1.3. Enterprise, business growth and size
A subsection of Business Studies, 0450, through 1. Understanding business activity
Listing 10 of 26 questions
Five years ago Manisha started making cakes from her home. The cakes are for celebrations, such as weddings and birthdays. Now she has a small shop and 3 employees. Product quality is important to her business. Manisha said: ‘I have benefited from the economic boom but I did not expect demand to increase by 500% each year. Somehow I have managed to cope with higher interest rates and all the challenges of being a sole trader. The business is profitable at last but I have to work every day.’ A friend has offered to become Manisha’s business partner. What is meant by an ‘economic boom’? Identify two factors which might affect demand for Manisha’s products. Factor 1: Factor 2: Identify and explain two ways higher interest rates might affect Manisha’s business. Way 1: Explanation: Way 2: Explanation: 1 2 Identify and explain two reasons why product quality might be important to Manisha’s business. Reason 1: Explanation: Reason 2: Explanation: Do you think Manisha should have a business partner? Justify your answer. [ 1 2
0450_s17_qp_12
THEORY
2017
Paper 1, Variant 2
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Dmit is a partner in a small retail clothing business. The business has been successful, but it is finding it difficult to compete against larger retailers. The partners are thinking of converting the partnership into a private limited company. Identify two features of a partnership. Feature 1: Feature 2: Identify two ways of measuring the success of a business. Way 1: Way 2: Identify and explain two reasons why the business might be finding it difficult to compete against larger retailers. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three methods of promotion that the partnership could use to increase sales. Method 1: Explanation: Method 2: Explanation: Method 3: Explanation: Consider the advantages and disadvantages of converting the partnership into a private limited company. Recommend whether the partners should do this. Justify your answer. Advantages: Disadvantages: Recommendation:
0450_w13_qp_11
THEORY
2013
Paper 1, Variant 1
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Homeright is a company that makes furniture such as tables and chairs. The company is successful and has grown rapidly in recent years. However the directors have found it difficult to manage the speed of growth. The Managing Director recently said that even more growth is planned for next year. The product range will be doubled and foreign markets entered. Identify two possible reasons why the directors want Homeright to grow. Reason 1: Reason 2: Identify two ways of measuring the success of a business. Way 1: Way 2: Identify and explain two possible problems for Homeright of selling its products in foreign markets for the first time. Problem 1: Explanation: Problem 2: Explanation: Identify and explain two problems to Homeright’s management that rapid growth could cause. Problem 1: Explanation: Problem 2: Explanation: Do you think that the profits of Homeright will continue to increase if the company grows in the future? Justify your answer.
0450_w13_qp_13
THEORY
2013
Paper 1, Variant 3
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Lu is a sole trader. He manages a bakery shop making and selling bread and cakes. He employs 4 workers all of whom are paid on time rate. Lu wants to expand the business by buying a new shop and using it as a café . He also wants to make a wider range of cakes, such as wedding and birthday cakes, for which he thinks there is a demand. At present the business sells all of the bread and cakes it makes. What is meant by a ‘sole trader’? Identify two methods Lu could use for paying employees (other than time rate). Method 1: Method 2: Identify and explain two suitable sources of finance Lu could use to buy a new shop. Source 1: Explanation: Source 2: Explanation: Identify and explain two methods of promotion that Lu could use for the new range of cakes. Method 1: Explanation: Method 2: Explanation: Do you think that Lu’s business will be more profitable if he expands it by opening a café in a new shop? Justify your answer.
0450_w14_qp_11
THEORY
2014
Paper 1, Variant 1
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DPC operates 200 takeaway pizza shops. Over 75% of its pizzas are ordered through e-commerce. The Managing Director thinks 2017 was a successful year. She said: ‘Looking ahead, there are signs that the economy is growing. However, DPC has a number of challenges. The Government plans to increase the minimum wage to $5 per hour. DPC has to respond to environmental pressures as well. Food waste and litter caused by used pizza boxes are problems. Complaints from the local community about this are too high.’ Identify two ways to measure business success. Way 1: Way 2: Identify two features of a growing economy. Feature 1: Feature 2: Identify and explain two ways in which an increase in the minimum wage could affect DPC. Way 1: Explanation: Way 2: Explanation: 1 16 Identify and explain two advantages to DPC of using e-commerce. Advantage 1: Explanation: Advantage 2: Explanation: Explain two ways in which DPC could respond to environmental pressures. Recommend which of the two options it should choose. Justify your answer. [ 1 16
0450_s18_qp_12
THEORY
2018
Paper 1, Variant 2
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Just4U manufactures motor car parts. The production methods are capital intensive. The management believes that the company benefits from economies of scale. However, problems with the workers in the factory have led to poor quality production. Despite this, the Managing Director believes that the company must continue to grow if it is to achieve its objectives. The business is planning a takeover of a competitor. What is meant by ‘capital intensive’? Identify two objectives that a business like Just4U might have. Objective 1: Objective 2: Identify and explain two economies of scale from which Just4U could benefit. Economy of scale 1: Explanation: Economy of scale 2: Explanation: Identify and explain two problems that poor quality might create for Just4U. Problem 1: Explanation: Problem 2: Explanation: Do you think that a takeover of a competitor will benefit the shareholders of Just4U? Justify your answer.
0450_w12_qp_12
THEORY
2012
Paper 1, Variant 2
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Questions Discovered
26