Business Studies -- Hong Kong Economy
Paper I : Short Questions
1. What role can an external director (a member of the Board of Directors, who is not an employee
of the company) play in a publicly-listed company? (91 : 2 marks)
2. Why do small businesses continue to flourish? (92 : 4 marks)
Suggest 4 reasons why small companies continue to flourish in Hong Kong. (94 : 4 marks)
3. Give examples of three types of government regulations that affect Hong Kong business
activities. (94 : 3 marks)
4. Name 4 groups who have a stake in any business and whose interests should be considered by a
firm concerned with business ethics. (96 : 2 marks)
5. List 4 factors in the external environment which might affect a firm. (96 : 2 marks)
6. Using examples explain how a firm which is concerned about business ethics should respond to
consumers‟ right to be informed. (97 : 4 marks)
7. Many companies buy licensed software for their employees but they also tolerate employees
using unlicensed software. Explain who might suffer, and how, if companies tolerate the use of
unlicensed software. (98 : 3 marks)
8. You are the manager of a company which imports and processes paper products from Indonesia
for the Japanese and Korean markets. Suggest 4 difficulties you might encounter because of the
Asian financial crisis. (99 : 6 marks)
9. Suggest 2 difficulties that the Government is likely to encounter in its efforts to promote and
develop a high technology sector in Hong Kong. (99 : 3 marks)
10. State 2 ways in which an environmental pressure group could affect a firm‟s activities. (00 : 2
11. Give 2 examples where environmental protection measures would hurt businesses in Hong Kong.
Also give 2 examples where such measures would lead to more business opportunities. (01 : 6
12. State 3 reasons for the high failure rate of small businesses. (01: 3 marks)
13. Briefly explain 2 possible benefits to Hong Kong businesses brought about by China‟s entry into
the World Trade Organization. (02 : 4 marks)
14. Suggest 2 possible problems that a franchisor might face in using franchising as a means of
expansion, as compared to setting up its own branches. (02 : 4 marks)
15. A foreign bank has selected Hong Kong as its Asian regional headquarters. Suggest 3 reasons
for the choice. (02 : 6 marks)
16. Discuss 2 possible conflicts in objectives between the management and the shareholders of a
company. (03 : 4 marks)
17. Suggest 2 reasons to explain why a listed company would go private. (03 : 4 marks)
18. List 4 ways for a company to enhance awareness of business ethics among its employees.
Paper II : Essay Questions
1. Mergers and divestitures are two significant but contradictory trends in today‟s corporate
environment. What are mergers and divestitures? Discuss the objectives behind mergers and
divestitures and explain how those objectives might be accomplished. (1990)
2. Business objectives are always varied in accordance with the operational environment and the
stages of development of the firm. Discuss. (1990)
3. “It‟s easier to start a new venture today, but it‟s harder to succeed.” Discuss the above statement
with reference to the Hong Kong environment. (1990)
4. What do you understand by „business ethics‟? Discuss the major ethical issues that a typical
manufacturer in Hong Kong has to face. (1990)
5. What factors would you consider to be important if you were going to select a form of business
ownership for a new enterprise in Hong Kong? Explain with specific examples. (1991)
6. The Hong Kong government is often criticized for not providing any specific support to the small
business sector. Do you agree with the view that, like many other governments in South East
Asia, the Hong Kong government should support the small business sector? Why or why not?
7. Discuss the business advantages and problems of the recent trend for many firms to shift their
manufacturing bases to Mainland China while maintaining only their head offices in Hong Kong.
8. “The main challenge for today‟s manager in a big business is how to stay big but act like a small
business.” Elaborate. (1991)
9. Joint Ventures are a popular way to help a company move into international business. Discuss
the advantages and disadvantages of this method, as compared to direct investment, when a
company plans to establish a business in the People‟s Republic of China. (1992)
10. To whom, apart from its owners/shareholders, does a Hong Kong business owe a responsibility?
Illustrate with examples. (1992)
11. It is the government‟s intention, as set out in the White Paper, “Pollution in Hong Kong: A Time
to Act”, to tackle Hong Kong‟s environment pollution problems over the next 10 years by means
of legislation and education. If you were running a business in one of the industries (e.g.
bleaching and dyeing) which is likely to be affected by such a government policy, how would
you respond? (1993)
12. Hong Kong businesses operate in a private enterprise system. Describe and give examples of
the major characteristics of such a system. (1993)
13. Business is become more responsive to consumer expectations than it was in the past. Illustrate
this trend with particular reference to the Hong Kong business environment. (1993)
14. You are planning to start up your own retail business. Which would you prefer: opening an
independent store or a franchise store? Why? (1993)
15. There is an urgent need in Hong Kong for an improvement in consumer rights and a policy on
business ethics. Elaborate on this statement with reference to the relationship between
consumer rights and business ethics. Illustrate your answer with an example. (1994)
16. Franchising is becoming one of the popular ways of getting into business. Explain with an
example how a franchise operation works. What are some of its advantages and disadvantages
for the franchisee? (1994)
17. In what sectors of the Hong Kong economy are small businesses most important? Discuss the
major strengths and weakness of small businesses in competing with big businesses. (1995)
18. In order to protect employees and consumers in Hong Kong, the government has recently brought
into effect two major ordinances: (a) The Occupational Retirement Schemes Ordinance and (b)
The Consumer Goods Safety Ordinance. Explain briefly what Hong Kong business owners are
required to do under these ordinances to protect employees and consumers. How would these
ordinances affect business operations? What managerial implications could be drawn from
these two ordinances? (1996)
19. “The social responsibility of business is to increase its profits.” Do you agree with this
statement? Why or why not? If the business community adopts a broader view of social
responsibility, what are the particular responsibilities it should bear? (1996)
20. Although the Hong Kong government is philosophically committed to the free-enterprise system,
it has increasingly intervened to solve specific problems and to help foster business prosperity.
Illustrate with examples how government actions benefit the business sector. (1996)
21. The Hong Kong Government‟s economic policy has been described as one of „positive
non-interventionism‟. Why, then, has the government continued to regulate some businesses?
Why, on the other hand, has it chosen to deregulate others? Illustrate your answer with
22. It is said that over-reliance on the service sector will leave Hong Kong vulnerable to the external
environment and that there is a need to revitalize Hong Kong‟s manufacturing industries as a
long-term policy. Comment on the pros and cons of the policy of revitalizing the manufacturing
industries of Hong Kong. (1998)
23. The relocation of manufacturing and processing operations to Mainland China by many
businesses has transformed Hong Kong‟s industrial and trade structure. Discuss this
transformation and illustrate with examples. (1998)
24. In view of the increasing concern about the worsening air pollution problem in Hong Kong, an
automobile manufacturer is considering launching a new car model. Illustrate how the firm can
increase its chance of success by planning for and developing the new model while ensuring that
it is socially responsible in regard to the environment. (1999)
25. A drug company is trying to decide whether it should charge a low price for a new drug product
to penetrate the market or charge a high price to skim the market. Discuss the conflicting
interests of the various stakeholders in setting the price of the new drug. (1999)
26. With reference to the government‟s actions towards different public utilities in Hong Kong (e.g.
telecommunication or public transport service), discuss the role government in relation to
27. By allowing more firms to operate in certain industries, the government has been opening up
markets previously protected by franchises.
(a) How would this affect the operations of the existing firms? (15 marks)
(b) What special issues should a firm take into account when entering a market newly opened
up to competition? (10 marks) (2000)
28. Developing and promoting technological innovation and advancement is one of the government‟s
long-term strategies to help enhance Hong Kong‟s competitiveness in the world market.
Discuss how this strategy will bring benefits and cause problems to business firms. (2000)
29. (a) Is big business always inefficient? Discuss. (16 marks)
(b) What are the consequences for the economy when big business dominates the markets?
(9 marks) (2000)
30. Most businesses in Hong Kong operate on the principles of private enterprise: private property
rights, freedom of choice, profit incentive, and fair competition.
Discuss how these principles drive the business of a company in the newspaper industry. (2001)
31. Suppose you have the following 3 alternatives when starting a small business :
(i) opening an entirely new business
(ii) opening a new business under a franchise
(iii) buying an existing business
Suggest and explain the criteria you would use in evaluating these alternatives. (2001)
32. A foreign company plans to set up a large-scale theme park or amusement park in Hong Kong.
Analyze the external environmental factors that the company should review when setting up the
park in Hong Kong. (2001)
33. During an economic downturn, one company may sell off some of its business divisions while
another company may choose to take over other companies. Discuss the reasons for this
34. While many businesses are conscious of the need for environmental protection, they often find
effective implementation difficult.
(a) Discuss the implementation difficulties these businesses might encounter. (12 marks)
(b) Elaborate, with examples, what aspects should be covered by a company‟s environmental
protection programme. (13 marks) (2002)
35. In recent years there has been a large number of business mergers and acquisitions with
(a) What are the reasons for business mergers and acquisitions? (12 marks)
(b) Suggest why the results of business mergers and acquisitions are often disappointing.
(13 marks) (2003)
36. The government wishes to boost private sector investment in research and development so as to
help Hong Kong‟s industrial development.
(a) Illustrate with examples the types of incentives that the government might provide to boost
private sector investment in research and development. (9 marks)
(b) How might the increase in private sector investment in research and development help Hong
Kong‟s industrial development? (16 marks) (2003)
37. Discuss the business ethical issues that a company has to consider with respect to the following:
(a) ensuring product safety
(b) avoiding environmental pollution
(c) fulfilling the duties of the board of directors (25 marks) (2003)
38. A recent survey on small and medium enterprises (SMEs) has revealed that local SMEs are
generally cautious about Hong Kong‟s business environment in the near future.
(a) Illustrate with examples how the business environment will affect the operations of SMEs.
(b) Besides business environment, what are the major factors leading to the failure of an SME?
(13 marks) (2003)
39. (a) If you are considering buying a franchise as a means of starting up a business, what factors
should be taken into account? (10 marks)
(b) Why has franchising become a common means of expansion in the business of convenience
stores? (15 marks) (2004)
40. Study the following data showing the total number of people employed in the services and
manufacturing sectors in Hong Kong:
Year Services Manufacturing
1980 627,342 892,140
1985 876,608 847,615
1990 1,239,004 715,597
1995 1,568,616 375,766
2000 1,620,148 226,205
(a) Describe the trend of changes in the industrial structure in Hong Kong, as reflected in the
above data. (4 marks)
(b) Explain why Hong Kong has been undergoing such changes in industrial structure.
(c) In view of the above trend, what difficulties would a manufacturing firm in Hong Kong
face? (9 marks) (2004)
41. It has been argued that big supermarket chains in Hong Kong have competitive advantages over
shops in traditional wet markets because of economies of scale in operation.
Elaborate with examples the types of economies of scale for big supermarket chains in Hong
Kong. (25 marks) (2004)