GCSE (9-1)

Business
Retrieval Activities – Theme 1

© artwork: Mark Bolitho | Origami photography Pearson Education Ltd/Naki Kouyioumtzis

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Retrieval Quiz - 1.1.1 – The dynamic nature of business
1. Identify three reasons why new business ideas come about:

Invention
Innovation
Changing Technology and consumer needs as a result
2. Products and services can become ‘obsolete’. Circle the correct definition of ‘obsolete’:

a. A product that is fashionable and in demand

b. A product that is out of date

c. A product which obstructs other products in the market

3. Define the term consumer.

Someone who buys the products from the business consumes their goods.
4. Give two examples of changes in consumer tastes and preferences in recent times.
Consumers want more convenient products.
Consumers also want a wider range of different products too (more choice)

5. Give one reason why a business might decide to adapt one of its products.

A business will want to adapt their products if they are making low sales with that product.
Adapting the product could potentially mean that more people will be interested in the
product so sales will increase. As a result, customer satisfaction rates increase and more
revenue is generated.

Retrieval Quiz - 1.1.2 – Risk and reward

1. Which of the following will improve the cash flow position for a small business?

A. Higher fixed costs

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 B. Higher sales revenue
C. Increased competition
D. Reduced promotion

2. Which of the following is not a type of risk for an entrepreneur?

A. Business failure
B. Financial loss
C. Innovative ideas
D. Lack of security

3. One reward for an entrepreneur starting their own business is ‘independence’. Circle the
best definition of ‘independence’:

a. Operating as a sole trader

b. The ability to make individual decisions

c. Working with other entrepreneurs

4. Give one reason why an entrepreneur might value receiving industry awards.
Industry awards would allow the business to gain a good reputation, resulting in
increased recognition, meaning that more people would want to buy products from the
business as they trust it.
5. Identify one reward for an entrepreneur when starting up a business.

One reward could be independence when starting up a business. An entrepreneur is able to

make decisions by themselves with their independence. This means that they can be their
own boss and no longer follow orders from other people.

Retrieval Quiz - 1.1.3 – The role of business enterprise

1. Businesses produce goods and services. From the products below, circle 5 ‘goods’.

Train Mobile Haircut Pair of New

journey phone trainers T-shirt

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 Internet Skateboard Restaurant Music streaming Bottle of
access meal service shampoo

2. Identify the 5 methods that businesses can use to ‘add value’:

 Have a USP
 Change the aesthetics of the products
 Change the place you sell it
 Change the price to make it cheaper
 Change the quality of the product
3. Give one risk that an entrepreneur takes when starting a new business.

Loss of financial security

4. Give two examples of resources that entrepreneurs organise.

…Raw materials……………………………………………………………………..
…Rent……………………………………………………………………..

5. Give two ways that a business might meet customer needs.

Creating more convenient products

Creating more choice amongst the products

Retrieval Quiz - 1.2.1 – Customer needs

1. Which of the following is a customer need?

A. Place
B. Price
C. Product
D. Promotion

2. ‘Convenience’ is an example of a customer need. Give two examples of business which

provide convenience. Briefly state why.

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 Business 1 …
McDonalds……………………………………………………………………………………….
Provides ‘convenience because:……their drive through so people can get their food
much quicker and don’t have to get out of the car
…………………………………………………..……………………………………………………
Business 2 Amazon delivery
Provides ‘convenience because:…… next day delivery mean people can shop online and
don’t have to go to a supermarket

3. ‘Choice’ is a customer need. State 5 different ways in which a manufacturer of soft drinks
provides choice for customers through different types of drink. An example is provided:
Example 1 - Energy drink

Example 2 – Different flavours of soft drink

Example 3 – Different packaging, cans or glass bottles

Example 4 – Different container sizes

Example 5 – Zero Sugar flavours

4. Give two benefits to a business of understanding customer needs.

1. Increased customer satisfaction
2. More customer loyalty

Retrieval Quiz - 1.2.2 – Market research – 1

1. Which of the following is an example of primary market research?

A. Government data
B. Focus groups
C. Internet research
D. Market reports

2. Give 2 ways that primary research can help a business to reduce risks.

Focus groups and questionnaires.

3. For each of the types of market research in the table below, state a definition, identify one
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 advantage and one disadvantage:
Definition Advantage Disadvantage
Can gain a general Time consuming
Observation When an entrepreneur idea of what to have
goes to a different in your business that
business to examine all the others do.
what works well for
them and what doesn’t

Researching about Can gain both May be outdated

Internet research different businesses in quantitative and
the market as well as qualitative data
information about the
customers and market
in general on the
internet.

When the Have a general idea But there is little

Focus Group entrepreneur calls a of customer quantitative data to
small group of random satisfaction rates. analyse graphs with.
customers to give
honest feedback about
the products and
service of the
business.

Gives clear Sometimes have to

Questionnaire A few short questions quantitative data give them a reward
for customers to which can easily be
answer about te interpreted
business to help them
improve.

4. Give one benefit to a business of using secondary market research.

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 ………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………………..…………………….
…………………………………………………..……………………………………………………

Retrieval Quiz - 1.2.2 – Market research – 2

1. Which of the following is an example of qualitative market research?

A. Face to face interviews

B. Internet research
C. Government reports
D. Surveys

2. Give two ways that primary research can help a business to reduce risks.

Business knows what to sell and what not to sell

Business can understand customer needs more efficiently
3. Identify two ways that social media can use to collect market research data:

Comments on posts can help with qualitative data collection.

Likes and shares will allow the business to know which products are more interesting to
customers.
4. Market research data needs to be as reliable as possible. Bias is one way in which
findings can be unreliable. Consider questions asked by a local pizza takeaway in a
customer survey:

Question 1  Delicious pepperoni

Which pizza topping do you prefer?  Ham
Question 2  Deep pan
Which pizza crust do you prefer?  Thin and crispy

Which question can be said to be biased? Question 1 (both?)

……………………………………

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Retrieval Quiz - 1.2.3 – Market segmentation

1. The following are ways in which markets can be segmented:

a. L ocation……………….

b. D emographics……………….

c. L ………………

d. I ncome ………………..

e. A ge………………

2. Complete the definition of a ‘market segment:

‘A market segment is a group of …businesses……………….. with similar

customers………………….’

3. Populate the market map (below) for the following clothing retailers:

Primark; New Look; Ted Baker; Ralph Lauren; Marks and Spencer;

High Quality

High Low
Price Price

Lower Quality

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Retrieval Quiz - 1.2.4 – The competitive environment

1. The following are methods by which businesses can compete with others:

a. P rice……………….

b. Q quality……………….

c. L ocation………………

d. P roduct ……………….. R ange………………..

e. C ustomer……………… Satisfaction ………………..

2. Which of the following is NOT an element of SWOT analysis?

A. Strengths
B. Weaknesses
C. Organisation
D. Threats

3. Which of the following is a direct competitor of McDonald’s?

A. Burger King
B. Pizza Hut
C. Subway
D. Tesco

4. Give two reasons why it is important for a business to understand its competitors.

1. So that they can find gaps in the market

2. So that they can keep up with the competition and lot loose customers
5. Give one way that a business can respond if a new competitor enters the local market.

Retrieval Quiz - 1.3.1 – Business aims and objectives

1. Define the term market share.

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………………………………………………………………………..
………………………………………………………………………..
……………………………………………………………………

2. The two of the following are financial aims for an entrepreneur when starting up a
business?

A. Business survival
B. Environmental protection
C. Increased profit
D. Individual control
E. Personal satisfaction

3. Give two reasons why profitability might be an objective for an entrepreneur starting a
new business.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

4. Give two examples of social objectives that an entrepreneur might have when starting a
new business.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

5. Define the term financial security.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

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Retrieval Quiz - 1.3.2 – Business revenues, costs and profits

1. What is the formula for calculating revenue?

A. Fixed Cost + Variable Cost

B. Price x Quantity

C. Sales – Total Cost

D. Cost per unit x Output

2. Draw a break even diagram showing the following lines:

 Revenue
 Fixed Costs
 Variable Costs
 Total Costs

3. On your diagram, indicate the break even level of output.

4. Give 2 examples of fixed costs.

1 ………………………………………………………………………..
2. ………………………………………………………………………..

5. Define the term variable cost.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

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Retrieval Quiz - 1.3.3 – Cash and cash-flow

1. Define the term net cash-flow.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

2. Give two reasons why cash is important to a business.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

3. Which two of the following are examples of overheads?

A. Advertising

B. Insurance

C. Packaging

D. Raw materials

E. Stock

4. Give one benefit to a business of having a positive cash-flow position.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

5. Match the terms with the correct definition:

Terms Definitions
1. Net cash flow a. The amount of money a business has at the start of
each month
2. Opening balance b. All the money that comes into a business

3. Cash inflow c. The amount of money a business has at the end of

each month
4. Closing balance d. The difference between cash inflows and cash
outflows

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Retrieval Quiz - 1.3.4 – Source of business finance

1. Define the term venture capital.

………………………………………………………………………..
………………………………………………………………………..
…………………………………………………………

2. Which two of the following are short-term sources of finance?

A. Crowd funding
B. Loans
C. Overdraft
D. Retained profit
E. Trade credit

3. Give one benefit to a business of using retained profit as a source of finance.

………………………………………………………………………..
………………………………………………………………………..
…………………………………………………………

4. Give two impacts on a business of using loans as a main source of finance.

………………………………………………………………………..
………………………………………………………………………..
…………………………………………………………

5. Give one drawback to a business of using crowd funding as a source of finance.

………………………………………………………………………..
………………………………………………………………………..
…………………………………………………………

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Retrieval Quiz - 1.4.1 – The options for start-up and small
businesses

1. Define the term limited liability.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

2. Define the term unlimited liability.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

3. Which one of the following is a feature of a private limited company?

A. Must be owned by one person

B. Owners have limited liability
C. Shareholders must work for the business
D. Shares are sold on the stock exchange

4. Give one advantage and one disadvantage of starting a business as a franchise.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

5. Give two advantages of running a business as a sole trader.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

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Retrieval Quiz - 1.4.2 – Business location

1. Identify the four factors that can influence the location decisions of a business. The
proximity to:

a. C ……………….

b. L ……………….

c. M ……………….

d. M ………………

2. Give one impact on a business of being located close to competitors.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

3. Define the term e-commerce.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

4. Which of the following businesses is more suited to e-commerce rather than fixed
premises?

A. Book seller
B. Hairdresser
C. Personal trainer
D. Restaurant

5. Give two advantages for a business of being located close to supplies of raw
materials.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

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Retrieval Quiz - 1.4.3 – Marketing mix

1. Identify the four elements of the marketing mix:

a. P ……………….

b. P ……………….

c. P ……………….

d. P ………………

2. Give two factors that might influence the price that a business charges for its product.

………………………………………………………………………..
………………………………………………………………………..

3. Which of the following is an example of a business focussing on the ‘place’ element of

the marketing mix:

A. Reducing price as a result of a new competitor entering the market

B. Introducing an online sales system
C. Introducing a new advertising campaign
D. Withdrawing a product from sale due to changing fashions

4. Define the term promotion.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

5. Give two possible impacts of e-commerce on the marketing mix of a business.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

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Retrieval Quiz - 1.4.4 – Business plans

1. Business plans identify certain aspects of a business. Highlight the five elements that
are contained in a business plan.

Business Employee Market Limited

aims/objectives names/photos research liability

Sources of Receipts and Cash-flow Location

finance invoices forecast details

2. Identify two aims that an entrepreneur may have when starting a business.

………………………………………………………………………..
………………………………………………………………………..

3. Give two advantages for a business of having a detailed business plan.

………………………………………………………………………..
………………………………………………………………………..

4. Define the term target market.

………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………

5. Business planning is important. A business plan can help:

M ………………. R ………….
O ………………. F ………….

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Retrieval Quiz - 1.5.1 – Business stakeholders

1. Define the term stakeholder.

………………………………………………………………………..
………………………………………………………………………..
…………………………………………………………

2. Give two impacts that pressure groups might have on a business.

………………………………………………………………………..
………………………………………………………………………..

3. Which one of the following is an advantage to a business of having satisfied

employees?

A. Lower fixed costs

B. Higher staff wages
C. Higher staff turnover
D. Improved customer service

4. Give one conflict that might exist between managers and employees.

……………………………………………………………………..
………………………………………………………………………..
……………………………………………………………

5. Give two ways that government impacts on a business.

………………………………………………………………………..
………………………………………………………………………..

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Retrieval Quiz - 1.5.2 – Technology and business

1. Which two of the following are advantages of using e-commerce for a business?

A. Attracts local customers

B. 24/7 ordering for customers
C. Higher staff turnover
D. Improved customer service
E. Increased sales revenue

2. Give two ways that social media might impact on the costs of a business.

………………………………………………………………………..
………………………………………………………………………..

3. For each of the elements of the marketing mix, suggest one impact of technology.

Element of the marketing Impact of technology

mix

Price

Product

Place

Promotion

4. Give one drawback for a business of using digital payment systems.

………………………………………………………………………..
………………………………………………………………………..
…………………………………………………………

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Retrieval Quiz - 1.5.3 – Legislation and business

1. Give two ways that legislation protects consumers.

………………………………………………………………………..
………………………………………………………………………..

2. Identify the types of legislation that protect employees:

a. R ……………….
b. P ………………
c. D ………………..
d. H ……………… a…. S ……………..

3. Give two impacts on business of complying with employment legislation.

………………………………………………………………………..
………………………………………………………………………..

4. Give two consequences on a business of not complying with consumer legislation.

………………………………………………………………………..
………………………………………………………………………..

5. Define the term discrimination.

……………………………………………………………………..
………………………………………………………………………..
…………………………………………………………………

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Retrieval Quiz - 1.5.4 – The economy and business

1. Define the term inflation.

……………………………………………………………………..
………………………………………………………………………..
……………………………………………………………

2. Which one of the following is an advantage for a business of low levels of

unemployment?

A. Employees require higher wages

B. Fewer potential employees available
C. High levels of consumer spending
D. Staffing vacancies can be filled quickly

3. Give two drawbacks to businesses arising from higher interest rates.

………………………………………………………………………..
………………………………………………………………………..

4. Define the term exchange rate.

……………………………………………………………………..
………………………………………………………………………..
…………………………………………………………………

5. Give one drawback to an importer of lower exchange rates.

………………………………………………………………………..
………………………………………………………………………..

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Retrieval Quiz - 1.5.5 – External influences

1. Define the term external influences.

……………………………………………………………………..
………………………………………………………………………..
……………………………………………………………

2. Give two ways that the economic climate can impact on a business.

………………………………………………………………………..
………………………………………………………………………..

3. Define the term legislation.

……………………………………………………………………..
………………………………………………………………………..
……………………………………………………………

4. Which would be the most likely impact on a business arising from a period of
economic growth?

A. Falling levels of consumer spending

B. Increased levels of competition
C. Lower sales revenue
D. Reduced fixed costs

5. Give one way that a business can respond to changes in legislation.

……………………………………………………………………..
………………………………………………………………………..
……………………………………………………………

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 Answers
Answers 1.1.1
1. Identify three reasons why new business ideas come about:

Changes in technology
Changes in what consumers want
Products and services becoming obsolete

2. Products and services can become ‘obsolete’. Circle the correct definition of ‘obsolete’:

a. A product that is fashionable and in demand

b. A product that is out of date

c. A product which obstructs other products in the market

3. Define the term ‘consumer’.

Someone who buys and uses goods and services.

4. Give 2 examples of changes in consumer tastes and preferences in recent times.

Internet shopping/decline of High Street

Food delivery
Use of social media
Accept any other valid examples

5. Give one reason why a business might decide to adapt one of its products.

To maintain market position

Competition/rival products
New technology
Existing product becomes obsolete

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Answers 1.1.2

1. Which of the following will improve the cash flow position for a small business?

A. Higher fixed costs

B. Higher sales revenue
C. Increased competition
D. Reduced promotion

2. Which of the following is not a type of risk for an entrepreneur?

A. Business failure
B. Financial loss
C. Innovative ideas
D. Lack of security

3. One reward for an entrepreneur starting their own business is ‘independence’. Circle the
best definition of ‘independence’:

a. Operating as a sole trader

b. The ability to make individual decisions

c. Working with other entrepreneurs

4. Give one reason why might an entrepreneur might value receiving industry awards.
Personal satisfaction
To promote the business
Add value

5. Identify one reward for an entrepreneur when starting up a business.

Personal satisfaction
Financial gain/profits
Independence
Business satisfaction

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Answers 1.1.3
1. Businesses produce goods and services. From the products below, circle 5 ‘goods’.

Train Mobile Haircut Pair of New

journey phone trainers T-shirt

Internet Skateboard Restaurant Music streaming Bottle of

access meal service shampoo

2. Identify the 5 methods that businesses can use to ‘add value’:

- Convenience
- Branding
- Unique Selling Point
- Quality
- Design

3. Give one risk that an entrepreneur takes when starting a new business.

Examples include:
- Financial risks - loss of personal assets, bankruptcy
- Competitive risks – threat of competitors

4. Give two examples of resources that entrepreneurs organise.

Examples include:
- Financial resources
- Human resources – employees
- Stock and equipment

5. Give two ways that a business might meet customer needs.

Examples include:
- Developing goods/services that customers want
- Convenience – e.g. opening hours that suit customers
- Convenience - delivery

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Answers 1.2.1
1. Which of the following is a customer need?

A. Place
B. Price
C. Product
D. Promotion

2. ‘Convenience’ is an example of a customer need. Give two examples of business which

provide convenience. Briefly state why.

Allow any valid examples:

Amazon
Provides convenience through its prompt home delivery service

3. ‘Choice’ is a customer need. State 5 different ways in which a manufacturer of soft drinks
provides choice for customers through different types of drink. An example is provided:
Example 1 - Energy drink

Example 2 – Zero sugar

Example 3 – Different flavours

Example 4 – Different containers

Example 5 – Different sizes

4. Give two benefits to a business of understanding customer needs.

Generating sales
Business survival

Answers 1.2.2 (Part 1)

1. Which of the following is an example of primary market research?

A. Government data
B. Focus groups
C. Internet research
D. Market reports

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2. Give two ways that primary research can help a business to reduce risks.

Understand customer needs

Ensure providing goods/services that customers want
Identify gaps in the market
Inform business decision-making

3. For each of the types of market research in the table below, state a definition, identify one
disadvantage and one disadvantage:
Definition Advantage Disadvantage
Watching how Obtains qualitative Time-consuming
Observation customers behave information
Using the interne t to Access to a wide May not have the
Internet research gather information on range of information specific information
consumers/products/ required by the
markets business
A group of people Obtain reliable Time-consuming and
Focus Group asked about their information about a small scale
views of a product product
A set of questions Can collect large People may not
Questionnaire about a product with a amounts of data complete
choice of answers questionnaires.

4. Give one benefit to a business of using secondary market research.

Fast to collect
Low cost
Wide range of data available

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Answers 1.2.2 (Part 2)

1. Which of the following is an example of qualitative market research?

A. Face to face interviews

B. Internet research
C. Government reports
D. Surveys

2. Give two ways that primary research can help a business to reduce risks.

Understand customer needs

Identify gaps in the market

3. Identify two ways that social media can use to collect market research data:

Understand customer needs

Identify gaps in the market

4. Market research data needs to be as reliable as possible. Bias is one way in which
findings can be unreliable. Consider questions asked by a local pizza takeaway in a
customer survey:

Question 1  Delicious pepperoni

Which pizza topping do you prefer?  Ham
Question 2  Deep pan
Which pizza crust do you prefer?  Thin and crispy

Which question can be said to be biased? ……………………………………

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Answers 1.2.3

1. The following are ways in which markets can be segmented:

a. Lifestyle

b. Demographics

c. Location

d. Income

e. Age

2. Complete the definition of a ‘market segment:

‘A market segment is a group of customers with similar characteristics’

3. Populate the market map (below) for the following clothing retailers:

Primark; New Look; Ted Baker; Ralph Lauren; Marks and Spencer

High Quality
Ralph Lauren

Ted Baker

High Marks and Spencer Low

Price Price

New Look

Primark

Lower Quality

31
Answers 1.2.4

1. The following are methods by which businesses can compete with others:

a. Price

b. Quality

c. Location

d. Product Range

e. Customer Service

2. Which of the following is NOT an element of SWOT analysis?

A. Strengths
B. Weaknesses
C. Organisation
D. Threats

3. Which of the following is a direct competitor of McDonald’s?

A. Burger King
B. Pizza Hut
C. Subway
D. Tesco

4. Give two reasons why it is important for a business to understand its competitors.

1. Pricing
2. Product range

5. Give one way that a business can respond if a new competitor enters the local market.

Change pricing
Adapt product range
Improve customer service

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Answers 1.3.1

1. Define the term market share.

The proportion of sales in a market that are taken by one business.

2. The two of the following are financial aims for an entrepreneur when starting up a
business?

A. Business survival
B. Environmental protection
C. Increased profit
D. Individual control
E. Personal satisfaction

3. Give two reasons why profitability might be an objective for an entrepreneur starting a
new business.

To generate income for the entrepreneur

To enable the business to grow

4. Give two examples of social objectives that an entrepreneur might have when starting a
new business.
Environmental protection
Supporting local community
Reducing carbon emissions

5. Define the term financial security.

Having sufficient cash flow/revenue/income to ensure a business can survive.

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Answers 1.3.2

1. What is the formula for calculating revenue?

A. Fixed Cost + Variable Cost

B. Price x Quantity

C. Sales – Total Cost

D. Cost per unit x Output

2. Draw a break even diagram showing the following lines:

 Revenue
 Fixed Costs
 Variable Costs
 Total Costs

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3. On your diagram, indicate the break even level of output.

4. Give 2 examples of fixed costs.

Rent
Advertising
Insurance
Salaries

5. Define the term variable cost.

Costs which change as the level of output changes

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Answers 1.3.3
1. Define the term net cash-flow.

The difference between cash inflows and cash outflows.

2. Give two reasons why cash is important to a business.

To pay suppliers
To pay employees
To pay overheads
To prevent business failure (insolvency)

3. Which two of the following are examples of overheads?

A. Advertising

B. Insurance

C. Packaging

D. Raw materials

E. Stock

4. Give one benefit to a business of having a positive cash-flow position.

Ability to pay suppliers

Ability to pay wages of staff

5. Match the terms with the correct definition:

Terms Definitions
1. Net cash flow a. The amount of money a business has at the start of
each month
2. Opening balance b. All the money that comes into a business

3. Cash inflow c. The amount of money a business has at the end of

each month
4. Closing balance d. The difference between cash inflows and cash
outflows

36
Answers 1.3.4

1. Define the term venture capital.

Money to invest in a business that is sourced from individuals or groups who wish to
invest their own money into new businesses.

2. Which two of the following are short-term sources of finance?

A. Crowd funding
B. Loans
C. Overdraft
D. Retained profit
E. Trade credit

3. Give one benefit to a business of using retained profit as a source of finance.

No repayments required
No interest needs to be paid
Easy/quick to arrange

4. Give two impacts on a business of using loans as a main source of finance.

Funds available to invest in the business

Higher fixed costs due to loan repayments
Increased cash outflows – worse net cash flow

5. Give one drawback to a business of using crowd funding as a source of finance.

Not reliable – may not raise as much capital as required.

Time – may take longer than expected to raise funds
Higher costs - investors often receive some incentive/products as a gesture.

Answers 1.4.1
1. Define the term limited liability.

Where the level of risk is limited to the amount of money that has been invested in the
business or promised as an investment.

2. Define the term unlimited liability.

Where the level of risk goes beyond the amount invested, so the personal assets of
the business owner can be used to pay of any debts the business has.
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 3. Which one of the following is a feature of a private limited company?

A. Must be owned by one person

B. Owners have limited liability
C. Shareholders must work for the business
D. Shares are sold on the stock exchange

4. Give one advantage and one disadvantage of starting a business as a franchise.

Advantages
Lower risk as using an established business model
Support and training
National marketing campaigns

Disadvantages
Cost - initial fee plus ongoing fees
Lack of independence

5. Give two advantages of running a business as a sole trader.

Independence – ability to make all decisions

All profits retained by the owner
Quick/easy to set up
Financial information is kept private

Answers 1.4.2
1. Identify the four factors that can influence the location decisions of a business. The
proximity to:

a. Competitors

b. Labour

c. Market

d. Materials

2. Give one impact on a business of being located close to competitors.

Pricing – may have to charge same price or lower

Promotion
Product range

3. Define the term e-commerce.

Using the internet to carry out business transactions.

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 4. Which of the following businesses is more suited to e-commerce rather than fixed
premises?

A. Book seller
B. Hairdresser
C. Personal trainer
D. Restaurant

5. Give two advantages for a business of being located close to supplies of raw
materials.

Lower costs
Quicker delivery times
Ability to use Just-in-Time stock control systems

Answers 1.4.3

1. Identify the four elements of the marketing mix:

a. Place
b. Product
c. Price
d. Promotion

2. Give two factors that might influence the price that a business charges for its product.

Cost of production/cost to supply the service

Competition
Planned level of profit

3. Which of the following is an example of a business focussing on the ‘place’ element of

the marketing mix:

A. Reducing price as a result of a new competitor entering the market

B. Introducing an online sales system
C. Introducing a new advertising campaign
D. Withdrawing a product from sale due to changing fashions

4. Define the term promotion.

The range of activities carried out by a business to make customers aware of its
products and to encourage customers to buy them.

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 5. Give two possible impacts of e-commerce on the marketing mix of a business.

Increased promotion of products

Increased availability of the product beyond fixed premises

Answers 1.4.4

1. Business plans identify certain aspects of a business. Highlight the five elements that
are contained in a business plan.

Business Employee Market Limited

aims/objectives names/photos research liability

Sources of Receipts and Cash-flow Location

finance invoices forecast details

2. Identify two aims that an entrepreneur may have when starting a business.

Financial security
Independence
Personal satisfaction
Profit
Social objectives

3. Give two advantages for a business of having a detailed business plan.

Reduced risk
Ability to raise finance
Less uncertainty

4. Define the term target market.

The group of people that a business has identified as potential customers.

5. Business planning is important. A business plan can help:

Manage Risk
Obtain Finance

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Answers 1.5.1

1. Define the term stakeholder.

Anyone who has an interest in the activities of a business, such as workers, suppliers,
the local community and government.

2. Give two impacts that pressure groups might have on a business.

Increase wages of employees

Use different production methods
Use less packaging
Use more local suppliers

3. Which one of the following is an advantage to a business of having satisfied

employees?

A. Lower fixed costs

B. Higher staff wages
C. Higher staff turnover
D. Improved customer service

4. Give one conflict that might exist between managers and employees.

Employees requesting higher wages but managers aim to keep down costs.
More holiday days.

5. Give two ways that government impacts on a business.

Taxes – higher costs for business

Legislation – costs of implementation
Minimum wages

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Answers 1.5.2

1. Which two of the following are advantages of using e-commerce for a business?

A. Attracts local customers

B. 24/7 ordering for customers
C. Higher staff turnover
D. Improved customer service
E. Increased sales revenue

2. Give two ways that social media might impact on the costs of a business.

Lower costs of promotion

Lower recruitment costs
Higher costs if necessary to employ social media specialist

3. For each of the elements of the marketing mix, suggest one impact of technology

Element of the Impact of technology

marketing mix

Price
Lower prices due to price comparison tools on social
media platforms

Product
Businesses can use technology to offer new types of
products, such as downloadable books.

Place Can create easy to use e-commerce sites that increase the
number of potential customers.

Promotion Targeted advertising using social media – for example

through the use of cookies.

4. Give one drawback for a business of using digital payment systems.

Cost of implementation
Lost sales if the system ‘crashes’
Need for regular updates

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Answers 1.5.3

1. Give two ways that legislation protects consumers.

Ensures products are safe

Ensures business cannot charge excessively high prices if there is little competition in
a market
Ensures consumers have the right to refunds and other protections.

2. Identify the types of legislation that protect employees:

a. Recruitment
b. Pay
c. Discrimination
d. Health and Safety

3. Give two impacts on business of complying with employment legislation.

Higher costs due to minimum wage legislation

Higher costs – Health and Safety compliance
Low staff turnover due to pay/conditions
Complying with legislation means businesses are not subject to legal challenges.

4. Give two consequences on a business of not complying with consumer legislation.

Reputational damage
High staff turnover
Legal challenge – potential cost
Potential for the business to be closed down

5. Define the term discrimination.

When someone is treated differently to someone else because of a particular

characteristic, such as a disability, their ethnicity or their gender.

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Answers 1.5.4

1. Define the term inflation.

The general increase in the price level over time.

2. Which one of the following is an advantage for a business of low levels of

unemployment?

A. Employees require higher wages

B. Fewer potential employees available
C. High levels of consumer spending
D. Staffing vacancies can be filled quickly

3. Give two drawbacks to businesses arising from higher interest rates.

Higher fixed costs - loan repayments/overdraft fees

Lower levels of sales as consumers have higher mortgage/loan/credit card
repayments

4. Define the term exchange rate.

The value of one currency in terms of another currency.

5. Give one drawback to an importer of lower exchange rates.

Higher costs of imported goods

May need to increase prices
Lower profit

Answers 1.5.5

1. Define the term external influences.

Factors outside of the control of a business but that influence the actions of the
business. Examples include the economy and technology.

2. Give two ways that the economic climate can impact on a business.

Higher sales during periods of economic growth

Lower wages during period of slow economic growth
More competition during periods of strong economic growth
Higher interest rates when inflation is rising
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3. Define the term legislation.

The laws that people and businesses in a country must comply with.

4. Which would be the most likely impact on a business arising from a period of
economic growth?

A. Falling levels of consumer spending

B. Increased levels of competition
C. Lower sales revenue
D. Reduced fixed costs

5. Give one way that a business can respond to changes in legislation.

Increase wages if required by legislation

Chane production methods
Relocate to a different country

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