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The document consists of a series of questions related to business concepts, including ways to grow a business, the importance of business plans, potential causes of business failure, and characteristics of successful entrepreneurs. It also explores government support for startups, measuring business size, and the implications of business expansion. Each question requires detailed responses, indicating a focus on understanding fundamental business principles and decision-making processes.

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GodfreyFrankMwakalinga

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0% found this document useful (0 votes)

47 views20 pages

My Test

Uploaded by

GodfreyFrankMwakalinga

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

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1

1 Identify two ways a business can grow.

Way 1: ......................................................................................................................................................

..................................................................................................................................................................

Way 2: ......................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

2 Identify two ways a business plan can help a business to reduce risk.

Way 1: ......................................................................................................................................................

..................................................................................................................................................................

Way 2: ......................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

3 Identify two possible causes of business failure.

Cause 1: ...................................................................................................................................................

..................................................................................................................................................................

Cause 2: ...................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

4 Identify two limitations of using the number of employees to measure the size of a business.

Limitation 1: ............................................................................................................................................

..................................................................................................................................................................

Limitation 2: ............................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
2

5 Define ‘entrepreneur’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
3

6 Gareth is planning to start a car washing business using government support. He is analysing market research
data to help him make important decisions about his business. Extracts from this data are shown in Figure
A and Figure B. Gareth said: ‘I will need to set business objectives.’ He plans to keep his business small.
Gareth is worried about the possible effects of higher taxes.

Do you have a car? Average price paid for car wash

23% $6.34
77%

Yes No

Figure A Figure B

Do you think offering financial help, such as grants, is the best way for a government to support business
start-ups? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
4

7 Pamela is a successful entrepreneur. She is the owner of a gift shop selling celebration cards, toys and candy
(sweets). When Pamela started her business 30 years ago she had no help to manage the shop. She now has
5 employees. Pamela knows maintaining customer loyalty is important. She uses competitive pricing. Most
of her marketing budget is spent on sales promotion. Pamela does not use e-commerce.

Do you think being a risk-taker is a more important characteristic of a successful entrepreneur than being
creative? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]

8 Identify four reasons why a new business might be at greater risk of failure than an established business.

Reason 1: .................................................................................................................................................

..................................................................................................................................................................

Reason 2: .................................................................................................................................................

..................................................................................................................................................................

Reason 3: .................................................................................................................................................

..................................................................................................................................................................

Reason 4: .................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]
5

9 Identify two possible reasons why an owner might want their business to remain small.

Reason 1: .................................................................................................................................................

..................................................................................................................................................................

Reason 2: .................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
6

10 Nancy wants to be an entrepreneur. She has analysed market research data and decided to start up a book
shop. Nancy has identified a suitable location and prepared a business plan. Nancy is calculating her total
costs. She will use this information to help her complete a break-even chart as shown in the figure below.
Nancy is also considering using e-commerce.

Explain two ways having a business plan could help Nancy.

Way 1: ......................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

Way 2: ......................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
7

11 Identify two ways a government can support new business start-ups.

Way 1:.......................................................................................................................................................

..................................................................................................................................................................

Way 2:.......................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

12 Tom started ALB 5 years ago making trainers (sneakers) out of sustainable materials such as wool. One of
ALB’s objectives is to protect the environment. ALB uses retailers to distribute its products. Tom thinks a
successful entrepreneur has to be a good manager.

Do you think a successful entrepreneur has to be a good manager? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
8

13 Identify two reasons why a government might support business activity.

Reason 1: .................................................................................................................................................

..................................................................................................................................................................

Reason 2: .................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

14 GCF is a public limited company. It provides a range of computer services to businesses including designing
websites and creating apps. The Human Resources Director use ideas based on Maslow’s Hierarchy of Needs
to help keep GCF’s 250 employees well-motivated. GCF plans to expand by taking over one of its competitors.
This will cost $50m. To finance the takeover, GCF is considering issuing new shares.

Do you think the number of employees is the best way to measure the size of a tertiary sector business?
Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
9

15 Define ‘business plan‘.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

16 Identify two ways of measuring the size of a business.

Way 1: ......................................................................................................................................................

Way 2: ...................................................................................................................................................... [2]

[Total: 2]

17 RJJ manufactures women’s shoes. It sells the shoes to a niche market using e-commerce. RJJ is a public
limited company and its shareholders benefit from limited liability. The Managing Director is planning to
expand the business. RJJ could take over a competitor. Last year profit decreased by $50 000. The Finance
Director has to decide on a source of finance to fund the expansion.

Do you think a takeover of a competitor is the best way for a large business to grow? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
10

18 Define ‘entrepreneur’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

19 KTF makes building materials, including cement and bricks. Last year KTF had sales of $25bn. KTF’s
objectives have often changed since it was started 60 years ago. The Managing Director wants KTF to expand.
KTF is going to take over one of its main competitors. The newly expanded business will have combined
sales of $40bn. The Managing Director said: ‘Many stakeholder groups will be affected by this decision.’
She knows there are many external factors that affect business activity including the business cycle, interest
rates and legal controls to protect the environment.

Outline one advantage and one disadvantage to KTF of taking over the other business.

Advantage: ...............................................................................................................................................

..................................................................................................................................................................

Disadvantage: ..........................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]
11

20 Veronique is bored with her work in a large factory. As a creative person, she would like to leave and start
up a flower shop. Veronique has asked about micro-finance and prepared a cash flow forecast. An extract is
shown in the table below. Veronique has also carried out some market research and found out that the demand
for flowers is likely to be high during festivals. She thinks she has the right characteristics to be a successful
entrepreneur.

Extract from the cash flow forecast for Veronique’s flower shop for the first 3 months ($)

Month 1 Month 2 Month 3

Cash in 500 1 200 2 000

Cash out 1 500 1 400 1 200

Net cash flow (1 000) (200) 800

Opening balance 0 (1 000) (1 200)

Closing balance (1 000) (1 200) (400)

Do you think being creative is the most important characteristic of being a successful entrepreneur? Justify
your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
12

21 DSY is a private limited company. It produces washing machines and cleaning equipment. The Managing
Director wants DSY to expand into a different market. He plans to spend $2bn on developing electric cars.
There is a lot of competition in the electric car market. This market is growing rapidly. A leading pressure
group has identified the environmental problems of non-electric cars. The Managing Director knows that
important decisions about the method of production and the new car’s brand image still have to be made.

Do you think entering a growing market where there is a lot of competition is the best way for a business to
expand? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]

22 Identify two reasons why a business might want to expand.

Reason 1: .................................................................................................................................................

..................................................................................................................................................................

Reason 2: .................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
13

23 KTF makes building materials, including cement and bricks. Last year KTF had sales of $25bn. KTF’s
objectives have often changed since it was started 60 years ago. The Managing Director wants KTF to expand.
KTF is going to take over one of its main competitors. The newly expanded business will have combined
sales of $40bn. The Managing Director said: ‘Many stakeholder groups will be affected by this decision.’
She knows there are many external factors that affect business activity including the business cycle, interest
rates and legal controls to protect the environment.

Explain how two external stakeholder groups might be affected by the take over.

Stakeholder group 1: ...............................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

Stakeholder group 2: ...............................................................................................................................

Explanation:.............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
14

24 Kara’s business makes wax candles. She sells them to retailers at low prices. She gives retailers 60 days to
pay. Kara has to pay her suppliers when raw materials are delivered. Kara used crowd-funding to set up her
business. The bank would not give Kara a loan as she did not have a business plan. Last year revenue was
$50 000. Demand is increasing but Kara is not yet able to benefit from economies of scale. She said: ‘Cash-flow
is a problem. All cash inflows are used to buy inventory.’

Outline two reasons why a bank might want Kara to produce a business plan before agreeing to give a loan.

Reason 1:..................................................................................................................................................

..................................................................................................................................................................

Reason 2:..................................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]

25 Identify two reasons why a government might support business start-ups.

Reason 1:..................................................................................................................................................

..................................................................................................................................................................

Reason 2:..................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
15

26 Explain four reasons why a person may set up their own business.

Reason 1:..................................................................................................................................................

..................................................................................................................................................................

Reason 2:..................................................................................................................................................

..................................................................................................................................................................

Reason 3:..................................................................................................................................................

..................................................................................................................................................................

Reason 4:..................................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [8]

[Total: 8]
16

27 Samira owns a successful business selling takeaway fried food. She employs 2 part-time workers. Last year
revenue fell for the first time in 10 years. This was because of increased competition from a well-known
franchise. To respond to this, Samira could lower her prices, as shown in the table below. Another option is
to start a delivery service. Samira plans to do some market research. She has to decide whether to use secondary
research or set up a focus group with some of her customers.
Price and varible cost information for Samira's business

Current price New price

Average price per item $4 $3

Average variable cost per item $2 $2

Forecast average number of customers per week 200 300

Identify and explain two factors Samira should consider before starting a delivery service.

Factor 1:....................................................................................................................................................

..................................................................................................................................................................

Explanation:.............................................................................................................................................

..................................................................................................................................................................

Factor 2:....................................................................................................................................................

..................................................................................................................................................................

Explanation:.............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
17

28 VXH produces a range of soft drinks made from fruit using batch production. VXH uses specialisation in its
factory. The business has grown quickly over the last two years. VXH has increased the number of production
workers from 40 to 80. This has increased the span of control for each manager. It has been difficult for VXH
to keep workers motivated. The Human Resources Manager has to decide whether it is better to use job
rotation or financial bonuses to improve employee motivation.

Identify and explain two possible reasons why VXH has grown quickly.