Topical 05: Explain how the input of capital can contribute to the effectiveness of business operations.

[Sir Afzal Shad]

Explain how the input of capital (including intellectual capital) can contribute to the effectiveness of business operations. [5]
Topical Past Paper Question 05

Answer
[KN] Financial resources, such as money and investments, help businesses buy necessary equipment, hire skilled workers, and expand their operations. For example, if a bakery needs a new oven to increase production, it can use money from its savings or borrow from a bank to purchase it.

[AN] It can boost business operations by creation of innovative products and stay ahead of competitors by taking support from economies of scale.

[AN+] Competitive edge can make business grab a larger consumer base in the market which may lead towards a strong brand reputation & chances of becoming a market leader.

[AN+] Input of capital smooths business operations as the managers can now focus on increasing the quality of production /services rather finding ways to fund the business operations & working capital.

[AN+] In addition, Intellectual capital can improve customer service and helps building brand loyalty. For example, a clothing retailer with knowledgeable staff who provide excellent customer service is likely to attract and retain more customers.

[Eyza Mehmood]

If the main point puts an emphasis on monetary funds then is it ok to mention intellectual capital in the AN+ despite not being mentioned or referred to in the KN and AN?

[Sir Afzal Shad]

If the main point puts an emphasis on monetary funds then is it ok to mention intellectual capital in the AN+ despite not being mentioned or referred to in the KN and AN?

If we are able to develop the link between both monetary funds and the intellectual capital; that how it is used to enhance intellectual capital. In that case, it can be used in the AN+