me know in the comment section below. Don’t forget to share, like and follow this blog. Happy Studying! ๐Ÿ™‚

Question 1


Organisational Chart Definition

1. (a) (i) Define the term ‘organisational chart’. (2 marks)

An organisational chart is a diagram that shows the structure or the layout and shows the relationship, the jobs and ranks, chain of command and the span of control of an organisation.

(ii) State TWO rules that should be followed when constructing an organisational chart.

TWO rules that should be followed when constructing an organisational chart are:

  • Chain of Command
  • Span of control (2 marks)

Simple Organisational Chart

(b) Construct a simple line organisational chart showing THREE levels and THREE positions for a small private limited company.

Chain of Command
Span of Control
Figure 1.0: Organisational Chart of a Bank (3 levels)

Duties of a Personnel (Human Resource Manager)

(c) THREE duties of a Personnel or Human Resource Manager are:

  • Hiring and firing people
  • Training and development
  • Handling employee grievance
  • Developing HR policies

Sources of Conflict

(d) (i) Sources of conflict within an organization are:

  • Pay
  • Promotion
  • Working conditions
  • Redundancies – people getting laid.

Conflict Resolution Strategies

(d) (ii) TWO strategies that could be used to resolve conflict within an organisation are:

Conflict Resolution
Photo by Gratisography on Pexels.com
  • Collaboration
  • Negotiation
  • Effective Communication
  • Mediation
  • Arbitration
  • Legal Action through the courts
  • Industrial action by unions (overtime ban, work-to-rule, strike action, sick out)

Question 2

Topics: Characteristics of an Entrepreneur, Roles of an Entrepreneur, Functional Areas of a Business.

Characteristics of an Entrepreneur

(a) Michelle invented a unique household product and wants to start her own business. List FOUR (4) characteristics she should display as an entrepreneur.

Four (4) characteristics of an entrepreneur are:

  • Goal oriented
  • Creative and innovative
  • Flexible
  • Problem solving – problem solvers
  • People oriented
  • Taking calculated risk
  • Persistent and persevering

Roles of an Entrepreneur

2 (b) Outline EACH of the following roles of an entrepreneur.

(i) Accessing funds (2 marks)

The entrepreneur is the one who has to go out and get the source of funding for their business. Some possible sources of funding can be from family and friends, banks, credit unions and even government grants and subsidies which is a critical factor of production (capital). Once, the entrepreneur acquires funds , they can then start their business venture.

(ii) Organising (2 marks)

The entrepreneur has to bring in all the resources and the factors of production such as the land, labour and capital together. Also, for the workers to carry out their duties more efficiently and effectively.

(c) Paul and his partner are seeking to establish a business. For EACH of the following statements, identify the steps they have taken.

(i) Paul came up with an idea to place custom designs on a sports car. – Conceptualising.

(ii) Paul met with his partners and determined how much raw material and capital and how many workers they would need to start the business. Research and identifying resources.

(iii) The partners went around the community asking people if they would be interested in having custom designs on their cars and how much they would be willing to pay. – Market Research

(iv) The partner created a document which summarized the production, marketing and financial elements of the business to present to potential investors. – Business Plan.

Steps in Establishing a Business


  • Concept- A new business concept
  • Research – research and market probe
  • Resources – identify resources – material, financial, human.
  • Feasibility Study – does the feasibility study indicate that success is likely?
  • Business Plan – Prepare a detailed business plan.
  • Funds – Funds from investors, banks and other sources.
  • Operation – equipment, staffing, production, marketing.

Functional Areas of a Business

2. (d) Describe ONE key functional area of a business.

There are four main functional areas of a business such as : Production (Operations), Finance, Marketing and Human Resource (Personnel).


  • Manufacturing products with set quantity to target and timeframe.
  • Acquire raw materials needed.
  • Quality control.


  • Manages cash flow.
  • Prepares all financial accounts (cash flow, Statement of Financial Position, Balance Sheet.
  • Gives financial advice to management.
  • Makes all payments and gets all receipts.


  • Conducts market research (4Ps)
  • Sales Promotion, Advertising and Public Relations
  • Distribution -manages various distribution channels


  • Hiring
  • Firing
  • Training and development

Why is planning important ?

2 (e) Explain TWO ways in which planning can improve the operation or success of a business.

  • Guideline for gap analysis – where are you now and where you want to be ?
  • Business Plan – if you require financing at a bank or from investors
  • Planning for historical purposes
  • Properly and effectively evaluate what you have accomplished versus what you may have not accomplished.
  • Reduces business-related risk.

Question 3

Topic: Production, Productivity, Factors affecting the supply of labour and the level of productivity.

Production and Productivity

3 (a) (i) Production

Production is the conversion of inputs into outputs. Simply put, raw materials converted or transformed into a product or service.

Production may be defined as the use of resources to make products or services. Production can be organised within firms (businesses) or within the household. In both cases inputs are employed to produce outputs. Firms (businesses) produces the output to sell and earn profits. The household produced the outputs to meet the needs of the family.

(Oxford Dictionary of Economics)

3 (a) (ii) Productivity (2 marks)

Productivity is the measure of the output of an organisation or economy per unit of input (labour, raw materials, capital, etc). E.g. A baker makes 10 bread per hour.

(Oxford Dictionary of Economics)

Factors affecting the supply of labour

3 (b) Identify TWO factors that affect the supply of labour.

Factors that can affect the supply of labour are:

  • Population size
  • Health of the workforce
  • Level of education
  • Working conditions
  • Entrepreneurial skills

Factors influencing productivity of labour

3 (c) Describe TWO factors that can influence the productivity of labour.

  • Education / skill set of the workers
  • Health of the workforce
  • Technology

Level of Production

3 (d) Differentiate between ‘subsistence production’ and ‘domestic production’.

Subsistence production is producing enough for your family, village and community level.

Domestic production is where you produce to supply your country e.g. to supply the whole of Trinidad and Tobago.

Positive and Negative Impact of Improving Technology

3 (e) Explain ONE positive and ONE negative impact on business, which results from improvement in technology.

Positive Impact

  • It makes the work easier and improve productivity

Negative Impact

  • People are going to reduce their jobs e.g in the banking sector with online banking.
  • Cost of implementation of technology – decreases profits.

Question 4

Topics: Marketing Activities, Traditional Marketing Mix , Methods of Sales Promotion, Retailing.

Marketing Activities

4 (a) List FOUR marketing activities.

Four marketing activities include:

  • Market research
  • Pricing
  • Packaging
  • Branding
  • Sales Promotion
  • Advertising
  • Distribution

Traditional Marketing Mix

4 (b) Outline TWO elements of the traditional marketing mix.

Traditional Marketing Mix 4P's of Marketing
Principles of Business Blog 
Figure 2.0 : Traditional Marketing Mix (4 P’s of Marketing)
https://principlesof business.net/

Source: https://eliainsider.com
  • Product – Some aspects to consider are the design, technology, usefulness, convenience, value, the quality, packaging, branding, accessories and warranties.
  • Price – How much are you going to charge for the product/ service? Also, what Pricing Strategy is going to be used? E.g. skimming, penetration, psychological, cost-plus, loss leader.
  • Place – The place indicates the location or where you are going to sell and distribute the product from. For instance is it retail, wholesale, mail order, internet, direct sales, peer-to-peer or a multi-channel approach.
  • Promotion – How are you going to increase sales through promotion of the product or service? Some ways of promoting may be the use of social offers, advertising, endorsements, user trails, direct marketing, leaflets/ posters, free gifts, competitions and joint ventures.

Methods of Sales Promotions

4 (c) Describe EACH of the following methods of promoting sales.

(i) Public Relations

PR and going out to the community to build a good brand. E.g. sponsor somebody and attach your business name to good and positive things.

PR presents the activities of a business in a favourable light. It is often handled by Corporate Communication Department. It tries to reach all stakeholders, including customers, employees, shareholders, the government and the wider community.

(ii) Sales Promotion

An activity designed to boost the sales of product or service. It may include an advertising campaigns, increased public relations as activity, a free sample campaign, offering free gifts or trading stamps, arranging demonstration of exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telephone selling, personal letters (Oxford DBM).


4 (d) Kevin and Mala have been thinking of setting up a cellphone and accessories business together.

(i) Define the term ‘retailing’.

Retailing is part of the distribution channel where customers can visit a store and buy their product. They sell individual units to the customer.

(ii) Describe THREE suitable types of retail outlets that Kevin and Mala could consider setting up.

Department store, retail stores outlets e.g. little outlets in a mall, online store e.g. ebay.

Question 5

Topics: CARICOM, WTO, Economic Problems, Economic Dualism, Foreign Direct Investment.

5. (a) State ONE major function of EACH of the following economic institutions.


(i) Caribbean Community (CARICOM)

To regulate trade among its member countries so most if so most of the caribbean countries are a member of caricom, CARICOM is a major trading bloc and a major function is to regulate trade. Helps regulate trade among its member sas well as with external bodies e.g. a c common external tariff with places like America, Europe in NAFTA.

World Trade Organisation (WTO)

(ii) World Trade organisation (WTO)

Set certain trade rules in place and uphold the rules and regulations and police trading in the world . WTO settles disputes with regards trade whether it be fishing waters, etc.

Economic Problems

(b) Outline ONE way in which governments can alleviate EACH of the following economic problems.

(i) Unemployment

  • Fiscal policy where they use money to start projects to give jobs via building schools or building, roads
  • Train persons who lack certain skills or educate in certain field where they can get jobs
  • Work programmes e.g. OJT

(ii) Overpopulation

  • Proper housing developing in rural areas

To relocate Government must do an education things, family planning . Have education drives e.g. family planning, free contraceptives to avoid accidental pregnancy, free condoms.

(iii)  Migration

  • Reduce crime
  • Provision of skill based job
  • PUSH FACTORS โ€“ unemployment, low wages, poor living conditions, few educational and career opportunities. They increase minimum wage, education drive, create jobs to match high skill of the work force.
  • PULL FACTORS โ€“ people are attracted to the new environment because of new employment opportunities, high wages, good living conditions, good educational and career opportunities.

Economic Dualism

5  (c)    Economic dualism

Economic dualism is a situation in where there are two different sectors within that one economy  for e.g. an economy might consist of high tech paying jobs in the urban areas, whereas in the rural areas, people are still working in a subsistence level and agriculture. Hence, one economy has two different levels.

Foreign Direct Investment (FDI)

5  (d)  Outline TWO benefits of obtaining Foreign Direct Investment (FDI).

  • Job creation e.g. hotel coming to the island โ€“ create jobs
  • Taxes for the government โ€“ new source of revenue
  • Access to foreign currency
  • Able to get ties with other government- – strengthen diplomatic ties
  • Let locals know about international standards and get to know about knowledge and compete on a global scale.

5  (e)   Explain TWO ways in which Caribbean governments can assist in the development of the manufacturing sector of their countries.

  • Use certain tools such as foreign policy and tax system e.g. tariff to make foreign goods more expensive to locals  which lead to buy local goods and grow the manufacturing sector and increase demand.
  • Government can implement subsidies to the manufacture โ€“ e.g. tax break for raw material and reduces overall production cost.
  • Train the population with modern techniques and best practice / education.

I genuinely hope that the solutions for the CSEC CXC POB PAST PAPERS / Principles of Business Past Paper May / June 2018 was extremely useful to you. If you would like me to address a topic or question, feel free to let me know in the comments section below๐Ÿ‘‡.

Also, if you enjoyed this post and found it very helpful, make sure to like and click the follow button at the top. Also, follow us on facebook @STUDYPOB. It would be awesome if you would like, share and tell all your friends and family writing the CSEC CXC Principles of Business Exam about this blog post. Don’t forget to check out my other post providing solutions for CXC CSEC Principles of Business (POB) January Paper 02.

Thanks again for the love and support. Happy reading and sharing …. until the next blog post! ๐Ÿ™‚


Black J, Hashimzade N, Myles G, eds. A Dictionary of Economics. 4 ed. ed. Oxford University Press; 2012. https://www.oxfordreference.com/view/10.1093/acref/9780199696321.001.0001/acref-9780199696321. (Accessed July 22, 2019)

CSEC (2018) Principles of Business Past Paper May/June 2018 Caribbean Examination Council.

Freedman, E. (2014) Elia Insider Available at URL: https://eliainsider.com (Accessed: 20 July 2019)


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.