Economic growth in country X has created many opportunities for new businesses such as TGH. TGH manufacture a range of personalised mobile phone cases using job production. Quality assurance is important to all 8 employees. TGH operate in a niche market. The Marketing Manager uses e-commerce as TGH’s channel of distribution. She is considering ways to build customer relationships. Define ‘economic growth’. Define ‘quality assurance’. Outline two reasons why building customer relationships might be important to TGH. Reason 1: Reason 2: 1 9 Explain one advantage and one disadvantage to TGH of using job production. Advantage: Explanation: Disadvantage: Explanation: Do you think cost-plus is the best pricing method for a new business to use when selling products to a niche market? Justify your answer. 1 9

0450_s21_qp_11

THEORY

2021

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WYP is a business partnership. Greg and his 3 friends started the business 7 years ago. WYP make eyeglasses which are only sold through its website. The price of each pair of glasses is $95. This is $200 cheaper than its main competitor. Greg said: ‘It was difficult at the start as we could not get trade credit. We also knew it would take time to develop customer loyalty.’ Greg thinks choosing the right method of promotion is important to the success of any new product. Define ‘partnership’. Define ‘customer loyalty’. Outline two possible reasons why WYP could not get trade credit. Reason 1: Reason 2: 1 12 Explain two possible problems for WYP of selling products at low prices. Problem 1: Explanation: Problem 2: Explanation: Do you think promotion is more important than product for a new business? Justify your answer. [ 1 12

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THEORY

2021

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Pamela is a successful entrepreneur. She is the owner of a gift shop selling celebration cards, toys and candy . 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. Define ‘competitive pricing’. Define ‘marketing budget’. Outline two possible threats to Pamela’s business of using e-commerce. Threat 1: Threat 2: 1 13 Explain two methods Pamela’s business can use to maintain customer loyalty. Method 1: Explanation: Method 2: Explanation: Do you think being a risk-taker is a more important characteristic of a successful entrepreneur than being creative? Justify your answer. [ 1 13

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THEORY

2022

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Mayfair Solutions, a public limited company, develops software packages for customers. The staff it employs are highly paid, but Mayfair Solutions believes that this is money well spent. The company has to keep updating its software packages because customer requirements keep changing. The software market is very competitive. What is meant by the term ‘public limited company’? Identify two features of a very competitive market. Feature 1: Feature 2: Identify and explain two possible reasons why the staff at Mayfair Solutions are paid high wages. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three problems that the need to keep updating its software packages may create for Mayfair Solutions. Problem 1: Explanation: Problem 2: Explanation: Problem 3: Explanation: Mayfair Solutions has recently received a takeover bid from a large rival software company. Do you think that this takeover would benefit both employees and shareholders of Mayfair Solutions? Justify your answer.

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THEORY

2011

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RGO is a large airline business. It provides flights to 120 countries using the latest up-to-date planes. Most of RGO’s customers are people travelling on holiday. RGO sells 80% of its tickets through its website. It operates in a competitive market so maintaining customer loyalty is important. One of RGO’s objectives is to increase market share from 8% to 10%. The Managing Director said: ‘One option is to lower ticket prices but to do this we will have to reduce costs.’ What is meant by ‘customer loyalty’? Identify two advantages to RGO of being a large business. Advantage 1: Advantage 2: Identify and explain two possible problems to RGO of reducing prices. Problem 1: Explanation: Problem 2: Explanation: 1 19 Identify and explain two ways (other than lower prices) that RGO could use to increase its market share. Way 1: Explanation: Way 2: Explanation: Explain two ways in which RGO could reduce its costs. Recommend which way RGO should choose. Justify your answer. [ 1 19

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THEORY

2019

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GBU is a public limited company. It makes a range of beauty products including shampoo and soaps for the mass market. Last year GBU’s revenue fell. The Marketing Director has been looking at the results from its primary market research based on a sample of 2000 consumers. An extract is shown in Fig. 1. She believes maintaining customer loyalty is more important than attracting new customers. Fig. 1: Extract from GBU’s market research Where do you buy your beauty products? Would you buy our beauty products? shop online mail order yes no What is meant by ‘mass market’? Calculate the percentage (%) of consumers who buy beauty products online. Identify and explain two possible reasons why GBU's market research might not be useful to the Marketing Director. Reason 1: Explanation: Reason 2: Explanation: 1 11 Identify and explain two advantages to GBU of using shops as a channel of distribution. Advantage 1: Explanation: Advantage 2: Explanation: Do you think maintaining customer loyalty should be more important to GBU than attracting new customers? Justify your answer. [ 1 11

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THEORY

2016

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After 20 years working for a bank, Luis has savings of $5000. He wants to start up his own business selling and repairing mobile phones. It is a competitive market. Luis has decided not to buy a franchise for $4500 as he thinks it is better to operate the business independently rather than be a franchisee. Based on his primary market research, he will need 15 customers each week to break even. Luis believes building customer relationships will be important. He plans to use social networks for promoting his new business. What is meant by ‘break even’? What is meant by ‘primary market research’? Identify and explain two reasons why it is important for Luis to build customer relationships. Reason 1: Explanation: Reason 2: Explanation: 1 21 Identify and explain two benefits to Luis’s business of using social networks for promotion. Benefit 1: Explanation: Benefit 2: Explanation: Do you agree with Luis’s decision not to become a franchisee? Justify your answer. 1 21

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THEORY

2016

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AirGo is a market-orientated business. It provides flights to 10 airports across Asia. 90% of its customers are people going on holiday. AirGo only advertises in national newspapers. The Marketing Director is worried that demand for AirGo’s flights is price elastic. Last year revenue fell due to increased competition. She wants to target a different market segment such as business customers. She does not know how new legal controls to protect the environment might affect AirGo. What is meant by ‘market-orientated’? What is meant by demand is ‘price elastic’? Identify and explain two ways in which new legal controls to protect the environment might affect AirGo. Way 1: Explanation: Way 2: Explanation: Identify and explain two disadvantages to AirGo of using newspapers for advertising. Disadvantage 1: Explanation: Disadvantage 2: Explanation: Do you think AirGo should target a different market segment? Justify your answer.

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THEORY

2016

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Sunil is a sole trader. He likes owning a small business. His shop sells low price raincoats. Sales vary throughout the year. The market for raincoats is competitive, but as Sunil makes a profit he doesn’t think competition is a problem for his business. In order to protect consumers, the Government of Sunil’s country has recently introduced new laws to protect consumers. What is meant by ‘profit’? Identify two factors which could affect demand for Sunil’s products. Factor 1: Factor 2: Identify and explain two reasons why profit is important to small businesses like Sunil’s. Reason 1: Explanation: Reason 2: Explanation: Identify and explain one way in which consumer protection laws might affect Sunil’s business and one way consumer protection laws might affect his customers. Way consumer laws affect Sunil’s business: Explanation: Way consumer laws affect Sunil’s customers: Explanation: Do you think the advantages of owning a small business are greater than the disadvantages for Sunil? Justify your answer.

0450_s12_qp_11

THEORY

2012

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GKA is a food retailer. It has 300 shops located in areas where average consumer incomes are low. GKA sells a limited range of own-label products including breakfast cereal and toothpaste. GKA does no promotion or market research. The Managing Director said: ‘Last year our market share increased to 5%. Profit increased by 40%. Keeping costs low means GKA can offer customers quality products at low prices.’ GKA is planning to open 100 shops in areas with high average consumer incomes.The Managing Director must decide whether GKA should change its pricing strategy as the business expands. What is meant by ‘market share’? Identify two aims of promotion. Aim 1: Aim 2: Identify and explain two methods of market research that GKA could use. Method 1: Explanation: Method 2: Explanation: 1 17 Identify and explain two ways in which GKA could keep costs low. Way 1: Explanation: Way 2: Explanation: Do you think GKA should change its pricing strategy as the business expands? Justify your answer. [ 1 17

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THEORY

2018

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