Questions Complete

1.
Adding value
1. Missing words
Adding value allows businesses to increase the ______________________ consumers are willing to pay for a good
or service. It can be created by high levels of product design and quality, greater convenience, or a highly
______________________________brand. Value added is measured by the difference between a product’s sales
price and the ______________________ of bought-in materials. If a customer is happy to pay £3 for a cup of
coffee whose ingredients only cost a few pence, the value added is very high indeed. Any business attempting to sell
products that have little or no added value is unlikely to make any profit.
Hint: words from – cost, differentiated, price
2. Adding value Choose two ways to add value to each business (draw lines to show your choice):
Business Method of adding value
a) Express, one-hour service
2.1 Dry cleaning business
b) Personal consultations and advice
c) Wide choice of organic products
2.2 Exclusive hairdressers
d) Prime location in a trendy part of the city
e) Home delivery
2.3 Health food supermarket
f) An in-store café
3. Adding value – Data Response: Tangg is a chain of smoothie bars with a number of outlets in south-west
England. Drinks are produced fresh in-store in response to customer orders. On average, each 250 ml smoothie
contains 10p of bought-in fruit and vegetables. The drinks are sold in recyclable cups, which the business buys from
a supplier at a cost of £2.00 per hundred. The drinks are sold to customers for £3.50 each. The business has
estimated its sales volume to be around 1 million in 2009. Answer the following questions:
3.1 What is the value added by each smoothie produced and sold?
___________________________________________________________________________________
3.2 What is the estimated total value added for the business in 2009?
___________________________________________________________________________________
3.3 Outline one way in which Tangg could add further value to the business, allowing it to push the price up by 50p.
___________________________________________________________________________________
4. Adding value - multiple choice questions
4.1 Which three of the following statements about added value are true?
a) Added value is always equal to the level of profit made by a firm
b) Whether a product’s feature adds value or not depends on what the customer thinks
c) The Ryanair brand adds value because it tells consumers that flight costs are always low.
d) A product’s added value is equal to the difference between its sales price and the cost of the bought-in materials
used to produce it.
e) For a product to be successful, it should generate enough added value to cover a firm’s internal costs and
generate a profit
f) Manufactured goods add value but services do not.
4.2 Which two of the following are not examples of a sports goods manufacturer adding value to a brand of trainers?
a) Improving design to increase comfort
b) Offer an on-line service where customers can personalize designs
c) Switching to using cheaper materials so that the shoes do not last as long
d) Reducing the number of styles chosen and concentrate on producing those with the highest sales
e) Creating an innovative feature that tones muscles when they are worn
www.a-zbusinesstraining.com
2. Branding and differentiation
1. Missing words
Branding involves creating an for a good or service that makes it stand out from the competition.
The degree to which consumers see a brand as being different from rival products is known as product
differentiation. Developing a highly differentiated can have a number of benefits for a business. Its
special features will act as a unique ______________________ point, attracting customers and discouraging them
from __________________ rival products. Such brands have a high degree of consumer loyalty, helping to
generate high levels of purchase. In turn, this may allow the producer to charge premium prices.
Hint: words from – brand, buying, identity, repeat, selling
2. Spot the brand:

Identify the following well-known brands from the clues given:
2.1 A smoothie brand that claims to be free of sin:
2.2 A long-standing, yeast based spread you will either love or hate:
2.3 A brand of men’s toiletries that claims to have an animal effect:
2.4 Online financial services may not be an easy sector to crack, but this brand has proved difficult to beat:
3. Branding and differentiation – matching definitions

Draw arrows to match each of the definitions on the left to the correct key term on the right:
Definitions Key terms
1. The extent to which a product is seen to be a) Branding

different from rivals by consumers. b) Brand loyalty
2. A price that is significantly above the average
c) First mover advantage
charged within a given market.
3. A feature of a product that can be focused on in d) Market share
order to make the product stand out from rivals. e) Premium price
4. The extent to which customers buy the same
f) Product differentiation
brand on a regular basis.
5. The process of creating an identity or personality g) Unique selling point
for a good or service h) Value added
4. Branding and differentiation – multiple choice questions

4.1 Which 3 of the following are benefits a firm is likely to enjoy by creating a highly differentiated cosmetics brand?
a) Consumers become less sensitive to price increases.
b) Consumers will only buy the brand if the price charged is below the market average.
c) Consumer loyalty is likely to be high.
d) There will be no need to advertise the brand.
e) Retailers will be more likely to stock the brand.
f) Any price increases will lead to large increases in the volume of sales.
4.2 Which two of the following statements about branding and product differentiation are true?
a) A brand leader will have the largest percentage share of sales within a specific market.
b) A high degree of differentiation reduces the value added to a product.
c) Successful brands are products that have no competitors.
d) If the price of a brand is increased, the revenue generated will automatically fall.
e) Firms in highly competitive markets need products with unique selling points to keep their market share.
3. Break even analysis
1. Missing words
A business breaks even when it produces just enough ____________________ from its output and sales to cover
its costs. Until it reaches this level of production, the firm will be making a_____________. However, once output
and sales increase beyond break-even point, the firm will be generating a _________________. Break-even
analysis can be useful to firms in a number of ways. It is often used by new firms as part of a business ___________
in order to obtain finance from the bank. It can be used by existing firms to show the impact of different
______________ on total revenue or the effect of a change in costs, both ______________ and variable – on the
level of profit generated. Hint: words from: fixed, loss, plan, prices, profit, revenue
2. Finding break-even point – True or False?
Look at this table of a firm’s revenues and costs, then decide whether the statements that follow are true or false:
Output Total Revenue Fixed Costs Variable Costs Total Costs
(units) (£) (£) (£) (£)
0 0 2,000 0 2,000
200 1,600 2,000 600 2,600
400 3,200 2,000 1,200 3,200
600 4,800 2,000 1,800 2,800
800 6,400 2,000 2,400 4,400
2.1 At an output level of zero the firm is making a loss of £2,000

2.2 At an output level of 200 the firm is making a loss of £2,600
2.3 At an output level of 400 the firm is still making a loss
2.4 At an output level of 800 the firm is making a profit of £2,000
3. Getting the numbers right
Study the table below and then answer the questions that follow (Try to justify each of the answers you choose):
Output Total Revenue Fixed Costs Variable Costs
(000s) (£000s) (£000s (£000s)
0 0 300 0
25 600 300 450
50 1,200 300 900
75 1,800 300 1350
100 2,400 300 1,800
3.1 The selling price charged by the firm is equal to:

a) £12 b) £18 c) £24 d) £36
Justify your answer: _______________________________________________________________________
3.2 The firm’s contribution per unit (selling price minus variable cost per unit) is equal to:
a) £6 b) £12 c) £18 d) £24
3.3 The firm’s break-even level of output is equal to:
a) 25,000 units b) 50,000 units c) 75,000 units d) 100,000 units
3.4 The firm’s margin of safety at an output level of 75,000 units is equal to:
a) 0 units b) 25,000 units c) 50,000 units d) 100,000 units
3.5 The firm makes a profit of £600,000 at an output level equal to:
a) 25,000 units b) 50,000 units c) 75,000 units d) 100,000 units
4. Break even charts
1. Cross out the wrong words so that the paragraph is correct.
It is often useful to present information relating to a firm’s costs and revenues in the form of a break-even chart.
Output and sales volume are given on the chart’s vertical / horizontal axis; costs and sales (in £s) are shown on its
vertical / horizontal axis. Lines showing total costs and total revenues are plotted and break-even output is where
the two lines cross. The distance between the total revenue and total cost lines gives the cash flow / profit made at
any level of output. Before the break-even point the revenue line is above / below the total cost line. Therefore the
business is making a profit / loss.
2. Break even charts
Gentle Garments opened two years ago and now has sales averaging 600 units a month. It produces very high quality
coats for wealthy, middle-aged women. A new Managing Director is determined to get demand up to 800 units a
month. He has proposed a new advertising campaign that would cost £15,000 a month. He believes this will achieve
his sales target.
£s
Break-even chart for Gentle Garments
90000
80000
70000
60000 Revenue
50000 Variable costs
40000 Fixed costs
30000 Total costs
20000
10000
0
0 200 400 600 800 Output (units)
2.1 What is Gentle Garments’ monthly revenue at present? ________________________
2.2 What profit is Gentle Garments making in the average month at the moment? _________________________
2.3 What is Gentle Garments’ margin of safety at the moment? ____________________________
2.4 Examine the new Managing Director’s idea for extra advertising. Do you recommend it or not? _____________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3. Impact on break-even point: rise or fall
Indicate the impact on the break-even point of a health food store caused by the following changes:
Possible changes Impact on break-even point (Rise or fall)
3.1 A fall in the cost of stock as a result of a switch to a cheaper
supplier.
3.2 A temporary 10% reduction in prices in an attempt to attract
more customers.
3.3 An increase in advertising expenditure in an attempt to attract
more customers
3.4 A decision to increase prices after a competitor goes out of
business.
4. Explain why:
4.1 The owner of a high-fashion clothes shop may want a very high margin of safety ________________________
______________________________________________________________________________________
4.2 It may be hard for a business to lower its break-even point when there’s a recession. ____________________
______________________________________________________________________________________
5. Business cycles
1. Missing words
Business activity can be heavily affected by the state of the economy. Most firms benefit from periods of economic
growth, when output is growing and ___________________________ is low. However, economic growth does
not always increase at a _______________ rate. It may even become negative, when output is
_____________________ and unemployment is _______________ . This pattern of changes is often referred to
as the business cycle. The economy is said to be booming when economic growth is above the normal level. It is
described as being in recession when it experiences at least six months of _______________________ growth.
Hint: words from - falling, negative, unemployment, rising, steady
2: True or false?
2.1 Technically, a recession is defined as one quarter of negative growth _____
Bonus mark – why? _______________________________________________________________________
2.2 Small firms are more likely to go out of business than large firms during a recession _____
Bonus mark – why? _______________________________________________________________________
3 Business cycle – multiple choice questions. Circle the right letters.

3.1 Which three of the following are most likely to occur during a boom period within the economy?
a) Rising levels of unemployment
b) A fall in the number of new businesses setting up
c) A rise in profits made by many firms
d) An increase in the amount spent by consumers on luxury goods and services
e) A fall in sales for most businesses
f) More difficulty in filling job vacancies for many firms
3.2 Which three of the following are most likely to happen during a recession within the economy?
a) The price of goods and services begins to rise at a faster rate
b) An increase in the rate of business failures
c) An increase in the amount of investment carried out by firms in order to expand
d) Consumers cut back on non-essential spending
e) Rising levels of employment
f) Many firms reduce their level of output
4. Business cycle – matching definitions
Draw lines to match each definition on the left to the correct key term on the right:

a) Boom
1. Where output within the economy falls for two successive
quarters, i.e. six months, or more. b) Business cycle
2. The rate of increase in the total output produced within an c) Demand
economy in a year.
d) Economic growth
3. The number of people looking for work but unable to find a
e) Economy
job.
f) Negative growth
4. Changes in the level of demand and output in the economy
that tend to be repeated every few years. g) Recession
5. A period of time when the economy is growing much faster h) Unemployment level
than it usually does.
6. Business objectives: financial
1. Missing words
An objective is a ______________ or goal. An individual or business aims to achieve it at some point in the future.
A financial objective is measured by money, usually either by cash flow or by ______________. Financial objectives
are likely to change over time. When a business is first set up, its main financial objective is likely to be cash
________________. Once there is enough cash to pay the bills, the decisions are more likely to focus on
increasing profits. Setting clear financial objectives provides targets for everyone within the business. These can be
used to _________________ how well the business is doing.
Hint: words from – measure, target, flow, profit
2. Financial objectives - multiple choice questions:
Fraser Doherty is a young, award-winning entrepreneur who used his grandmother’s secret recipe to set up
SuperJam, a highly successful business within the highly competitive UK jam market.
2.1 Which two of the following would have been realistic financial objectives for the business when it was first set
up?
a) To obtain a 50% share of the UK jam market within six months.
b) To generate enough finance to survive the first year of trading.
c) To launch all of SuperJam’s product range in Europe and the USA within the first year of trading.
d) To generate enough revenue to cover all costs within the first two years of trading.
e) To work no more than four hours a day during the first year of trading.
2.2 Which three of the following are likely financial objectives for SuperJam, now that it is an established business?
a) To increase profits by 10% each year over the next five years.
b) To ensure that all the ingredients used are organic and come from Fairtrade suppliers.
c) To help set up a project to encourage young entrepreneurs.
d) To achieve a 5% share of the UK jam market within the next three years.
e) To increase overseas sales by 20% in two years time.
f) To win more awards for enterprise in the future.
3. Financial objectives – matching definitions
Match each of the definitions on the left to the correct key term on the right:

1. A target or goal set by a business which it aims to a) Value analysis
achieve in the future.
b) Enterprise
2. Generating a level of revenue that is greater than the
costs incurred by a business over a period of time. c) Entrepreneur
3. A short term business objective, which means generating d) Market share
enough money to pay any debts that fall due. e) Mission
4. An individual who is good at spotting business
f) Objective
opportunities and taking risks.
5. An aim that an individual is passionate about, creating a g) Profit
sense of duty or purpose. h) Survival
4. Financial objectives – true or false?

4.1 All businesses should have clear financial objectives when they are first set up.
4.2 Many businesses focus on survival when they are first set up, rather than making a profit.
4.3 A business offering a product with high value added is likely to make more profits than a business with low value
added.
4.4 A business that is able to prevent other firms from copying its ideas is guaranteed to be profitable.
7. Business objectives: non-financial
1. Missing words
Although one of the key aims for firms is to make a ________________, many entrepreneurs have other, non-
financial objectives for starting up and running a business. For example, someone might decide to start up a business
because they are frustrated in their _____________, or believe they can do better. Other non-financial
____________________for starting a business may include the need to prove yourself, or to try and make the
world a better place. The _____________________ sector is becoming more significant in the UK, and includes
organisations with social goals, such as bringing clean drinking water to Africa.
Hint: words from: job, not-for-profit, objectives, profit

2. Non-financial objectives – matching activity:
Choose the most likely non-financial objective on the right for each of the entrepreneurs described below:
Entrepreneur Non-financial objective
2.1. Someone who resents the lack of consultation in a) To take on new challenges, perhaps by developing a
their current job and disagrees with company policy. hobby into a business venture
2.2. Someone who gave up a job some years ago to b) A need to overcome feelings of failure and a desire
raise a family – all of whom have now left home. to prove yourself.
2.3. Someone who left school at sixteen with no c) A desire to change the world and improve the lives
qualifications. of others.
2.4. Someone who feels strongly about social d) To have more control over decision-making and to
injustice. be your own boss.
3. True or False? (Write a T or F by each of the following statements)

3.1 The only way of judging the success of a business is by the amount of profit it makes.
3.2 People often set up their own businesses in order to have more control over what they do at work.
3.3 A social enterprise is a business organization that aims to make a loss.
3.4 A social enterprise is an organization that attempts to achieve social goals through business methods and
activities.
3.5 People who work for social enterprises are less motivated than those working for other firms because there is
no need to make profits.
4. Non-financial objectives - multiple choice questions:
4.1 Stephanie is 30 years old and has decided to set up her own, home-based book-keeping business after being
made redundant for the third time. Which two of the following are likely non-financial objectives behind her
decision?
a) To generate more income than she was earning in her previous job
b) To generate more income than she would receive by claiming benefits
c) To prove to friends and family that she has the skills to run a business
d) To have enough money to retire in 25 years time
e) To be able to work more flexibly in order to see more of her family
f) To overcome feelings of failure resulting from her job loss
4.2 Harry and Marcus are life-long friends who had planned to start a business since they were at school. They set up
Firefly Tonics in 2002 after working for some years for consultancy firms in London. The company produces healthy
energy drinks that contain no caffeine or added sugar.
Which two of the following are likely non-financial objectives for Harry and Marcus when they set up their business?
a) Because they were unable to find a job with another firm
b) Because they wanted the challenge of getting a new business off the ground
c) Because they enjoyed working together
d) Because they knew the idea was guaranteed to work
e) Because they believed they would make more money running their own business.
8. Business plan
1. Missing words
A great idea may be important but it is not enough to create a successful business. In order to do this, an
entrepreneur will need to ____________ carefully how he or she intends to put the idea into practice. In order to
do this, an entrepreneur is likely to produce a business plan. This is a document which sets out details of the
business opportunity and how it will be achieved. It provides details about the business’ owners and their
_________________, as well as a description of the goods or services to be produced. It needs to contain a great
deal of financial information. Central to any effective business plan is a cash-flow _______________, outlining the
money coming in and going out of the business. This should also identify how much ______________ is needed to
get the business started, how much will be required once it is up and running and when it is likely to be repaid.
Producing a business plan is, therefore, vital for raising funds from _____________________or the bank.
Hint: words from – finance, forecast, investors, objectives, plan
2. Business plans – matching definitions:

1. The money (capital) that a business needs in order a) Break-even
to carry out its plans.
b) Business plan
2. Generating a level of revenue that is greater than
the costs incurred by a business over a period of c) Cash flow forecast
time. d) Entrepreneur
3. An individual who is good at spotting business
opportunities and taking risks. e) Finance
4. A document that sets out a business opportunity f) Investors
and how it will be achieved.
g) Objective
5. A document showing the expected cash inflows
h) Profit
and outflows in the coming months
3. Business plan - multiple choice question:

Danny wants to set up his own business as a personal fitness trainer and is hoping for a £10,000 loan from the bank.
Which 3 of the following pieces of financial information should he include in his business plan?
a) Results of some market research Danny carried out into rising obesity levels in the UK.
b) Details of the money available for investment into the business from Danny and two family members.
c) Details of Danny’s GCSE and A level qualifications
d) Details of Danny’s qualifications as a personal trainer
e) Estimates of the business’ running costs for the first twelve months
f) Forecasted revenue generated from clients in the first twelve months, based on market research carried out by
Danny.
4. Give two answers for each of the following:
4.1 Give two likely benefits for a new business from drawing up a business plan:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Give two possible dangers for an existing business from failing to produce a business plan before starting a period
of rapid expansion:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
9. Building the marketing mix
1. Missing words
The marketing mix refers to four aspects of marketing that are combined in order to achieve a successful marketing
campaign. These elements – also known as the four ‘P’s – consist of the product itself, its _________________ and
the methods used to promote it. The fourth P is making sure that customers can buy it in the right ____________.
Having a great product lies at the heart of any business success. This means ensuring that it meets customer
_____________. However, even great products can ____________ if they are sold at a price which is too low or
too high. Success also depends on making customers aware that the product exists and convincing them to try it.
Finally, customers have to be able to get hold of products easily or else they may end up buying _____________
products instead. Hint: words from – fail, needs, place, price, rivals
2. Building the marketing mix – definitions:

1. The way in which the general public views a a) BOGOF
company or product.
b) Brand
2. Making sure that the product is available at the
places the customers want to buy it c) Marketing mix
3. The part of Promotion that means spending money d) Place

in order to communicate directly to customers e) Advertising
4. A sales promotion technique which stands for ‘buy f) Price taker
one, get one free’.
g) Promotion
5. The key elements of product, price, promotion and
place designed to achieve marketing objectives. h) Consumer image
3. Building the marketing mix – Spot the P:

Correctly identify the element of the marketing mix being described in the table below:
Feature Element of the marketing mix
1. A supermarket begins a home delivery service for customers
who order on-line
2. A computer manufacturer sets up a 24 hour after sales
telephone helpline, available free to all customers.
3. A department store sets up point-of-sale displays to support
the launch of a new range of cosmetics.
4. A newly established hairdresser offers a 50% discount for
customers who return within six weeks
4. Building the marketing mix - multiple choice questions:
4.1 Which two of the following statements about the marketing mix are true?
a) Price is the most important element in the marketing mix for any product.
b) Price can be used to communicate a product’s image.
c) The right price is always the one that is cheapest.
d) Strong brands tend to set their prices at the same level that their rivals have set.
e) Usually, the stronger the brand, the more control the firm has over the price set.
4.2 A firm producing organic breakfast cereals has received complaints that customers are unable to find a newly
launched brand in any of the major supermarkets. Which element of the marketing mix needs sorting out?
a) Price
b) Product
c) Place
d) Promotion
10. Calculated risk
1. Delete the wrong word from each pair (underlined)
Businesses are faced with risk at all times. Entrepreneurs make decisions that not only risk their own money and
reputations, but also that of other investors and lenders. The riskiest stage for most businesses is at start-up –
approximately one third fail within the first three years/months. However, even established firms face risks. On
average, 80% of new products are unsuccessful but cautious/innovative businesses still continue to develop and
launch them. This is because the potential rewards/risks generated by one successful idea can more than make up
for a number of failures, i.e. the risk/reward ratio is favourable/unfavourable. Also, those firms that do not develop
new products run the risk of not being able to respond to changes in the market.
2. Calculated risk – matching activity

Match the most likely risk and reward to the business decisions given below:
Business decision Reward Risk
2.1. A manufacturer takes out a large loan to a) A significant share in the i) Late payment by the
buy more machinery. new market is obtained. customer leads to cash flow
problems.
2.2 A UK supermarket chain decides to b) A contract to supply on a ii) Existing level of demand
expand into the US market. regular basis is awarded, falls, leaving unsold stocks of
increasing profits. finished goods.
2.3. A new business uses up its cash to buy c) Output increases, resulting iii) Competition proves higher
stock in order to meet a large order from a in higher profits. than expected, leading to
new customer. disappointing sales.
3. Calculated risk – true or false?

3.1 Only big businesses face risks big enough to threaten their survival.
3.2 A single mistake is more likely to do threaten the survival of a small business than a large one.
3.3 Initial mistakes can help a business be more successful in the long term.
3.4 A firm that can come up with an idea that is new and different from its rivals is guaranteed success.
4. Calculated risk – multiple choice questions

4.1 Which one of the following most accurately explains the purpose of attempting to calculate risk when making
business decisions?
a) To make sure that a decision involving no risk at all is made
b) To attempt to make a decision involving the greatest risk and the least reward
c) To try and make a decision where the risks will be outweighed by the rewards
d) To make sure that all risks have been identified before a decision is made
4.2 Which three of the following are most likely to be considered when attempting to calculate the risk of a business
decision?
a) What are the options that involve no risk to the business
b) What are the likely benefits for the business if the decision results in success
c) What options exist where success is guaranteed.
d) What are the likely costs for the business if the decision results in failure
e) What actions can managers take to remove any chance of failure
f) What are the chances of failure threatening the survival of the business
11. Calculating net cash flows
1. Missing words
At any given time, money will be coming into and going out of a business. Cash inflows might occur when customers
pay for goods or services, or when the firm’s owner takes out a bank _____________. Cash outflows are created
when the business has to pay wages to its staff and pay _______________________ for stock. ________ cash
flow is the difference between total cash inflow and total cash outflow in any one month. If a business has
_______________________ cash flow, it may struggle to keep running smoothly.
Hint: words from – loan, negative, net, suppliers
2. Calculating net cash flows: multiple choice questions:
2.1 When calculating a firm’s net cash flow, which two of the following would be used:
a) Overdraft facility
b) Total cash inflows
c) Total profit
d) Monthly sales volume
e) Total cash payments
2.2 When calculating a firm’s monthly net cash flow, which two of the following would not be included as part of its
total cash inflow?
a) Cash sales
b) Payment of a grant from the government
c) Money spent on advertising
d) Money invested by the firm’s owner
e) Rent paid to the owner of the premises used by the firm
3. Calculating net cash flows:
Edward Collins runs his own art shop, selling paintings, cards and stationery. He also rents the first floor of his shop
to a friend. Below is an incomplete cash flow forecast for January – April next year – complete it by filling in the
missing information:
All figures are in £s January February March April
Total cash inflow 3800 b) 4,500 4,800
Cash payments:
Supplies 1.800 2,300 2,300 2,500
Loan repayment 500 500 500 500
Gas & electricity (paid quarterly) 0 0 800 0
Insurance (paid annually) 500 0
Other expenses 700 700 700 500
Total cash outflow 3,000 3500 4,800 d)
Net cash flow a) 1,000 c) 1,300
Opening balance 1,000 1,800 2,800 2,500
Closing balance 1,800 2,800 2,500 3,800
Bonus questions:
i) Briefly explain what happens to Edward’s net cash flow in March.
ii) Should he be concerned about this?
12. Calculating total costs
1. Missing words
Businesses face a number of different costs – both when they are first set up and as part of their
_____________________ operations. These costs are often split into _________________________ costs,
which change in line with output, and fixed costs which do not. A business will make a profit as long as its revenue is
greater than its __________________ costs. It is important, therefore, that total costs are managed carefully, in
order to make as much profit as possible. Hint: words from: day-to-day, total, variable
2. Calculating total costs: fill in the 4 gaps
Output Variable costs Fixed costs Total costs
(000s) £000s £000s £000s
0 0 a) 250
250 125 250 b)
500 c) 250 500
1000 500 250 d)
Bonus mark: what is the variable cost per unit in the above table?
___________________________________________________________________________________
3. Calculating total costs.
Read the following information and use it to answer the questions that follow:
HAF Ltd manufactures computer components – it has made the following data available:
• Fixed costs (per month): £100,000
• Variable costs (per unit): £2.00
• Current output (per month): 50,000 units
3.1 Which one of the following gives the firm’s current total costs?
a) £120,000 b) £150,000 c) £200,000 d) £300,000
Prove it: _________________________________________________________________________
3.2 Then the firm’s fixed costs fall by 10% - what will total costs now be equal to?
a) £190,000 b) £200,000 c) £210,000 d) £220,000
Prove it: ___________________________________________________________________________
3.3 In addition to the fall in fixed costs, demand for the firm’s products falls by 20% - what will total costs be now?
a) £160,000 b) £170,000 c) £180,000 d) £190,000
Prove it: ___________________________________________________________________________
4. Calculating total costs – true or false?

4.1 If a firm’s output increases by 50%, its total costs will automatically increase by the same percentage.
4.2 If a firm’s total costs are greater than its total revenues over a period of time, it will have made a loss.
4.3 If a firm’s total costs are greater than its total revenues for a 6-month period, it will be forced to close down.
4.4 A firm’s profits can increase even if its total costs have increased.
4.5 A firm with revenue of £15,000 and a profit of £2,000 has total costs of £17,000.
13. Calculating profit
1. Missing words
Profit is the amount left over from the revenue generated from a firm’s sales during a period of time, once the costs
have been taken away. If a firm’s costs are greater than its revenues, it is said to have made a .
Calculating the level of profit allows us, therefore, to measure how successfully a business has performed. New
firms often fail to make a profit in the first months of trading, because initial ___________________ costs are high
and sales are low. Profit provides an important source of ______________________ and a return on the
________________________________ made by the owners of the business.
Hint: words from – finance, investment, loss, start-up
2. Calculating profit: briefly explain the deliberate mistake in each formula below:
2.1 Profit = total costs – total revenue __________________________________________________
2.2 Sales revenue = sales price + quantity sold __________________________________________________
2.3 Total costs = fixed costs – variable costs __________________________________________________
3. Changing profit over time:

The table below relates to the costs and revenues of a UK firm producing healthy soft drinks between 2006 and
2009 – use the data to calculate (and fill in) the missing figures. Then answer the questions that follow:
Year Quantity sold Total revenue Total costs Profit
000s £000s £000s £000s
2006 200 400 300 i)
2007 250 500 ii) 175
2008 310 620 355 iii)
2009 400 iv) 400 340
Now, match the following answers to the questions below:

a) 85% b) 25% c) 100% d) 33% e) 50%
3.1 What was the percentage increase in quantity sold from 2006 – 2009? ____________
3.2 What was the percentage increase in total revenue from 2006 – 2009? ____________
3.3 What was the percentage increase in total costs from 2006 – 2009? ____________
Bonus points:
Give one possible reason why total costs increased by a smaller percentage than the quantity sold
______________________________________________________________________________________
4. Calculating profit – true or false?

4.1 A firm’s profit can be calculated by subtracting its total costs from its total revenue.
4.2 A firm’s total revenue can be calculated by adding its profit to its total costs.
4.3 A firm’s total costs can be calculated by subtracting its profit from its total revenue.
4.4 A decrease in sales revenue or an increase in total costs will lead to an increase in profits.
5. Calculations
5.1 A farmer sells 40 pigs a month. The fixed costs are £1,200 a month and each pig eats up £15 of variable costs. At
auction, the pigs usually sell for between £45 and £60 each.
a) What’s the month’s profit at £45? ___________________________________________________________
b) What’s the month’s profit at £60?___________________________________________________________

14. Cash flow – how to improve it
1. Missing words
All businesses should aim to keep a _________________net cash flow position. Negative net cash flow means that
a business does not have enough cash coming into the business to pay for its cash expenses. This may force the
business to apply for an overdraft as a ____________________solution; this is expensive if used in the long term.
A firm must make sure, therefore, that cash _____________________ are larger than cash________________.
Hint: words from – inflows, outflows, positive, short-term
2. Improving cash flow: multiple choice questions:

2.1 Which two of the following would be most likely to keep a firm’s cash flow positive in its first year of trading?
a) Ignore late-paying customers to maintain a good relationship
b) Rent equipment rather than buy it outright
c) Run expensive advertising campaigns frequently to increase demand
d) Control running costs as much as possible
e) Agree a large overdraft facility with the bank
2.2 James Smead Ltd produces clothes for department stores in the UK. Which two of the following are most likely
to help the company recover from a negative cash flow position?
a) Sell off any unused machinery and equipment
b) Increase the salaries of sales staff in order to encourage them to work harder
c) Reduce the price charged to its customers for all new orders
d) Increase the price charged to its customers for all new orders
e) Offer existing customers a small discount for paying on time
3. Improving cash flow: Samir and Sabina are catering students who want to set up in business together. They
plan to provide a service preparing the food for private parties in their local area. They have prepared the following
cash flow forecast as part of their business plan. They had expected initial sales to be low but are disappointed with
the results. Fill in the gaps and answer the questions that follow:
February £s March £s April £s
Cash inflow 10,000 1,000 1,400
Delivery van 7,000 0 0
Kitchen equipment 2,000 0 0
Others 600 1,300 1,650
Total cash outflow a) 1,300 1,650
Net cash flow 400 b) d)
Opening balance 0 c) 100
Closing balance 400 100 e)
4. Improving cash flow – match the action to its most likely effect
Action to improve cash flow Likely effect
1. Sell the Head Office building and rent one a) Cash inflow will increase, but costs will be higher in the
instead long term.
2. Sell off machinery that is not being used. b) Cash inflow may increase but profits will decrease.
3. Hold a ‘20% off everything’ sale c) Cash inflow will increase immediately but cash outflow
may also increase.
4. Offer customers a discount for prompt d) Cash inflow will increase but the business may not be
payment. able to respond to a sudden increase in demand.
15. Cash flow problems
1. Missing words
Most businesses aim to make a ________________ in the long term. However, on a day-to-day basis having
enough cash to keep the business running smoothly is more important. Cash is not the same thing as profit. It refers
to the _______________ a firm holds in notes and coins, as well as in its bank account. Cash comes into a
business from money received from sales of goods or services, i.e. customers who pay up. It is used to meet the
firm’s ____________________, such as obtaining supplies, buying equipment and paying wages. If a business is
unable to pay its ________________, it may be forced to close down. Every year, thousands of businesses fail as a
result of cash flow problems. Hint: words from: expenses, money, bills, profit
2. Cash flow problems: multiple choice questions:

2.1 Which two of the following are most likely to cause cash flow problems for a new business?
a) Being offered a large overdraft facility by your bank
b) Failing to agree credit terms on purchases with suppliers
c) Spending most of the business start-up capital on new equipment
d) Over-estimating running costs
e) Refusing to sell to customers on credit
2.2 Which one of the following is least likely to cause cash flow problems for an existing business?
a) The unexpected loss of a regular customer
b) An unexpected fall in the cost of supplies
c) An unexpected increase in energy costs
d) An unexpected decrease in the number of cash sales
3. Cash flow calculations:

‘Neat & Tidy’ is a cleaning business owned by Anita Turner. Complete the following cash flow forecast for the
business, (fill in the gaps i), ii), and iii), then answer the questions that follow:
Jan Feb Mar April May June
£ £ £ £ £ £
Receipts 10,000 10,000 10,000 10,000 10,000 10,000
Payments: 8,500 8,500 12,500 8,500 8,500 12,500
Net cash flow 1,500 1,500 (2,500) 1,500 1,500 i)
Opening balance 1,000 2,500 4,000 1,500 3,000 ii)
Closing balance 2,500 4,000 1.500 3,000 4,500 iii)
At the end of May, Anita finds out that the rent on the offices used by the business is to increase in June causing her
total payments to increase by £500 a month:
3.1 What will be new net cash flow figure for the business in June?
a) (£2,000) b) (£2,500) c) (£3,000) d) (£3,500)
3.2 What will be the new closing balance figure for the business in June?
a) (£2,000) b) (£2,500) c) £1,000 d)) £1,500
Then, at the beginning of June, two big customers cancel their contracts, causing receipts to fall by 20%:
3.3 What will be the new net cash flow figure for the business In June?
a) (£3,000) b) (£4,000) c) (£5,000) d) (£6,000)
3.4 What will be the new closing balance figure for the business in June?
a) £500 b) £1,000 c) (£1,000) d) (£500)
16. Cash flow forecasting
1. Missing words
A cash flow forecast is a prediction of the money that is expected to come in and go out of a business over a
period of time. Cash flow forecasts are usually drawn up on a __________________ basis. They are useful in
helping a business to identify months when cash _________________ are likely to be greater than cash inflows.
Then the managers can plan how to deal with a period of ____________________ cash flow. Firms will also
include a cash flow forecast as part of a business plan to obtain finance. New businesses may find it very difficult to
make accurate predictions, as they cannot be sure of their level of ____________.
Hint: words from – negative, monthly, sales, outflows
2. Cash flow forecasts: odd one out!
Circle the item that does not belong in each of the groups below (say why for a bonus point!):
2.1 staff wages cash sales credit purchases office rent
Why? _____________________________________________________________________________
2.2 credit sales owner’s capital loan repayment cash sales
Why? _____________________________________________________________________________
3. Drawing up cash flow forecasts: Steve set up snack bar near to a sixth form college four months ago. He is
worried about how the summer holidays will affect his cash flow and is thinking of applying for an overdraft. He has
begun to produce a cash flow forecast (see below) - do him a favour and fill in the missing figures:
May June July Aug Sept
£000s £000s £000s £000s £000s
Total receipts 24 20 c) 8 22
Total payments 21 18 17 16 18
Net cash flow 3 2 (3) d) 4
Opening balance 1 b) 6 3 (5)
Closing balance a) 6 3 (5) e)
Bonus question: is Steve right to think that he will need an overdraft? Explain why:
______________________________________________________________________________________
4. Cash flow forecasting – matching definitions

1. When a firm’s cash inflow is less than cash outflow in a a) Cash
given month b) Cash flow
2. The movement of money into and out of a firm’s bank c) Cash flow forecast
account d) Closing balance
3. The difference between a firm’s cash inflow and its cash e) Cumulative cash
outflow in a given month f) Overdraft
4. The cash available to a firm at the beginning of a given g) Net cash flow
month.
h) Negative cash flow
5. The way most firms finance day-to-day negative cash flow i) Opening balance
5. Explain two ways:

5.1 A retail store’s cash flow forecast could prove inaccurate. ________________________________________
______________________________________________________________________________________
5.2 A business might find it easier to insist that all customers pay cash. __________________________________
______________________________________________________________________________________
17. Cash flow effect of stock and credit
1. Missing words
The timing of receipts and payments can be just as important for a firm’s cash flow as the amount of money involved.
Often, firms sell on credit in order to attract _____________________ by giving them plenty of time to pay.
However, cash flow problems can arise if these credit periods are ___________________ or if customers do not
pay by the agreed date. A business can help its cash flow position by ______________________ the level of credit
received from its suppliers and __________________________the amount of time customers are given to pay.
Tying up too much cash in stock can also lead to cash flow problems. Cutting stock levels will boost the cash
position, e.g. by reducing the level of orders sent to ____________________.
Hint: words from – lengthy, suppliers, maximising, minimising, sales
2. Effect of stocks and credit on cash flow - calculations:
Katie Charlesworth makes celebration cakes for birthdays and other special occasions. She has been approached by
a top department store which promises to increase orders by 25% in the first three months, if sales go well. The
store is insisting, however, on having two months to pay for delivered orders.
Complete the case flow forecast below to show the results the first months of trading:
Oct £s Nov £s Dec £s Jan £s Feb £s
Owner’s investment 10,000 0 0 0 0
Credit sales 0 b) 16,000 20,000 25,000
Total cash inflow 10,000 b) 16,000 20,000 25,000
Cost of supplies 6,000 8,000 10,000 10,000 10,000
Other expenses 2,000 2,000 2,000 4,000 2,000
Total cash outflow 8,000 10,000 12,000 14,000 12,000
Net cash flow 2,000 (10,000) 4,000 d) 13,000
Opening balance 0 2,000 c) (4,000) 2,000
Closing balance a) (8,000) (4,000) 2,000 e)
3. Matching. Match up the changes in credit terms to the most likely consequences in the table below:
Change to credit terms Possible consequences
1. Offer large discounts to customers for cash sales. a) Supplies may be refused, or suppliers may give
preference to other customers.
2. Reduce the credit period given to new and existing b) A fall in income from sales, causing profits to
customers. decline.
3. Ask suppliers to increase credit period allowed for c) Sales may be lost to rival firms.
payment.
4. Multiple choice questions:
4.1 Which three of the following are most likely to result from a firm cutting its stock levels?
a) The firm’s revenue will increase significantly.
b) The firm may lose discounts on the cost of supplies bought in bulk.
c) The firm may struggle to respond to an unexpected increase in demand
d) The firm’s overheads may increase significantly.
e) The firm’s staffing costs may increase significantly.
f) The firm’s cash outflow may fall significantly.
4.2 Which one of the following is most likely to result in a positive net cash flow for a firm?
a) Offering credit periods to customers that are longer than those received from suppliers.
b) Offering credit periods to customers that are shorter than those received from suppliers.
c) Offering credit periods to customers than are the same as those received from suppliers.
d) Avoiding credit sales to customers and credit purchases from suppliers altogether.
18. Communication
1. Missing words
Communication is largely about passing on _______________________ . Good communication is vital if a
business is to become and remain successful. It can take a number of forms and be carried out for a variety of
reasons. For example, a manager might call a _________________ to gather the opinions of workers or pass on
instructions. Or a firm might run an advertising campaign to ________________ customers about new products.
Effective communication can have a number of benefits, improving efficiency, reducing the number of mistakes and
creating a more ______________________ workforce. Poor communication can lead to misunderstandings and
_____________________within the workplace, increasing costs and reducing profits.
Hint: words from – disputes, information, motivated, inform, meeting
2. Matching. Draw arrows to match each of the definitions on the left to the correct key term on the right:

1. When the person who receives the message takes a) Barriers to communication
the opportunity to reply.
b) Communication
2. Communication that takes place between a
business and individuals or organisations outside c) External communication
the business. d) Information overload
3. Anything that prevents the flow of communication. e) Internal communication
4. When the receiver of a message has no chance to f) Motivation
give a reply or response.
g) One-way communication
5. Communication that takes place between
individuals or departments within a business. h) Two-way communication
3. Communication – one-way or two-way?

Correctly identify whether the examples below describes one-way or two-way communication:
Example of communication One-way or two-way?
1. A notice placed on the bulletin board of a school staffroom,
announcing the date of the next staff meeting.
2. A telephone survey carried out by the customer service department
of a second hand car dealer.
3. A major TV advertising campaign carried out by Marks and Spencer
in the months leading up to Christmas.
4. A meeting on the marketing mix, held between a firm’s marketing
manager and her sales team.
4. Communication - multiple choice questions:

4.1 Which one of the following is not required in order to have effective communication?
a) clear and easily understood information.
b) Information that is accurate.
c) Information with no opportunity for feedback.
d) Information that is complete.
4.2 Which two of the following are most likely to result from effective communication?
a) Relations between employees and employers are likely to deteriorate.
b) The level of mistakes should be reduced, causing costs to increase.
c) The firm’s understanding of its customers’ needs should improve.
d) The level of employee motivation should increase.
e) The chances of all staff working towards the same goal will be reduced.
19. Competition
1. Missing words
Businesses are run by people who, like us, love an easy life. We’d all like to get up late and have a relaxed day with a
good lunch break and no stress. When businesses have no competition, that’s largely how it is. Until recently, this
was the position of ____________________, with its 90% share of the world market for business software
(‘Office’, i.e. Word, Excel and Powerpoint). Because customers have nowhere else to go, the ‘monopoly’, dominant
supplier has all the power. It can charge ___________ prices, offer poor customer __________________ and be
slow to ____________________. Once a business has strong competitors, it has to work hard to be
_____________________ and to be ____________________ - focused.
Hint: words from – innovate, high, customer, Microsoft, service
2. The American chocolate giant Hersheys decides to spend £60 million to break into the UK
chocolate market, currently dominated by Cadbury’s. Briefly outline the possible impact.
Group Effects of Hersheys’ arrival Likely responses to Hersheys arrival
UK consumers
UK chocolate
manufacturers
UK retail (shop)
outlets
3. Data Response
Sonia loves pizza and believes she can start a successful takeaway business in her home town: Bromley. She and her
two brothers have interviewed 120 people and found the following, surprising, results. A local business called Al
Capone’s is outselling the mighty Domino’s Pizza. She is very encouraged by this.
% share of Pizza Takeaway in Bromley
15%
40%
Domino's
Al Capone's
Bromley Pizza
45%
3.1 Outline two possible reasons why Al Capone’s is outselling Domino’s locally. __________________________
______________________________________________________________________________________
______________________________________________________________________________________
3.2 Sonia plans to call her outlet 19Pizza, with the promise: ‘Delivery in 19 minutes or your money back’. Outline
one strength and one weakness of her plan to beat her competitors.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
20. Competitor strengths and weaknesses
1. Missing words
Knowing how and where a new business fits into the _________________ can significantly improve its chances of
success. Market research can help an entrepreneur gather valuable __________________ about the market,
customers and __________________________. Customer research is necessary to find out their views and
opinions. Information relating to how, when and why customers use - or do not use - rival products can be vital in
analysing competitors’ strengths and _______________________. This can, in turn, help to identify possible
__________ in the market that can be successfully exploited. On the other hand, it may reveal the level of
competition is very ________________, suggesting that it would be better to not start up after all.
Hint: words from – competitors, gaps, information, market, strong, weaknesses
2. Competitor strengths and weaknesses – matching activity

1. Sections of a market made up of groups of a) Competitors
customers with very similar characteristics and
needs. b) Competitive advantage
2. Identifying a consumer need that is not being met c) Consumer

at the moment by an effective product or service d) Customer
3. The final user of a good or service. e) Market research
4. Firms that operate in the same market and
f) Market segment
produce similar products.
g) Market gap
5. The process of gathering and analyzing information
on a market. h) Market size
3. Competition – strength or weakness

When Tracey Ellis set up The Domestic Bliss Agency, she wanted to ensure it stood out from local rivals offering
housekeeping services. Below are the results of her competitor analysis: which is a strength and which is a weakness
of her competitors?
Research findings Competitors’ Strength / weakness
1. One national cleaning company had a 75% share of the local
market.
2. The same national cleaner advertised frequently on local
radio.
3. Two smaller local businesses had a reputation for staff
turning up late regularly.
4. None of existing competition offered other housekeeping
services, such as ironing.
4. Competitor strengths and weakness - multiple choice questions:

Which three of the following statements are true?
a) Carrying out a competitor analysis guarantees success for a new business.

b) Carrying out a competitor analysis can lead to an entrepreneur deciding not to set up in a particular area.
c) Carrying out a competitor analysis focuses on what rival firms do well, rather than what they do badly.
d) Carrying out a competitor analysis could involve asking questions to other businesses, as well as consumers.
e) Carrying out a competitor analysis could include asking consumers to talk about their experience of using rival
products.
f) Carrying out a competitor analysis will only be successful if it leads to brand new products being developed.
21. Competitive advantage
1. Missing words
Competitive advantage is a term used to describe any factors that help a product or a business to be more successful
than its _________________. One way to achieve a competitive advantage is to charge lower _______________
than competitors. In order to do this, a business must ensure its ______________ are lower than other firms, as
Ryanair does in the air travel market. However, price is not the only way of achieving competitive advantage. Many
businesses do this by producing brands that stand out. They may be brilliantly _________________ or backed by
famous actors or celebrities, such as Cheryl Cole’s advertising for L’Oreal.
Hint: words from – costs, prices, designed, rivals
2. Competitive advantage – matching activity
The companies in the table below have all enjoyed a competitive advantage within the markets in which they
operate. Match up the correct source of competitive advantage to each one:
Company Source of competitive advantage
2.1. Apple a) Clever technically, but also keen to keep prices competitive
2.2. Coca Cola b) A long-standing reputation for high standards of quality and reliability.
2.3. Mercedes c) Focus on designing stylish and trendy products that are fun and easy to use.
2.4. Nintendo d) A no-frills service leading to prices that are consistently lower than rivals.
2.5. Ryanair e) Known to be the original; competitors are always seen as copycats
3. Competitive advantage – multiple choice questions

3.1 Which one of the following is least likely to allow a restaurant to achieve a competitive advantage over rivals in
the local area?
a) By ensuring that kitchen staff and waiters are well trained
b) By offering a wider choice than competitors
c) By offering the same choices as competitors but at lower prices
d) By employing school friends as waiters – they aren’t very efficient but everyone has a laugh.
3.2 Which two of the following are not likely to result from a firm achieving a competitive advantage within the
market?
a) Increased sales
b) High levels of consumer loyalty
c) Falling market share
d) Rising profits
e) Negative cash flow
f) Enough profit to invest in expansion
4. Competitive advantage – true or false:
4.1 Competitive advantage can only be achieved by charging prices below those of competitors. True / False
Bonus mark – say why/why not:
4.2 The only way for a firm to achieve a competitive advantage is by launching brand new products into the market
True / False
______________________________________________________________________________________
4.3 Once a firm has a competitive advantage within the market, it will remain the market leader indefinitely.
True / False
______________________________________________________________________________________
22. Competitiveness
1. Missing words
Competitiveness is the ability of a business to operate successfully despite the existence of other ______________
in the market. The price charged by a firm for the goods or _________________ it supplies is an important part
of its ability to compete. This is because, although customers do not necessarily always choose the cheapest
products available, they expect to receive ________________ for money. Other important determinants of a
firm’s competitiveness include product design, product _________________, brand image and speed of
_____________________. Most small firms only worry about their competitiveness in relation to local rivals.
However, businesses that selling abroad also need to think in terms of their _______________________
competitiveness and the factors that might influence this.
Hint: words from – delivery, firms, international, quality, services, value
2. Competitiveness – true or false? (write in a T or F by each of the following)
2.1 Competitiveness can be achieved by being the fastest, rather than the cheapest, in the market.
2.2 Firms may be more likely to compete on price when the economy is in recession.
2.3 Small firms only ever need to worry about their ability to compete with other local firms.
2.4 Firms in highly competitive markets are always less likely to be innovative than those operating in markets where
competition is low.
3. Competitiveness – matching definitions

1. A key feature of a good or service that is not shared a) Competitiveness
by rivals.
b) Competitive advantage
2. The ability of a firm to either sell abroad or compete
in the home market against imports c) Copycat products
3. The process of turning a new idea into a successful d) Customer
product e) Innovation
4. Any aspect of a product or firm that makes it f) International competitiveness
successful in the market.
g) Market share
5. An individual or firm that buys a product from a
business. h) Unique selling point
4. Competitiveness – multiple choice questions

4.1 Tony owns one of several hairdressing salons in the local area. He has decided that the best way of attracting
more customers is to reduce the prices he charges, but he is keen to maintain his current profit levels. Which two
of the following actions would be least effective in helping him to do this?
a) Move to more expensive premises on the high street to improve the salon’s image
b) Encourage staff to cut down on the amount of hair care products that they waste.
c) Increase the amount spent on advertising in order to make the business better known.
d) Switch to using cheaper brands of shampoo and conditioner.
e) Start charging customers for tea and coffee, rather than offering free drinks.
4.2 Patrick owns and runs a highly successful convenience store in the village where he lives. He has just discovered
that Tesco plans to open one of its Tesco Metro stores nearby in the near future. Which three of the following
actions are most likely to help maintain competitiveness?
a) Put up prices in order to make as much profit as possible before the new store opens
b) Set up a same-day home delivery service for customers living in the village.
c) Write to the local newspaper to complain about the new supermarket
d) Carry out research to find out if there are any unusual product lines that customers would like him to stock.
e) Extend his opening hours until 10 pm on weekdays and open on Sundays
f) Do nothing and hope that his customers stay loyal.
23. Consumer protection
1. Delete the wrong word
The government has created a number of laws to protect / connect consumers from being exploited / tainted by
businesses. There are two key consumer protection laws. The Sale of Foods / Goods Act gives you the right to take
back an unwanted / faulty item and get your money back. The Trades / Graves Descriptions Act makes it an offence
for businesses to make false claims about what their products can do. These laws force businesses to spend time
and money learning the rules and regulations, then producing goods and services that comply with the law.
Otherwise, they run the risk of ending up in court paying expensive lawyers and suffering bad advertising / publicity
2. Consumer protection – matching activity

Match the key provisions to the correct piece of consumer protection legislation in the table below:
Consumer protection legislation Key provision

1. Trades Descriptions Act (1968) a) All sales staff selling food must have hygiene training and
all premises must be regularly inspected.
2. Sale of Goods Act (1893) b) Firms must be able to demonstrate that all advertising,
labels and public statements made by firms about their
products is true.
3. Food Safety Act (1990) c) All items sold on credit must have a clear indication of the
annualised percentage interest rate (APR) being charged.
4. Consumer Credit Act (1974) d) All goods must be fit for the purpose for which they are
sold.
3. Customer protection - multiple choice questions:

3.1 Which two of the following are benefits for a business resulting from being aware of consumer protection
legislation?
a) It does not cost a business anything to ensure it is meeting the requirements of UK consumer protection
legislation.
b) The Government will not allow a business to trade unless it can prove it is meeting the requirements of consumer
protection legislation.
c) A business can avoid being fined as a result of breaking the law.
d) A business cannot be fined as long as it can prove it is aware of consumer protection legislation.
e) A business can present a positive public image by being seen to promote consumer protection.
3.2 Which two are the most likely disadvantages from the government passing more consumer protection
legislation?
a) Businesses will devote fewer resources to keeping up to date with the law.
b) The costs of keeping up to date with the law might lead to increased prices charged to customers.
c) Fewer people might set up new businesses in the UK because they are put off by the amount of legislation.
d) Consumers might become concerned about buying from UK firms, so buy imports instead.
e) More foreign firms might attempt to set up in the UK as a result of the legislation.
4. Customer protection – true or false?
4.1 The existence of consumer protection legislation can benefit businesses as well as consumers.
4.2 A firm in a monopoly position is less likely to exploit consumers than a firm operating in a highly competitive
market.
4.3 The Trades Descriptions Act states that goods should be fit for the purpose for which they are sold.
4.4 When buying services, consumers can trust small firms more than they can trust large firms.
24. Creativity
1. Missing words
Although some great business ideas have come from flashes of inspiration, most successful _________________
result from careful, logical thought. This process is known as ________________________ creativity. Thinking
creatively requires an ability to look at a situation and ask questions such as ‘ _______ ?’ and ‘why not?’.
Investigating how things could be done differently can generate new approaches. These ideas can then be turned into
products that satisfy customer ____________________ more effectively. Ideas as creative as the iPhone or
Nintendo Wii can transform a firm’s business success.
Hint: words from – deliberate, needs, products, why
2. Creativity – matching activity
The table below identifies a number of entrepreneurs known for having a creative approach to business. Match each
one to the business with which they are associated.
Entrepreneurs Business
1. Adam Balon, Richard Reed and Jon Wright a) Fifteen Restaurants
2. Richard Branson b) Amstrad
3. Sergey Brin and Larry Page c) Innocent Drinks
4 Steve Jobs d) EasyJet
5. Stelios Haji-Ioannou e) Google
6. Jamie Oliver f) Apple
7. Duncan Goose g) Virgin
8. Alan Sugar h) One Water
3. Creativity – true or false?

3.1 The most successful products come from flashes of inspiration. T or F? _____________
Bonus point: If it’s true, why? If it’s not true, why not?
______________________________________________________________________________________
______________________________________________________________________________________
3.2 Generating ideas for new products should only be the responsibility of marketing staff. T or F? _____
______________________________________________________________________________________
______________________________________________________________________________________
3.3 Encouraging all employees to think creatively can lead to greater levels of motivation. T or F? ______
______________________________________________________________________________________
______________________________________________________________________________________
Multiple choice question
4. Read the passage below and answer the question that follows:
Ketan Varu set up Spice-N-Tice in 2005 to manufacture and sell curry kits. Each kit contains fresh pre-blended
herbs and spices, recipe cards and a shopping list of other ingredients. Ketan’s idea came from making up packs for
friends who wanted to make curries but did not want spend time and lots of money on jars of herbs and spices sold
in specialist shops.
Which one of the following is least likely to involve creative thinking?
a) Thinking of ways of allowing customers to buy Indian herbs and spices without having to spend lots of money.
b) Identifying the recipes for Indian dishes that would be most suited to the curry kits.
c) Thinking of ways to simplify recipes for Indian dishes for customers with limited cooking skills.
d) Employing a marketing consultant to design the company’s website.
25. Customer needs
1. Missing words
The ability to ______________________and meet customer needs is essential to business success. To meet
customer needs, a business must produce a _______________________ product and ___________________,
reliable service. Customers’ needs change over time and these changes can occur quite suddenly. A business needs,
therefore, to keep close to its customers. Market research can play an important role in providing information
about customers and what they expect to receive from the goods and services that they pay for. This research can
be quantitative or ________________________ and come from questionnaires or from careful analysis of the
firm’s customer database. The most successful businesses try to beat customer ________________________.
Hint: words from – efficient, expectations, identify, qualitative, well-designed
2. Customer needs – matching definitions
Draw arrows to match each of the definitions on the left to the correct key term on the right:

1. When an individual or firm carries out new, first- a) Customer expectations
hand research.
b) Goods
2. The process of collecting and analysing data in
order to improve decision-making. c) Market research
3. Research involving the collection of large d) Primary research
quantities of data suitable for statistical analysis.
e) Qualitative research
4. What customers believe they will receive from
the goods or services they buy. f) Quantitative research
5. Using the results of research that has previously g) Secondary research
been carried out by another individual or
organization. h) Services
3. Researching customer needs – primary or secondary

Identify whether the following research methods would be classed as primary or secondary:
Example of research Primary or secondary
3.1 A garage carries out a telephone survey to find out

customer opinions on the standard of service provided
3.2 A new business uses The Yellow Pages to identify the
number of competitors in the local area.
3.3 A leisure centre checks on-line newspaper reports on
heart disease before producing a new advert.
3.4 A fast-food restaurant leaves short questionnaires on
tables.
3.5 A chocolate producer holds an informal discussion with a
group of regular customers
4. Meeting customer needs – multiple choice question

Which two of the following are not benefits to a business from producing products that exceed customer
expectations?
a) An increase in market share
b) An increase in the number of complaints received
c) An increase in customer loyalty
d) Greater scope for charging premium prices
e) Greater risk of going out of business

26. Customer Satisfaction
1. Missing words
Customer satisfaction depends on how well customers’ expectations are met. A dissatisfied customer will talk in a
______________ way about the business to their friends. Customer satisfaction is achieved by keeping your staff
thinking about what customers want. This is called customer _______________. It is vital to the success of a firm
because it has a big influence on ________________ purchase.
Choose the missing words from: focus, repeat, negative
2. True or False? For each of the following, mark T for True or F for False
Customer Satisfaction leads to: True or False?

a) An increase in complaints
b) A reduction in the number of returned products
c) An increase in the level of sales
d) Negative Public Relations
e) Staff feeling happier and performing better in their jobs
3. How can we judge customer satisfaction?

Customer satisfaction is one of the keys to a business’ success. Entrepreneur Theo Paphitis suggests that customer
satisfaction is achieved through staff ‘knowledge of their customers’.
For each of the following business situations, how would staff be able to tell if a customer was satisfied or
dissatisfied? Think about how a satisfied customer might react and how a dissatisfied customer might react. For
example, if a business increases its prices, a satisfied customer is likely to keep buying products whereas a dissatisfied
customer may start buying from another shop.
Situation Satisfied customer reaction Dissatisfied customer reaction

A newsagent increases the price of a
can of Coke by 2p
An electronics store begins charging
5p for carrier bags
A clothing store switches to a cheaper
supplier. This leads to lower quality
goods, so it lowers its prices.
4. What would you do to keep the customer satisfied?

You are the manager. Briefly explain what you would do to ensure the customer remains satisfied in the short term
and the long term.
a) Anna has been in a shoe shop waiting to try on a pair of shoes for 15 minutes. The shop assistant has been busy
dealing with another customer who cannot decide between 2 pairs of shoes. Anna is getting impatient.
______________________________________________________________________________________
______________________________________________________________________________________
b) “When I rang up yesterday I was told that that this film was suitable for children under 10.. My two sons were
absolutely terrified and spent most of the film hiding behind the seat in front”
______________________________________________________________________________________
______________________________________________________________________________________
27. Customer Service
1. Missing words
Customers are the most ___________________________ part of a successful business. The experience that a
customer has with a business is called customer___________________. Good customer service is about putting
the needs of the customer first and looking after them so that they will want to ____________________ and use
the business again. Customer service covers many areas including how a customer is greeted, the range and
_________________ of products, staff knowledge of products/services, _________________ sales service and
products being available when customers want them. Words from: service, important, return, quality, after
2. Words for customer service. Put these words into the correct column
Accurate, Distracted, Enthusiastic, Helpful, Unsure, Unhelpful, Sincere, Caring, Well presented, Grumpy, Aloof,
Negative, Confident, Interested, Negative, Polite, Scruffy, Rude, Positive, Offhand, Unsure
Good Customer Service Bad customer service
3. Good or bad customer service?

For each of the following situations, state whether you think they show good or bad customer service. Where you
choose ‘Bad’, suggest how the situation could have been dealt with better.
a) A supermarket employee is off to the staff room for a coffee break. A customer stops and asks which aisle the dog
food is in. The employee says “I am on my coffee break, you will need to find another member of staff to help you”.
______________________________________________________________________________________
______________________________________________________________________________________
b) A customer rings up the bank to ask for advice. During the call, the member of staff cuts the customer off by
mistake and the line goes dead. The member of staff rings the customer back straight away and apologises.
______________________________________________________________________________________
______________________________________________________________________________________
c) A customer at a gym goes to complain to a receptionist because the changing rooms are dirty. The receptionist is
chatting to another member of staff and takes 5 minutes before acknowledging the customer. After listening to the
complaint she says “it’s nothing to do with me, you’ll have to find a member of the cleaning staff”
______________________________________________________________________________________
______________________________________________________________________________________
d) A customer bought a digital camera 10 days ago and it has stopped working. He returns it to the shop. The sales
assistant has a look at the camera and says he has no idea what is wrong with it and that there is no one in the shop
to help him as the manager is off sick. He suggests that the customer comes back another day.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4. Anagrams
The following are advantages to a business of good customer service. Unscramble them to reveal the correct phrase
They should come back – again and again SEEN A STRIPE BUS
The way to build an image of real quality DOG NATIO TOE PUR
This should pass some positive messages around DEPOSIT TO HUMOUR WOVIF
28. Design and Design Mix
Good product design will take into account three key factors. These are function, cost and appearance. How the
firm combines these three elements is called the design mix.
1. Which words/phrase fits which design mix heading? Put a tick in the right box
Function Cost Appearance
1.1 How well the product works
1.2 The materials used in manufacture
1.3 Colour
1.4 Easy to use
1.5 How well the product lasts
1.6 How the product feels
1.7 Efficient to produce
1.8 Reliability
1.9 Simple design
1.10 How the product looks
2. Which is the most important element of the design mix for the following products?
a) A restaurant offering an all you can eat lunch time menu for the over 60s ______________________
b) A cleaning product which destroys lime scale immediately ______________________
c) A designer clothes shop offering a range of unique, highly priced clothing for women _________________
3. Place the products on the diagram according to their design mix

For example, the designers of a VW Beetle car focus on the appearance of the car (its shape, a flower included on
the dashboard etc) as well as function (reliability, speed, road handling etc)
Appearance
a) Purple Ipod Nano 8GB
b) Daz ‘mandarin and lime’ washing
powder
c) Nokia N96 mobile phone
d) Primark plain white t shirt VW
e) Calvin Klein men’s shirt
Beetle
f) Branded bottle of water
g) A can of Diet Coke
h) A paper clip
i) Mayonnaise in a squeezy bottle Function Cost
4. Considering the design mix

Apple’s Mac Mini desktop computer is described as “the world’s most energy efficient desktop computer”. The
computer is very small, is highly recyclable and uses 45% less energy than a normal desktop computer. Yet it
contains features customers would expect from a good computer. The Mac Mini currently retails at around £450
and costs around £300 to manufacture.
Explain how Apple has considered each element of the design mix in designing the Mac Mini.
______________________________________________________________________________________
______________________________________________________________________________________
29. Economic Growth
1. Missing words
Economic Growth is the rate of increase in the level of output per year within an economy. It is measured using
GDP (Gross ________________ Product). GDP means the total ____________ of all the goods and services
produced in a country in a year. On average in the UK there has been economic growth of approximately 2.25%
each year. This means that every year, the economy has been producing 2.5% __________ goods and services than
it did in the previous year. In 2008 and 2009, most countries faced a fall in output for the first time in many years, i.e.
a recession. Changes in the rate of economic growth and levels of economic activity over time are called the
business _________________. Words from: cycle, domestic, value, more
2. Label the business cycle, i.e. put a, b and c on the right places on the diagram
The business cycle shows fluctuations in the level of economic growth over a period of time.
Output a) UPTURN
b) BOOM
c) RECESSION
Time
3. Data Response. The graph below shows UK Economic growth. Use the graph to help you answer the questions.
a) According to the graph, what was the annual (4q, i.e. 4 quarter) rate of economic growth in:
i. Quarter 2 in 2006
ii. Quarter 2 in 2009
b) At what stage of the business cycle was the UK in:
i. Quarter 1 in 2006 ________________________
ii. Quarter 1 in 2009 _________________________
c) Outline the impact on these businesses of the rate of growth in Quarter 1 of 2006 AND Quarter 4 of 2008
BUSINESS Q1 2006 Q4 2008
A small business in
Brighton town centre
which sells luxury
handmade chocolates
A chain of discount shops

called Poundland, selling
every item for £1
30. Effect on small firms of price changes
1. Missing words
The price of __________________ such as coal, oil, steel and copper depends on supply and ______________.
Businesses therefore have little ________________over the price at which they buy these raw materials. Changes
in commodity prices can have a ______________ impact on ________________ businesses such as plumbers,
builders and farmers. Words from: demand, small, big, commodities, control
2. Multiple Choice
John runs a small plumbing business. He employs 2 members of staff; a plumber who helps him complete jobs and a
secretary who takes orders and completes his paperwork and accounts. He rents a small office in the local town.
2.1 The price of copper rises on world markets. What is the most likely reason for this increase?
a. The demand for copper has fallen
b. The supply of copper has risen
c. The supply of copper has risen faster than the demand for copper
d. The demand for copper has risen faster than the supply of copper
2.2 Which of the following of John’s business costs will be affected by the increase in the price of copper? (You
may select more than one answer)
a. Rent
b. Raw materials
c. Electricity bills
d. Staff wages
e. Vehicle costs
2.3 Which of the following of John’s business costs will be affected by the increase in the price of oil? (You may
select more than one answer)
a. Rent
b. Raw materials
c. Electricity bills
d. Staff wages
e. Vehicle costs
2.4 John needs to decide whether to put his prices because of the increase in the cost of copper. Which one of
the following is most likely to affect his decision?
a. How big is the increase in the cost of copper
b. Which supplier he buys his copper from
c. Whether the government will allow him to increase his prices
d. Whether he expects the price of oil to rise or fall
3. Data response
3.1 John decides not to raise his prices in the short term. Explain 2 effects that his decision may have on his business.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3.2 The price of copper has remained high. After six months, John decides that he needs to raise all of his prices for
plumbing jobs by 10%. Explain how John’s customers might react to this increase in price.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
31. Enterprise – What is it?
1. Missing words
Enterprise is the quality that makes someone think for him/herself – and then act to turn an idea into a reality. Some
enterprising people are driven by a desire to achieve an _____________________: to get rich, to be your own
__________ or to make a difference to the world (perhaps through a new charity). Others are driven by necessity,
e.g. there are no secure jobs locally, so starting a business is the only way to secure a steady(ish)
_________________. Whatever the motive, enterprise only becomes entrepreneurship when the person takes the
initiative to create a business. To do this successfully requires initiative and a range of skills from cash flow
management to a talent for showing ___________________ to staff.
Choose words from: boss, leadership, ambition, income
2. Objective test question. Which two of the personal qualities and skills on the right best match the types of
business start-up on the left? Answer on the right, e.g. 2.2 = c) d)
Business Start-Up Enterprise skills and qualities ANS
2.1 Ted is starting a sole trader social enterprise selling made-to a) Determination and resilience
measure beds, and giving 75% of the profit to charities. The market for
b) Good grasp of calculated risk
beds is known to be very, very tough.
2.2 Lola is fresh from college and short of money, but wants to start a c) Good at planning ahead
fashion clothes shop. In her area, town centre rebuilding makes it hard
d) Persuasive dealing with banks/investors
for any business to see clearly how the future looks
2.3 Cara’s dad is willing to lend her £30,000 to start an ice cream- e) Can inspire others to give their best
making business, but only if he is confident that she will use the money
f) Hugely motivated to help the homeless
effectively to minimise his chance of losing his investment
3. Data Response Question
Property Market in Runcorn 2001-2009

35
30
25
20
15 Number of estate
10 agents*
5 Property prices (%)**
0
-5 2001 2002 2003 2004 2005 2006 2007 2008 2009
-10
-15
Liliya came from Russia to go to school in Britain, then on to Manchester University. Within her business course, she
researched the 2008/09 property price crash. She was able to produce the graph shown above. By Autumn 2009
commentators were predicting a house price recovery in 2010. She was especially interested in the business
implications. With the collapse in the number of estate agents locally, wasn’t it time to open a new one?
3.1 Outline one example of how Liliya showed enterprise in the text above.
______________________________________________________________________________________
3.2. Use the graph to explain why Liliya thought Autumn 2009 was the right time to open an estate agency.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
32. Enterprise qualities
1. Missing words
Whereas all enterprise skills can be learnt, some of the qualities shown by entrepreneurs may come naturally to
them. For example, some children show __________________________from an early age, whereas others give
up too easily. Business success requires personal qualities backed by good organisation and planning. Although
______________________ is helpful to an entrepreneur, someone who is 100% creative but 0% organised is likely
to be a start-up disaster. Therefore enterprise qualities and enterprise _______________need to be balanced.
Choose words from: skills, determination, creativity
Qualities of Entrepreneurs who succeed and those who fail
Risk-taking ability
Ability to persuade
Showing leadership
Start-up failure
Quality of decision making
Start-up success
Creativity
Initiative
Determination
40% 45% 50% 55% 60% 65% 70% 75% 80% 85%
2.1 From this list of enterprise qualities, identify the three that seem to be the most important to success when
starting a business.
______________________________________________________________________________________
2.2. Briefly explain why ‘the ability to persuade’ may be so important. ___________________________________
______________________________________________________________________________________
______________________________________________________________________________________
2.3. Briefly explain why initiative might not automatically lead to business success. __________________________
______________________________________________________________________________________
______________________________________________________________________________________
3. Objective test question
Emma plans to open a Hair & Nails outlet in Nottingham. She is full of enthusiasm, hoping for success after a poor
time at school. She gave up too easily when subjects became difficult. Fortunately she looks great, is very chatty and
friendly – and shows great creativity with hair styling. She is worried, though, about how to handle the three staff she
plans to hire. She is only 24 and they will be older than her.
Which two of these enterprise qualities are most likely to prove Emma’s weakest.
a) Having ideas and showing initiative
b) Determination, even when things go wrong
c) The ability to persuade others of her point of view
d) Showing leadership
e) The willingness to take calculated risks
f) Creativity
33. Enterprise skills
1. Missing words
Starting a business successfully requires personal qualities such as __________________, but also requires a lot of
skills. Whereas some people naturally have enterprise qualities such as determination, everyone can learn to plan
ahead. Enterprise skills can be learnt; successful entrepreneurs will be those who learn ___________________.
In the 2009 recession, the collapse of established businesses such as Woolworth’s was seen as an opportunity by
some entrepreneurs. They saw new __________ appearing in the market (and in the High Street). As long as they
planned carefully, they were able to use their _____________ to create profitable new businesses.
Choose words from: skills, quickly, initiative, gaps
2. Data Response Question (1)
Siggi Hats is where celebrities go to buy their posh hats for weddings or super-posh events. Siggi started in 1979 and
is still hugely successful. He said, in 2009:
“If you want to start up in business do your market research very well; make sure you’ve got a product you believe
in and that people want … the most important thing is to get your pricing right. You have to sit down and work out
how much to charge … when I started I focused on turning over huge amounts of cheaper hats … I learnt to think
more and charge more! You need to be very flexible to adapt to the market … and you have to make sure you’ve
got your finances planned out.”
2.1 From this list of enterprise skills, identify two shown by Siggi: planning; thinking ahead; seeing opportunities;
having drive and determination
______________________________________________________________________________________
2.2. Briefly explain the way in which Siggi showed one of these two skills. _______________________________
______________________________________________________________________________________
2.3. Briefly explain why it’s important in business to be ‘very flexible’. ___________________________________
______________________________________________________________________________________

The number of business start-ups rose from 432,300 in 2007 to 436,600 in 2008. This was a surprising increase given
the recession. The number of businesses started by men rose by 1%, whereas the number started by women rose
9%.
According to Barclays Bank, the number of new businesses started by men-only was 300,000 and women-only was
90,000 in 2008. But the people coming to Barclays ‘Let’s Talk Starting’ workshops was 50/50 men and women. The
Bank concludes that women are increasingly interested in starting a business for themselves.
3.1 Outline one possible reason why, in the past, women have been less likely to start up a business than men.
______________________________________________________________________________________
______________________________________________________________________________________
3.2 Outline one enterprise skill that women might be developing, making them more likely to start up on their own.
______________________________________________________________________________________
______________________________________________________________________________________
3.3 Explain how a mindmap could be used to help decide whether or not to start up a business.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
34. Environmental issues – long term
1. Missing words
There are two main environmental problems facing the world in the long term: global warming and resource
depletion. Global warming is thought to be caused by CO2_______________________; these, in turn, are caused
by many factors – but affluence (__________________) seems the main one. Western countries buy more, drive
more, eat more and heat more – and therefore use more of the things that cause the CO2 emissions. Resource
depletion also matters; it means that some resources such as oil are finite, in other words there’s enough for now,
but not for the _____________________ future. If oil runs out the implications for economic welfare are
especially tough. Choose words from: wealth; emissions; indefinite
2. Data Response Question Global CO2 emissions 2007

Total yearly Per person
Different countries argue about which is the most guilty for (million (thousand
the CO2 emissions that are believed to cause global tonnes) tonnes)
warming. The Table on the right shows emissions by China 6284 4.8
country. It identifies the total figures and the figures per USA 6007 19.9
person in the population. Nigeria is a huge country (and a Europe 4690 7.9
massive oil producer), yet it contributes very little to Russia 1673 11.8
greenhouse gasses. India 1401 1.2
Study this Table for a few minutes before answering the Japan 1262 9.9
questions below. UK 564 9.3
Australia 456 22.1
Source: U.S. Energy Information Administration Oct 2009
Nigeria 103 0.7
2.1 Outline one reason why the Americans say that China is the most guilty when it comes to global warming.
______________________________________________________________________________________
2.2 Outline one reason why the Chinese say that Americans have the main responsibility for global warming.
______________________________________________________________________________________
2.3 In general, less developed countries such as China, India and Nigeria say that the rich countries should pay the
bills for reducing greenhouse gasses. Is this fair?
______________________________________________________________________________________
______________________________________________________________________________________
Causes of Greenhouse Gasses worldwide (total = 100%)

Source: World Resources
Institute (quoted in The
Other Guardian, October 2009)
Agriculture
Within the ‘Transport’
Industry category, the
breakdown was:
Fuel generation • Road 10.5%
Transport • Air 1.7%
• Other 2.5%
0% 4% 8% 12% 16% 20% 24% 28% 32% 36%
3.1 Research shows that most people blame businesses for global warming. Based on the bar chart, are they right?
______________________________________________________________________________________
______________________________________________________________________________________
3.2 Are campaigners right to single out air travel as a particularly serious cause of greenhouse gas emissions?
______________________________________________________________________________________
35. Environmental issues – short term
1. Missing words
‘The environment’ includes a wide range of situations, from life-threatening to unsightly. In less developed countries,
__________________________ tend to be weak. This can allow businesses and individuals to dump dangerous
waste products at landfill _____________ or simply by the road. When economic ________________ creates
more wealth, people start to insist that governments make their lives safer and more pleasant. So environmental
legislation gets teeth. In the UK, people worry about air pollution, noise pollution, water pollution and the effects of
too much waste – and how to dispose of it. Then there are long-term issues such as global __________________
and resource depletion. Some people seem to think the world gets dirtier as economies grow and develop. In fact
the UK today is hugely less polluted than fifty or a hundred years ago. This is partly a natural result of wealth, and
partly a result of ___________________ action such as the Clean Air Act.
Choose words from: sites, government, regulations, warming, growth
2. Multiple Choice Questions
2.1 Which one of the following would be the most dangerous cause of air pollution?
a) A factory with a zero emissions policy
b) An organic farm, using natural manure on the fields
c) A narrow but busy road, with traffic that crawls slowly
d) A huge Amazon warehouse, used to store stocks of books ANS = ______________
2.2 Which one of the following would be the most dangerous cause of water pollution?
a) Pesticides running off farmers’ fields into a nearby river
b) The liquid from fully treated sewage running into the sea
c) River water used for cooling at a factory, then checked, then returned to the river
d) Tidal barriers used to absorb wave energy in order to turn it into renewable electricity

In July 2009 the government of Brazil uncovered 1,400 tonnes of hazardous waste from Britain. Two companies
based in Swindon had collected waste including used syringes, car batteries and soiled nappies – and sent it to Brazil
disguised as ‘recyclable plastic’. The Brazilians were furious, and demanded that the rubbish be sent back to Britain. A
complication, though, was that the limited companies ceased trading earlier in 2009. The surprise was that the
companies – set up in 2007 – had received a licence from the UK Environment Agency to allow such huge shipments
to take place. The British Embassy in Brazil had to step in to avoid severe embarrassment to Britain.
3.1 Outline one case for and one case against bringing in tougher rules for businesses seeking waste disposal licences.
For tougher rules: ________________________________________________________________________
______________________________________________________________________________________
Against ________________________________________________________________________________
______________________________________________________________________________________
3.2 How might limited company status protect the business owners from financial loss in a case such as this?
______________________________________________________________________________________
______________________________________________________________________________________
3.3 Should limited company status be allowed to protect business owners from financial loss in a case such as this?
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
36. Estimating revenues
1. Missing words
A business needs to be able to estimate the level of revenue made in the coming months in order to ___________
effectively. To do this, it will need to know the ________________ it intends to charge for its products and the
amount it expects to sell. Having a good idea of the level of future demand will allow a firm to order the right
_________________ of stock and employ the right number of workers. Being able to predict future prices will
show whether it is possible to cover expected ______________ and still make a __________. However, a firm’s
ability to predict its future revenues depends to a large extent on the conditions in which it operates. Predicting
revenue for an existing product with relatively _______________ demand is fairly easy. Far, far tougher is to
predict revenue for a brand new business. Hint: words from – costs, plan, price, profit, quantity, stable
2. Calculations
The table below shows the effect on revenue of charging different prices for hamburgers. Fill in the gaps.
Estimated price Estimated demand Estimated revenue

(£) (units) (£)
1.75 6,000 A=
B= 3,500 8,750
3.25 C= 6,500
3. Estimating revenue – true or false (a bonus mark for explaining why!):

3.1 A firm’s estimated revenue can be calculated by dividing its planned sales price by the amount it expects to sell.
T/F
Reason: ________________________________________________________________________________
3.2 Predicting the level of sales revenue is likely to be easier when one firm controls a large share of the market.
T/F
Reason: ________________________________________________________________________________
3.3 Overestimating price levels could lead to future revenue being lower than expected. T/F
Reason: ________________________________________________________________________________
4. Multiple choice questions

4.1 In which three of the following situations might a pizza delivery business find it most difficult to estimate
revenues accurately?
a) Where the cost of fuel is subject to large and unexpected changes
b) Where new firms offering take-away services are regularly set up in the local area
c) Where the price of ingredients can be affected by changes in the weather
d) Where the business enjoys high levels of customer loyalty
e) Where existing competitors often run promotions such as buy-one, get one free
f) Where the business is about to open for the first time next Monday.
4.2 Which three of the following are the most likely consequences for a business that under-estimates the quantity
of goods it expects to sell next month?
a) The amount of profit made in that month will be higher than expected
b) The amount of profit made in that month will be lower than expected
c) The business may be forced to cut prices to get rid of unwanted stock
d) The business may increase the level of supplies ordered in future
e) The business will see an improvement in its net cash flow for that month
f) The business may be forced to increase expenditure on advertising
g) The variable costs of operating the business will be lower than forecast
37. Estimating costs
1. Missing words
Businesses incur a number of costs, both at start-up and as a result of the day to day activities required to produce
goods or services. Individual costs are often described as either being ______________, meaning that they do not
change as output changes, or as being ___________________, meaning that they do change with the quantity
produced and sold. Being able to estimate costs accurately is difficult, especially for new businesses or those
planning to develop new __________________ or enter new _________________. However, being able to do
so is very important, as costs will need to be covered if the business is to survive and make a _________________
in the long-term. Costs act as a major influence on the price charged by a business. Accurate cost estimates are
also needed so that a business can raise sufficient __________________ to support start-up and growth.
Hint: words from – finance, fixed, markets, products, profit, variable
2. Key terms:
Match the definition on the left to the correct key term on the right:
Definition Key terms

1. A method of paying employees where the amount earned a) Fixed costs
varies depending on the level of output produced. b) Net cash flow
c) Piece rates
2. The addition of fixed costs and variable costs. d) Profit
e) Sales revenue
f) Total costs
3. Costs, such as rent and insurance, that do not change with
output. g) Variable costs
3. Estimating costs - calculations:

Dennis is a keen gardener who is thinking of using some land on a property that he owns to grow organic tomatoes.
He will sell them to local shops and restaurants. He plans to do most of the work himself but will need to hire
temporary staff to help plant the fruit, and he plans to pay them on a piece-rate basis. He also plans to rent farm
equipment until the business is up and running, in order to cut down on start up costs. Dennis has estimated the
first month’s costs to be:
Variable costs: tomato plants - £1,200; fertilizer - £50; extra labour - £250
Fixed costs: advertising - £100; rent of equipment - £200
Answer the following questions:
3.1 What would be the effect on total costs if Dennis has underestimated the cost of renting equipment by 25%?
a) down by £100 b) down by £40 c) up by £40 d) up by £50
3.2 What would be the effect on total costs if Dennis has underestimated the cost of variable costs by 20%?
a) up by £160 b) down by £240 c) up by £200 d) up by £300
3.3 What would be the effect on total costs if Dennis has underestimated fixed costs by 50%?
a) down to £1,650 b) down to £1,800 c) up to £1,950 d) up to £2,100
3.4 What would be the effect on total costs if Dennis has overestimated the cost of tomato plants by 20%?
a) down by £100 b) down by £240 c) up by £100 d) up by £200
4. True or false?
4.1 Fixed costs never change. T/F
4.2 The cost of labour is sometimes treated as a variable cost. T/F
4.3 Underestimating demand can lead to an increase in costs T/F
4.4 Underestimating costs can lead to cash flow problems. T/F
38. Ethics
1. Missing words
Behaving in an ethical manner is about doing what is ______________ (morally), rather than simply what is within
the law. Supermarket chains may be acting legally when they use their market power to push down the
_____________ paid to farmers, but many would question whether this is ethical. A firm that behaves in a socially
responsible manner attempts to show concern for all its ________________________, including its workers,
customers, suppliers, the environment and community. However, this may be hard to do in practice. For example, it
could mean turning down _________________ from customers who behave unethically themselves. Or it might
mean a bit extra for supplies. Both of these would cause _________________ to be lower than they would
otherwise be. In addition, many businesses have been criticised for claiming to be ethical when their policies are as
profit-focused as most of their rivals. Hint: words from – orders, prices, profits, right, stakeholders
2. Key terms
Definition Key term

1. A firm that trades in goods and services in order to a. Ethical behaviour
raise funds to support a social cause
b. Fairtrade
c. Pressure group
2. Individuals or groups that are seen by a firm as vital
to its success, e.g. employees, customers d. Primary stakeholders
e. Secondary stakeholders
3. A movement that attempts to ensure a fair deal for
f. Social enterprise
farmers and workers in developing countries
g. Sole trader
4 I di id l th t b li th h
3. True or false?
3.1 All businesses operating in the UK are required by law to behave in an ethical manner. T/F
3.2 What is considered to be ethical behavior may change over time. T/F
3.3 A firm that decides to behave in a genuinely ethical manner may experience a reduction in profits in the short
term. T/F
3.4 A firm that that decides to behave in a genuinely ethical manner should put the needs of its shareholders before
those of its other stakeholders. T/F
4. Exam-style questions:
4.1 Which one of the following supermarket policies could best be described as an ethical business practice?
a) Switching from offering customers free plastic carrier bags to selling re-useable shopping bags made from recycled
materials.
b) Buying in bulk from suppliers in order to pass cost savings on to customers in the form of lower prices.
c) Offering financial support to suppliers of dairy products to allow them to switch to more environmentally friendly
farming methods.
d) Refusing to sell alcohol to anyone under the age of 18 to reduce the levels of teenage binge drinking.
4.2 Identify two possible benefits for the supermarket from appearing to behave in a more socially responsible
manner:
1. ____________________________________________________________________________________
______________________________________________________________________________________
2._____________________________________________________________________________________
______________________________________________________________________________________
39. Exchange rates
1. Missing words
An exchange rate is the price at which one currency can be traded or ‘exchanged’ for another. For example, the £
may be ___________________ for 1.10 euros or 1.40 US dollars. As is the case with the price of goods and
services, the exchange rate is determined by the _______________ and demand for £s at any given time. This
means that the value of the £ is not fixed but is allowed to go up and down. An increase in the demand for £s will
cause the exchange rate to __________________in value, whereas an increase in the supply of £s will cause its
value to fall. A strong £ refers to a situation where there has been a significant ___________________ in its value
against other major currencies. On the other hand, if the £ suffers a major decrease in value it is described as being
‘weak’. Hint: words from - rise, increase, exchanged, supply
2. Exchange rates: true or false?
2.1 A strong pound makes it cheaper for UK manufacturers to sell their goods abroad.
2.2 A weak pound may help to decrease the level of competition faced by UK firms in the home market.
2.3 A strong pound is likely to increase the costs of production faced by UK manufacturers who import raw
materials.
3. Impact of exchange rate changes
Sophie Ellis imports leather bags from a manufacturer in Portugal for sale in her boutique in Manchester. The
average cost per item is €60.
Choose one of the following options from (a – d) as the correct answer to questions 3.1 to 3.4:
a) £22 b) £24 c) £48 d) £50
3.1 Assuming an exchange rate of £1 = €1.25 what is the cost per item in pounds of the bags bought by Sophie?
______________________________________________________________________________________
3.2 If Sophie charges £72 per bag, how much profit will she make on each bag sold?
______________________________________________________________________________________
3.3 The exchange rate changes to £1 = €1.20 - what is the new cost per item in pounds of the bags bought by Sophie
(assuming their Euro price remains the same)?
______________________________________________________________________________________
3.4 How much profit is Sophie making on each bag sold at the new exchange rate, assuming that she chooses not to
change her UK prices?
______________________________________________________________________________________
4. Give two answers for each of the following?
4.1 Briefly outline two types of UK business that would like to see the £ fall in value.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Give two possible effects on a UK manufacturer of a rise in the value of the £:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.3 Give two possible responses of UK firms to a fall in the value of the £:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
40. Factors affecting Demand
1. Missing words
Demand for a product or service is the amount that a customer is willing to purchase. For most products and
services, the main factor that affects how much a customer is willing to buy is _____________. The lower the
price, the ____________ the quantity demanded and the higher the price, the ____________ the quantity
demanded. Demand is also affected by how much ________________ a firm does in order to raise awareness of
its products and services and by customers’ incomes. The demand for ice cream is also be affected by
_________________ factors such as the weather. Words from: lower, seasonal, higher, advertising, price
2. Objective Test questions

2.1 Will the following lead to an increase (I), a decrease (D) or no change (N) in demand for Mars Bars?
a) a price cut of 10% _______
b) the introduction of a new ‘healthy’ chocolate bar by a competitor _________
c) a large advertising campaign using a high profile celebrity __________
2.2 Will the following lead to an increase (I), a decrease (D) or no change (N) in demand for Oil?
a) a price cut of 10% ________
b) a rise in average income levels ________
c) the building of large wind farms to produce energy for 60% of UK businesses _________
3. Demand diagram for a branded bottle of water

The diagram below shows the daily demand for bottled water in a small shop that is open for 6 days each week.
Price per
bottle
80p
Demand
100 Number of bottles
a) What is the weekly demand for this bottled water? __________________
b) What is the weekly revenue from selling this bottled water? ______________________
c) The newsagent increases the price to 90p a bottle. Explain the likely impact on demand. ______________
______________________________________________________________________________________
4. Explain why
4.1 An increase in the price of petrol does not lead to a massive drop in demand
______________________________________________________________________________________
______________________________________________________________________________________
4.2 A hot summer leads to a drop in demand for Cadbury’s Dairy Milk bars
______________________________________________________________________________________
______________________________________________________________________________________
4.3 A 40% increase in the price of wheat on world markets leads to a drop in demand for bread at the local bakery
______________________________________________________________________________________
______________________________________________________________________________________
41. Factors affecting Supply
1. Missing words
Supply is the amount of a product or service that is available on the _______________ for customers to buy. For
all products and services, including commodities, the main factor that affects how much a supplier is willing to
produce is price. The ______________ the market price for the product or service, the more the supplier is
willing to produce. The lower the market price for the product or service, the ___________ the supplier is willing
to produce. The amount that a supplier is willing to produce is also affected by the cost of the _______________
needed to make the product or service. The higher the cost of inputs, the less the supplier is willing to produce.
Words from: higher, less, market, inputs
2. Multiple Choice
2.1 Are the following likely to lead to an increase (I), a decrease (D) or no change (N) in the supply of wheat?
a) Bad weather which results in damaged crops
b) The introduction of a government subsidy for wheat farmers
c) A rise in the cost of pesticides
d) An increase in the price of oil
2.2 On a Demand and Supply diagram, the supply curve slopes upwards because:
a) as price increases, so do costs
b) as price increases, suppliers are willing to supply less
c) as price increases, suppliers are willing to supply more
d) as price increases, customers demand more
2.3 The people of Warminster love coffee shops, but in the past 6 months four have closed down. Which two of
these seem the most likely explanation for this?
a) The minimum wage has risen from £5.73 to £5.80 an hour
b) Landlords have been putting the rents up
c) Tax rises have increased the price of beer in the local pubs
d) Traffic jams have made it much more expensive for suppliers to deliver
e) New E.U. laws on factory safety have been brought in
3. Complete the following table
Change Effect on supply Effect on price Effect on sales
A bad harvest for coffee beans
The government introduces a

subsidy on rice production due
to recent findings about the
health benefits of eating rice
New technology is introduced
which increases the efficiency
of producing computers
4. Explain why
4.1 An increase in supply leads to a fall in price
______________________________________________________________________________________
______________________________________________________________________________________
4.2 A reduction in wage costs leads to an increase in supply
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
42. Financing Growth
1. Missing Words.
When a firm’s sales rise, it has to find the extra cash needed for extra production. If its cash ________ is strong
enough, it may be able to find the finance from inside the business. This is known as _______________ finance. If it
cannot generate enough cash, it will have to find an ________________ source of capital such as a bank.
Choose from: external, internal, flow
2. Match up.
2.1 Match the definition on the left with the correct term on the right. Select the definition and then the term. There
is only one correct term for each definition. Show your answers by drawing a line from the definition on the left, to
the matching term on the right.
Definition
Shares are offered for sale to the public on the stock i
exchange
Where money from customers is used to buy new ii Term
things a Retained Profit
Where money is borrowed from an external source iii
b Share capital
e.g. bank loan or mortgage
c Personal Funds
A limited company can sell part of its company to iv
others. The money does not have to be repaid. d Flotation on the stock exchange
Where business owners uses their own savings to v e Sale of Assets
put into the business
f Debt
When shareholders give their dividends vi
Money that the firm has made that it puts back into vii
the business.
Where a business sells something it owns e.g. viii
buildings or equipment, in order to raise cash
2.2 From the list on the right, circle to show whether the sources of finance are from internal or external sources.
a) Retained Profit Internal External
b) Share capital Internal External
c) Personal Funds Internal External
d) Flotation on the stock exchange Internal External
e) Sale of assets Internal External
f) Debt Internal External
3. Multiple Choice
3.1 Alexa runs a furniture company called Furnesse Ltd.; there are currently two shops but Alexa wants to open a
third. She thinks this will provide the growth needed to buy more cheaply from suppliers. To finance the new shop,
Alexa needs access to £30.000. From the list below, circle the two most likely sources of finance for the business.
a) Retained Profit b) Share capital c) Personal Funds
d) Flotation on the stock exchange e) Sale of assets f) Debt
3.2 Consider the options you have chosen for Alexa. Which one of these sources of finance would you recommend
to Alexa? Explain why.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
43. Fixed and Variable Costs
1. Missing words
A useful starting point for any business attempting to estimate its costs is to identify whether they are fixed or
variable. Variable costs directly with the quantity produced and sold by a firm, whereas fixed costs remain
unchanged as output changes, at least in the run. However, this does not mean that fixed costs cannot
or decrease suddenly – for instance, the cost of insurance may rise dramatically after a claim has been made. In the
term, all costs are said to be variable, as firms will need to buy new equipment or move to larger premises if output
is to beyond current capacity.
Hint: words from - change, expand, increase, long, short
2. Fixed or variable – which is which?

Sweeney’s Taxis incurs the following costs – say whether they are likely to be treated as fixed or variable:
Example of Cost Fixed/Variable
2.1 Office rent – paid monthly
2.2 Wages to drivers – paid on the basis of 60% of the value of fares received
2.3 Wages to the firm’s two receptionists – paid on the basis of hours worked
2.4 Petrol and diesel costs
2.5 Interest charges on the bank overdraft used to finance the business start-up
3. Fixed and variable costs: true or false?

3.1 A firm’s total costs can be calculated by adding its fixed costs to its variable costs per unit.
3.2 A manufacturing firm’s total costs will be equal to zero if its output is zero.
3.3 Fixed costs do not change just because output levels change.
3.4 A rapidly expanding firm may experience increases in fixed costs as well as increasing variable costs.
4. Cost calculations 1. Use the information in the table below to help you fill in the gaps:
Output Fixed costs Variable costs Total costs
(units) £s £s £s
0 a) 0 b)
________________ ________________
20,000 100,000 c) 180,000
_________________
60,000 100,000 d) 340,000
________________
100,000 100,000 400,000 e)
_________________
5. Cost calculations 2.
Carla has just opened her first business – a nightclub in Hartlepool. Guests pay £30 which pays for entry, a burger
and your first 4 drinks. The weekly fixed costs are £3,600 and the variable cost per guest is £12. Carla’s business
plan forecasts 200 guests in week 1 rising to 800 by week 10.
5.1 If the forecast is right, what will be Carla’s total costs in Week 1? __________________________________
5.2 If the forecast is right, what will be Carla’s total costs in Week 10? __________________________________
5.3 In fact Carla proves wrong about the variable costs, which turn out to be £15 per person.
5.3a) What is the effect on Week 1’s total costs if variable costs are £15? _______________________________
5.3b) Suggest two reasons why variable costs per person may prove higher than expected. ___________________
______________________________________________________________________________________
______________________________________________________________________________________
44. Forecasting Cash Flows
1. Missing words
When running a business, the scary thing is knowing that wages, rent and other bills have to be paid, but not
knowing whether you’ll have enough _________ to pay. A cash flow forecast tries to make it easier. Each future
month’s cash outflows and cash _____________ are carefully estimated. Then the information is put into a
___________________. It shows the cash in the bank at the start of each month, the cash flows within the month
and then the cash (or________________) expected by the end of each month.
Missing words: inflows, overdraft, cash, spreadsheet
2. Multiple Choice
2.1 Poppy’s is a flower shop that specialises in contemporary floral displays. Poppy’s is a small business owned by
Julie. Which two of the following are not cash outflows for the business?
a) Julie puts some of her own money into the business.
b) Julie buys some display stands for the shop.
c) Julie received payment for a wedding she has just provided displays for.
d) Julie places an advert in the local paper.
2.2 Julie has produced a cash flow forecast for July. Total cash inflow for the business in July was £3500. Poppy’s
total payments were £2500. The closing balance for June was £2000. Select the net cash flow for July from below.
a) £4000
b) (£1000)
c) £8000
d) £1000
e) £1500
2.3 Select one reason why a bank manager might want to see Poppy’s cash flow forecast.
a) To help Julie look after her savings
b) To make sure that the cash outflows and cash inflows are the same
c) To decide whether Poppy’s could afford to repay a potential loan
d) To decide whether Poppy’s will make a profit
e) To know whether Poppy’s will be able to meet customer demand.
3. Matching. Put these 8 words under the correct column heading. There are two terms for each column.
Outflow, Cash at start, Receipts, Payments, Monthly balance, Inflows, Opening balance, Net inflow/outflow
Revenue Expenditure Net Cash Flow Cash at start of month
4. Select the correct statements

4.1 The best definition of a cash flow forecast is:
a) a measure of how much profit a business makes
b) an estimation of cash flowing into a business
c) a prediction of how cash flows into and out of a business over a period of time
d) a statement of how a business intends to spend its cash.
4.2 All but one of the following are benefits of cash flow forecasting. Select the one incorrect statement.
a) A cash flow forecast is a good way of predicting when a business might face a liquidity problem.
b) A business can see when an overdraft or other short term borrowing might be required.
c) Customers can see whether a business will be able to pay them.
d) It helps a business decide whether they can afford to launch a new product.
45. Franchising.
1. Missing words
Starting a business is very __________, even for experienced businesspeople. For those starting their first business,
it can be wise to take a half-way step, by buying into a _____________. Instead of having to make every decision
yourself, the franchise owner will tell you how to set up many of the key services or systems. And, if you have
____________________ carefully, you will have bought into a franchise with a good track record of sales success.
Missing words from: franchise, researched, risky
2. Multiple Choice
Shama is interested in fashion, she loves shoes. Shama wants to open her own shoe shop but lacks business
experience. She has found out that most of Clarks Shoe Shops are owned by 50 franchise businesses.
2.1 Select the two most likely reasons that Shama might want to buy a Clarks franchise.
a) Shama will be able to receive thorough training provided by Clarks
b) Shama is able to pay a percentage of her revenue to Clarks
c) Shama will find it easier to borrow money from the bank to set up her business
d) Shama will have flexibility in how she runs her businesses
e) Shama will be able to change to new, cooler brands as fashions change
2.2 If Shama had to pay 10% of her royalties to Clarks and her turnover was £380,000 in her first year, how much
would she be paying to Clarks?
a) Nothing, they want a share of the profits
b) £38000
c) £3800
d) £370,000
e) £3799900
3. Unscramble these common franchise businesses names.
3.1 A Din Zips Zoom (clue, you can even order online!)
3.2 Young It (you’ll look great when they’ve finished)
3.3 Aw By Us (they can be really long)
3.4 Inland Hi Yo (we all deserve a break sometimes)
3.5 Eg Grub Rink (don’t tell whoppers)
4. Select the correct answers

4.1 All but one of the following are reasons why franchising is a successful way for the franchise owner to grow.
Which one is not a benefit?
a) It allows the business to grow rapidly
b) The person buying into the franchise provides the finance, reducing the investment cost of expanding
c) Poorly run franchise outlets can ruin the brand’s good name.
d) The franchise owner benefits from the royalties paid by the small business franchise holders.
4.2 All but one of the following are benefits of buying a franchise. Select the one incorrect statement.
a) The business should have an existing customer base so failure should be less likely
b) Easier to raise money from bank to buy a franchise
c) National advertising is organised by the franchise-owner
d) A franchise business will receive a higher profit than an Independent business operating within the
same industry.
46. Goods and Services
1. Fill in the blanks.
Businesses try to sell us goods and services. _________ are physical things i.e. you can touch and feel them.
_______________ are non-physical things i.e. you cannot touch them. Because services are usually provided face-
to-face, staff training and morale has an immediate impact on the _______________. By contrast, as we eat a Mars
Bar it doesn’t matter to us whether the factory worker was pleasant or grumpy.
Choose from: customer, services, goods
2. Match Up
From the list below identify whether the businesses sell goods or services (cross out the wrong answer)
2.1 Christine’s Hair Salon goods/services
2.2 Toyota goods/services
2.3 Philip’s Car Wash goods/services
2.4 Virgin Trains goods/services
2.5 Nokia goods/services
2.6 Coca-Cola goods/services
3. Answer the questions that follow:

3.1 There are two types of goods: consumer goods and producer goods. Explain the difference.
3.2 Below is a list of products. Identify which are a) consumer goods and b) producer goods. Circle a) or b)
i) a tractor a) b)
ii) a tin of soup a) b)
iii) an industrial drill a) b)
iv) steel a) b)
v) a pair of trainers a) b)
vi) a tumble dryer a) b)
vii) a bicycle a) b)
viii) a Boeing 747 (jumbo) jet a) b)
ix) a factory a) b)
x) cat food a) b)
4. Unscramble the tiles to reveal a message about different types of goods and services
47. Identifying a business opportunity
1. Missing words
Business opportunities can be identified in different ways. The most common is for someone who works in an
industry to spot an opportunity within that business sector, e.g. a BBC TV producer spots the need for a talent
agency focused on actors who are great at voice-overs. Next most common is observation, combined with asking
‘Why’ or Why not?’, e.g. ‘Why is there no sit-down pizza place in Woking?’. Then come the more businesslike
methods such as market _________________ and ________________ research. Then there are opportunities
that arise because of dissatisfaction, perhaps with the customer ___________________ offered by the local
hairdresser or awful __________________ management at the local chip shop.
Hint: words from – service, mapping, quality, market
2. Business opportunity – data response
Trev is sure that there is room for a new laundry business in Barton. He wants to provide a service based on
dropping off dirty clothes in the morning, and picking them up, clean, on the way home from work. Barton has two
laundry/Dry Cleaners at the moment, one in Longton Road and one in the High Street. To help his analysis, he
carried out a detailed count of the number of people passing 4 different locations in Barton on a weekday morning.
Rush hour passers-by in 4 Barton locations
Barton Centre
Barton Station
Barton High Street
Longton Road
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500
People per hour
2.1 Outline one way in which the bar chart gives support to Trev’s ideas. ________________________________
______________________________________________________________________________________
2.2 Outline one other piece of research that would help Trev decide whether to go ahead or not.
______________________________________________________________________________________
______________________________________________________________________________________
3. Business opportunity - multiple choice question:
Aliesha has spent 15 years as a nurse, and now wants to sell her small flat in Ipswich to finance a business start-up.
She is looking for something to do with catering. Which two of the following are most likely to provide a promising
business opportunity for Aliesha.
a) Spending £150,000 to take on a large Burger King franchise
b) Buying 50% of the shares in a friend’s school catering business, to become joint managing director
c) An independent, high fashion clothes shop is for sale quite near to her flat
d) A closed Chinese restaurant gives scope for opening the first Organic Burger bar in the area
e) The large Woolworth’s site is available for starting up a Hong-Kong style, huge Chinese restaurant.
f) A local private hospital is looking for a catering contractor to supply and serve meals on a daily basis.
4. True or False?
4.1 New opportunities are hard to find these days because consumer tastes and activities don’t change over time.
4.2 Some very successful new businesses have started up with no market research at all.
4.3 Buying into a successful franchise such as Subway is probably the least risky business opportunity.
48. Impact of government and EU
1. Missing words
The UK government influences business activity in various ways. There are a number of ______________ charged
by the government to raise finance for public services that affect businesses such as Corporation (profit) tax. Laws
have been passed to _________________ firms’ behaviour in a number of areas. For instance, health and safety
legislation forces businesses to _____________________ their consumers and workers, and fines can be imposed
on those that do not. Other laws have been passed that aim to improve workers’ conditions, including
__________________ and paternity rights for parents, the national _____________________ wage and anti-
discrimination legislation. Some of this legislation has resulted from the UK’s membership of the European Union
(EU). Although regulation can increase business __________________ and restrict what they can do, it also leads
to a number of benefits. Hint: words from – regulate, costs, maternity, minimum, protect, taxes
2. Key terms:
Definition Key term

1. Rights given to female employees when they have a a. Corporation tax
baby b. Discrimination
c. Income tax
2. A tax that is paid on most goods and services when d. Interest rate
they are bought by consumers.
e. Maternity rights
3. Rights given to male employees when they become
fathers. f. Minimum wage
4. Where an individual or group is treated unfairly, g. Paternity rights

perhaps due to their race, gender or age. h. Value added tax
5 A id b b i h fi h
3. Multiple choice question
3.1 Which one of the following is least likely be seen as a benefit to a UK manufacturer from the existence of health
and safety legislation?
a) The number of accidents in the workplace is likely to be lower.
b) The production process should be interrupted less often, leading to an increase in productivity.
c) The cost of administration and staff training are likely to increase.
d) The amount of compensation paid to staff having accidents in the workplace is likely to fall.
4. Consequences:
Match up the two most likely consequences for each of the changes in tax given in the table below:
Change in tax Likely consequences

a. Firms who sell relatively cheap ‘bargain’ products may see an
1. A reduction in the increase in demand.
rate of income tax
b. Firms may decide to expand as they have more profit for
investment.
2. An increase in the rate
c. Firms selling expensive, luxury products may see a reduction in
of value added tax
demand.
(VAT)
d. Firms may find it easier to attract investment from new
shareholders.
3. A reduction in the
rate of corporation e. Holiday companies, restaurants and other firms in the leisure
tax industry may see a rise in demand.
f. Banks and building societies may enjoy an increase in demand for
mortgages.
49. Impact of Profits and Losses
1. Missing words
Profit is calculated by the formula__________________ minus ___________________. If costs are
______________ than revenue then the business is making a loss. If costs are ______________ than revenue
then the business is making a ________________. Many new, small firms will find it hard to make a
_____________ in their first few months of trading. When estimating profits it is therefore important that new
businesses are ______________. Choose words from: profit, cautious, revenue, costs, lower, higher
2. Calculations. Calculate the profit/loss made in each of these situations

2.1 Sunil has estimated that his weekly revenue for his new newsagent shop will be £1600. He has also estimated that
his weekly costs will be £1300. What is his estimated weekly profit?
2.2 Lisa has prepared an estimate of her profits to show the bank manager. She has estimated that her monthly
revenue will be £3350 and her monthly costs will be £2000. What is her estimated profit for the year?
2.3 Amanda’s new ice cream shop will be open 5 days a week in December. The price for an ice cream is £2.50. She
expects to sell 4 ice creams per day. Her total costs per week are £150. Calculate her weekly profit in December.
3. Impact of profits and losses

3.1 For new, small businesses, profits are a ‘guesstimate’. The business cannot be sure of its revenues or costs until it
has been trading for a while. Toni owns a small bakery in a local town. It has been open for 2 weeks. She employs
one member of staff. Before starting her business, she estimated her monthly profit at £800. However, it is still too
early to tell. For each of the situations in the table, think about the impact that these will have on Toni’s profit levels
and on Toni herself. The first one has been done for you.
Change Impact on profit Impact on Toni

The government increases Costs will increase and therefore profit will May have to take a lower wage herself in
the minimum wage by £1 decrease the short term, will take longer to cover
per hour for over 21s. costs
Insurance for the business
premises is 10% lower than
Toni estimated
The price of wheat

increases by 10%
A competitor closes down

leaving Toni’s as the only
bakery in town
3.2 The graph below shows the estimated revenues and costs for Dan’s new music shop.
250
200
150
£000s
Revenue
Total costs
100
50
0
Jan Feb Mar Apr
a) In which month does Dan start making a profit? ___________________

b) Assuming Dan’s estimates are correct and the trend shown in the graph continues, explain the impact that
this will have on i) Dan and ii) the future of the business. Write your answers on the back of this page.
50. Import protection and export subsidy
1. Which word is being described?
A) ______________________ the sale of a product or service to a person or business overseas
B) ______________________ the purchase of a product or service from overseas
C) ______________________ a limit on the number of imports from foreign countries
D) ______________________ a tax placed on goods and services which are imported into a country
E) ______________________ an amount paid by the government to businesses who export products to

help reduce their costs of production
Words from: Subsidy; Quota; Import; Export; Tariff
2. Objective Test question
From the list below, identify two advantages of import protection such as quotas and tariffs
a) Domestic firms are protected from imports into the market
b) There is little incentive for domestic businesses to reduce the costs of production
c) Domestic employment is protected
d) Customers get a greater choice of products
e) Can lead to lower safety standards in domestic markets
f) May lead to businesses running out of stock
3. Explain the effects of the EU government imposing import protection and export subsidy
measures on the 3 different groups in the table
Group Effects of Import protection Effects of Export subsidies
(Quotas and tariffs)
UK Consumers
UK businesses
Chinese businesses
4. Data Response question. The EU is considering scrapping current export subsidies on sugar
4.1 Explain why EU sugar farmers want the EU to keep its export protection measures
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Explain how the decision to abolish the export subsidy will affect one stakeholder group, other than the sugar
farmers themselves
______________________________________________________________________________________
______________________________________________________________________________________
4.3 Do you think that exports of sugar from the EU should be subsidised? Explain your answer.
______________________________________________________________________________________
______________________________________________________________________________________
51. Income distribution
1. Missing words
Incomes are distributed unevenly within countries and – even more obviously, ______________ countries of the
world. In some countries, the top 5% of income earners earn 50% of the wealth generated in a year. This leaves
relatively little for the bulk of the population. Other societies such as Sweden or Cuba are more equal, with a
relatively ________________ gap between the rich and poor. The wider the income distribution, the higher the
proportion of families who with be living in relative ______________.
Missing words: poverty, between, narrow
2. Data Response
The table below shows the average yearly income per family (US$) in selected countries across the world. (World
Bank, World Development Report 2009)
2.1 State two possible reasons for the difference in income between the UK and China______________________
______________________________________________________________________________________
2.2 Explain one action by a UK company that could improve the level of income per head in India
______________________________________________________________________________________
______________________________________________________________________________________
2.3 Explain one action by the UK government that could help to reduce the inequality of international income
distribution._____________________________________________________________________________
______________________________________________________________________________________
2.4 Explain why a country with a high level of income per head is likely to buy more imports than a country with a
low level of income per head. ________________________________________________________________
______________________________________________________________________________________
2.5 Using the chart, which countries are UK businesses most likely to sell their exports to? Explain your answer.
______________________________________________________________________________________
______________________________________________________________________________________
2.6 Explain how the low level of income per head in India affects a business such as Gap which outsources
production of some of its clothing to India.
______________________________________________________________________________________
______________________________________________________________________________________
52. Interest Rates
1. Missing words
Interest rates are the cost of __________________ money or the reward for ___________________ money. It
is an annual percentage rate set by the __________________ Policy Committee of the Bank of England. Changing
interest rates can cause problems for businesses, and small businesses can be particularly affected. When interest
rates rise, consumer spending ___________________ because people have to pay more on their mortgages.
When interest rates are lowered, consumer spending tends to __________________. These changes in consumer
spending affect demand and therefore revenue. In addition, many small and start up businesses rely on borrowed
finance such as loans and overdrafts. A rise in interest rates increases the payments businesses have to make to their
______________. Missing words: banks, Monetary, increase, decreases, borrowing, saving
2. Calculations
John runs a computer repair business. He has a loan of £100,000 which he used to finance his start up business.
Calculate John’s annual interest payments if the interest rate is:
a) 5.25%
b) 8%
c) 3%
3. Data response
The graph below shows changes in the Bank of England Base Rate, February 2001 to February 2008
(www.bankofengland,co.uk) Study the graph and answer the questions that follow.
3.1 What was the Bank of England Base rate in i. February 2002 ii. October 2005 iii. February 2008 iv. March 2009?
_____________________________________________________________________________________
3.2 Ellie owns a small jewellery shop which opened in July 2003. The opening was financed by a loan of £50,000
which she had to pay back over 5 years. Explain the impact on Ellie of the increase in interest rate from 3.5% to
4.75% between 2003 and 2006.
_____________________________________________________________________________________
_____________________________________________________________________________________
3.3 Ellie relies on an overdraft facility provided by her local bank. Explain the effect on Ellie’s costs of the fall in
interest rates between October 2008 and March 2009.
_____________________________________________________________________________________
_____________________________________________________________________________________
3.4 Explain in your own words what is likely to have happened to the demand for Ellie’s jewellery between October
2003 and February 2009
_____________________________________________________________________________________
_____________________________________________________________________________________
53. Invention and Innovation
1. Missing words
______________________ is showing how an original idea for a new product can work. When the new idea is
brought to the market, it is known as an ______________________. Innovation adds value to products, as is
shown by the price premiums charged by companies such as Apple or Innocent Drinks. An entrepreneur with the
quality of ___________________ will be likely to be inventive and innovative.
Words from: creativity, innovation, invention
2. Invention or Innovation?
State whether each of the following are examples of invention or innovation:
a) The super-small ‘flash memory’ at the heart of the iPod
b) Squeezy bottles for ketchup and mayonnaise
c) Probiotic yoghurt drinks
d) A new type of battery, which recharges as you walk
e) Dyson ‘cyclone’ cleaning system (that replaced the ‘vacuum’ cleaner)
f) Factory Style chip fryers in a fish and chip shop
g) The motion controller that comes with the Nintendo Wii
3. Dragon’s Den
The TV programme Dragon’s Den sees entrepreneurs pitch their inventions and innovations to a panel of investors
in the hope that they might help finance their business dream. Here are two ideas being pitched on the Dragon’s
Den website. Choose one of these and say whether you think it would be a good investment. Give reasons for your
answers. (see www.bbc.co.uk/dragonsden for more)
a) The Cosy Shopper – a hygienic, cushioned cover for supermarket trolley baby seats
b) Travellersreunited – a social network that re-unites backpacking friends
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4. The future
Copyright Kane Kramer 1979
Apple launched its iPod in 2001. The original idea for the iPod was invented long before, by Kane Kramer. But the
idea was brought to market by Apple, the innovator. Apple is constantly seeking to innovate in relation to the iPod.
a) Outline one new feature the Ipod is likely to have in 5 years' time? Why do you think this?
______________________________________________________________________________________
______________________________________________________________________________________
b) REGEN is a recent invention in relation to MP3 players. It is a batteryless MP3 player that's powered by the
action of Yo-yoing. It can store up to 200 songs on its built-in hard drive. It has a touch screen LCD display
and wireless Bluetooth headphones. You yo-yo the player 10 – 12 times and it is ready to go
(www.techeblog.com). Do you think this idea is likely to be a success? Why do you think this?
______________________________________________________________________________________
______________________________________________________________________________________
54. Legislation affecting Staff
1. Match the law with the correct description
Equal Pay Act Employers must provide safe premises, machinery and working conditions
Age Discrimination Act Firms must not treat workers with disabilities less favourably than other
workers in recruitment or during the course of employment
Race Relations Act Men and women doing equal work of equal value must receive the same
pay
Disability Discrimination Act People must not be discriminated against on the grounds of colour, race,
nationality or ethnic origin
Sex Discrimination Act It is illegal for an employer to discriminate on the grounds of age in
recruitment, promotion, dismissal and training
Health and Safety at Work Act Employers must not discriminate on the grounds of gender in recruitment,
promotion, training and terms and conditions of employment
2. Which law has been broken?

2.1 Amy owns a lollipop shop. She employs two workers to act as shop assistants in one of her branches. They are
the same age and work the same shifts. James is paid £6.15 per hour and Jenny is paid £6.90 per hour. Which law has
the business broken?
______________________________________________________________________________________
2.2 Amy has a lollipop making machine in each of her 3 branches. In one of the branches, the machine has lost the
guard covering the blade on the lollipop shape-cutter. An employee reported this 3 weeks ago but she still hasn’t
fixed it because: “It will cost too much and I’ve more important things to spend money on”.
______________________________________________________________________________________
2.3 ‘Barman required at The Fox Inn, Manchester’________________________________________________
2.4 Social worker required to deal with local Indian community. Indian Nationals preferred.
______________________________________________________________________________________
2.5 Temporary labourers needed for City Centre building site. Able-bodied applicants only please’
______________________________________________________________________________________
3. Explain why
Employment legislation can have both a positive and a negative effect on businesses. For each of the situations below,
explain why:
3.1 Employment legislation may help in motivating a workforce________________________________________

______________________________________________________________________________________
3.2 Employment legislation encourages employers to treat staff fairly ___________________________________

______________________________________________________________________________________
3.3 Employment legislation can increase costs for businesses _________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3.4 Explain the impact treating all employees fairly and equally may have on the business_____________________
______________________________________________________________________________________
______________________________________________________________________________________
55. Limited and Unlimited liability
1. Missing words
A sole trader is an ___________________ liability business owned by one person. This means that the owner of
the business is fully responsible for the _______________of the business if it fails. If the owner of a sole trader
business is not able to pay the debts, s/he will be declared ___________________. A private________________
company is a small family business with shareholders. The shareholders have ___________________ liability. This
means that if the business fails, the shareholders only lose the amount they have _________________ in the
business. Missing words from: limited, invested, unlimited, private limited, debts, bankrupt
2. Limited or Unlimited Liability?

Place the following words under the correct heading. Do they relate to limited or unlimited liability?
Sole Trader High Personal Risk Shareholders Low Personal Risk
Private Limited Company Responsible for all debts Lose only the amount invested
Protection Separate from owner Business and owner seen as one
Loss of personal possessions Risk of bankruptcy
Unlimited Liability Limited Liability
3. Multiple Choice
3.1 A shareholder in a private limited company has
a) Unlimited liability
b) Limited liability
c) Complete control over the company
d) No rights, because it isn’t a public company
3.2 Which of the following features relates to a sole trader business?

a) Limited liability
b) Easy to sell shares to new investors
c) Complete control over the business
d) A legal requirement to have an accountant produce financial accounts for the business
3.3 Lisa is a plumber who runs her business as a sole trader. Her business has performed poorly over the past year
and she has run up debts of £65,000. Lisa invested £100,000 of her own money in the business and used her flat as
security for a loan of £50,000. Her house is worth £250,000. She owes £15000 to her suppliers. If she closes her
business, how much of the debt is Lisa responsible for paying?
a) £65,000 b) £50,000 c) £15,000 d) £100,000
4. Which type of ownership?
Lucy is a sole trader who runs an events management company. She employs 3 people and for each event she runs
she has to borrow up to £100,000 for materials and venue hire. She does not get paid by her customers until after
the event has taken place.
4.1 Outline two advantages to Lucy of staying as a sole trader and two advantages to Lucy of setting up a limited
company
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Advise Lucy as to which type of business ownership is best for her. Give reasons for your answer.
______________________________________________________________________________________
______________________________________________________________________________________
56. Managing Quality
1. Missing Words
Quality is a very important part of any business. It is the key to customer ______________. If a customer receives
poor quality service in a restaurant they are unlikely to return. If a driver’s new car keeps breaking down, she is
unlikely to buy that make of car again. The traditional approach to managing quality is quality _______________.
This involves putting systems in place which randomly test the quality of products. A more recent approach to
quality management involves developing a _________________ of quality, where everyone in the business is
___________________ for the quality of the work that they do. This can be more effective, as it focuses on
everyone getting quality right ______________ time.
Missing words from: control, first, culture, satisfaction, responsible
2. True or False? (Write a T or F by each of these statements)

a) Managing quality leads to increased customer complaints ______
b) In a system of quality assurance, everyone in business is responsible for quality ______
c) Quality control means that quality should be a part of every process within the business ______
d) In a service organisation high quality is about providing efficient customer service ______
e) A quality control system leads to 100% of products being checked for quality ______
f) A quality culture leads to more motivated staff ______
3. Quality Control or Assurance?
Do the following statements refer to a system of Quality Control (QC) or Quality Assurance (QA)?
a) Products are checked randomly at different stages of production ______
b) Quality is everyone’s responsibility ______
c) The focus is on testing finished products for quality ______
d) Quality is part of every process within the business ______
e) Aims for zero defects ______
f) Requires all staff to be trained in the importance of quality ______
g) Reacts to poor quality rather than prevents it in the first place ______
h) Once it is fully established, fewer quality checks should be needed ______
4. Data response
Quality is a key concern of companies such as Heinz. Heinz has recently issued a product recall of a baby food
product – the ‘Mum’s Own Spaghetti Bolognese’ as small pieces of plastic have been found in a small number of jars
which can represent a choking hazard to babies.
4.1 Explain how these faulty products could have ended up on supermarket shelves
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Explain the impact of this product recall on Heinz
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.3 Suggest how Heinz can attempt to ensure that this does not happen again
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
57. Managing Stock
1. Missing words.
In businesses such as shops, stock ties up a lot of __________. Therefore firms try to keep stock levels as low as
they can. The concern, though, is that a sudden rush of demand will leave ______________ empty, which would
mean poor customer _______________. Major retailers such as Tesco use computerised systems to help run
efficient _________ In Time ordering of stock. Missing words: shelves, cash, just, service
2. Interpreting a stock control chart of tennis rackets at a shop. Look at the graph; answer the questions:
a) What is the maximum stock level of tennis rackets that the sports retailer holds? _________
b) What is the re-order level? ____________
c) What is the minimum stock level? __________
d) What is the lead time? _______ days
3. Match the key term with the correct definition (Draw an arrow to the right definition)
3.1 Maximum Stock Level a) The minimum stock level held at all times to
avoid running out
3.2 Buffer Stock Level b) Having empty shelves
3.3 Over stocking c) When products are ordered and delivered
just before existing supplies run out
3.4 Zero stock level d) The highest level of stock that a business
wants to keep at any one time
3.5 Just in Time Stock control e) Holding too much stock in the business
4. Just in Time stock control

Many businesses, such as Tesco, now operate a Just-In-Time (JIT) stock control system. State whether each of the
following is an advantage (A) or disadvantage (D) of a JIT stock control system.
a) Ordering in smaller quantities means missing out on bulk buying discounts ______
b) Failure of stock to arrive on time leads to dissatisfied customers ______
c) Reduced costs of storage ______
d) Fresher, more up to date produce ______
e) Cuts the amount of the firm’s cash tied up in stock ______
f) May be unable to meet sudden increases in demand ______
g) Improves efficiency ______
5. Briefly explain
Why clothes shops hold Sales in January and July each year. __________________________________________
______________________________________________________________________________________
58. Market Knowledge
1. Missing Words
Understanding the customers is vital to the success of a new business. In order to start a successful business, an
entrepreneur will need good ____________________ of the market they are thinking of entering. This involves
researching what customers _______________ and ________________ and also what _________________
businesses are already supplying. Failure to understand the customers you want to sell to - and the market in which
you are operating - will lead to business__________________.
Words from: need, rival, knowledge, want, failure
2. How to gather knowledge
For the following situations, what do you think would be the most effective method of gathering market
knowledge? Think about your knowledge of direct customer contact, primary research and secondary research.
Situation Method Justification
The owner of a small hairdressing
salon wants information on the
impact of a new hairdresser she
has recently employed
A new pizza restaurant, due to
open in the next 6 months, needs
to gather information on trends in
pizza buying amongst customers
A large local supermarket wants
to judge the impact of a recent
change in store layout
An ice cream shop has trialled a
new flavour and wants to make a
decision as to whether to include
it in their range permanently
A sports shop wants to find out
why the sales of a specific sports
shoe are falling
3. Direct customer contact in large organisations

It is easy for the owner of a very small business to gather market knowledge through direct customer contact. Large
organisations such as Tesco and HMV obtain their market knowledge by analysing data from their loyalty cards.
3.1 How do loyalty card schemes help businesses such as Tesco and HMV gather market knowledge?
______________________________________________________________________________________
______________________________________________________________________________________
3.2 Outline one possible benefit of loyalty card schemes to a) The business and b) The customers
a) ____________________________________________________________________________________
______________________________________________________________________________________
b) ____________________________________________________________________________________
______________________________________________________________________________________
3.3 A very successful BBC TV programme entitled ‘Back to the Floor’ saw a number of Chief Executives of large
organisations spend a week as a junior employee in their organisation. Explain two benefits of this to the business.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
59. Market Mapping.
1. Which two statements about market mapping are true:
a) Market mapping allows the business to plot sales revenue.
b) Market mapping is used by all businesses.
c) Market mapping is used to identify niches in the market.
d) Market mapping means plotting where each brand fits in a two dimensional diagram
2. Look at this market map for the sports and energy drinks market.
High in stimulants Powerade

Relentless Energy Drink
Red Bull
Red Bull Sugar Free
Lucozade Alert Irn Bru 32 Energy Drink Lucozade Original Energy
Lucozade Sports Caffeine

Red Devil
Low in calories
High in calories
Biological Synergy
Fitness Water
Low in stimulants Gatorade
2.1 Sales for sports and energy drinks have been rising sharply in recent years. Jack works for a company which sells
bottled water; he wants to move into the energy or sports drinks market. From the list below identify the most
likely gap for a new sports or energy drink.
a. An energy drink like Red Bull
b. A sports drink that is high in stimulants and high in calories
c. A sports drink that is low in calories
d. A sports drink that is high in calories
e. A drink that is high in price and low in calories.
2.2 Jack has discovered that most customers who purchase energy drinks are young men. Jack has made a decision
that he will create a brand new fitness drink aimed at twenty something, gym going, women. Looking at the market
map, why has Jack made this decision?
a. there are potentially more customers in the low calorie, fitness drink sector
b. there may be few customers in the low energy, high stimulus sector of the market
c. Red Bull is too well established to compete with.
d. Gatorade has recently been launched onto the market.
3. Can you complete the cryptogram below? Find out which letters the numbers represent to
complete the phrase, some have been done for you to start you off.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
26 24 12 3 17
M A M A P G S A O
12 26 1 4 7 14 12 26 3 3 19 16 24 19 17 26 5 26 15 13 8
S P G G A P M A
17 3 13 14 14 19 16 24 26 24 26 3 19 16 14 25 7 12 26 1 4 7 14
60. Market Segmentation
1. Missing words: Market segmentation means analysing how a market can be divided into sections. Although the
Rolls Royce and the Ford Focus are both cars, they are not in __________________with each other. One is an
everyday family car and the other is in the super-luxury end of the market (and costs more than most people’s
houses). By segmenting the market, you may be able to see where _________ are booming, or may be able to
identify a _____. Missing words from: gap, sales, competition
2. Multiple Choice
Bestle and Hopter manufacture washing powder. They have been making and selling washing powder for many years
and have seven different brands on the market.
2.1 Identify the most likely reason why Bestle and Hopter have seven different brands available to buy.
a) One product would not satisfy all customers’ needs
b) They couldn’t decide which product would be the most successful so they made them all
c) It means they reach equilibrium pricing.
d) They know they have the right marketing mix.
2.2 Identify the two most likely ways in which Bestle and Hopter would segment the washing powder market.
a) Location
b) Age
c) Age left full-time education
d) Income
e) Size of Household
2.3 Bestle and Hopter make a brand of washing powder which comes in large boxes called “ValuWash”. From the
list below identify the market segment they are targeting.
a) Young school leavers
b) A low income family of 5
c) A couple of high earning solicitors
d) Retired couples
3. Look at the data and then answer the questions that follow.
Ellen has been asked by a popular children’s author to manufacture some merchandise linked to the very popular
series of story books called “The Adventures of Tiggi the cat!”. Look at the data below
Groups (% ) that read "The Adventures of Tiggi The Cat!"
6 to 12 months
1 to 3 years
3 to 6 years
7 to 9 years
3.1 Which market segment should Ellen design her toys for? ___________________
3.2 Explain your reasoning__________________________________________________________________
______________________________________________________________________________________
3.3 Outline one reason why it would be a mistake to treat the whole age range (6m to 9yrs) as one market.
_______________________________________________________________________________________________
4. Rearrange the following anagrams to reveal methods of segmenting the market
i Nicety Hit ii Reign Oil
iii Den Erg iv Coat Lion
61. Marketing Mix.
1. Spot the odd one out. Identify the incorrect answer.
1.1 The marketing mix is also known as:
a) The 4Ps
b) A marketing strategy
c) The marketing recipe
d) Product, Price, Place, Promotion.
1.2 Methods of promotion commonly used by small businesses are:

a) Adverts in the local newspaper
b) Leaflets
c) Local radio adverts.
d) Television adverts.
1.3 One way of differentiating your product from others that already exist is to give it a design feature that is
different. The name for this is the:
a) Unified Selling Point
b) Unique Selling Point
c) Unique Selling Proposition
d) USP
2. Multiple Choice
Erin owns and runs a small beauty salon; her business has been operating for three years. Erin’s business, “Best for
Beauty”, is based in a small town and her customers are mostly local. After spending two months in the USA, Erin is
the only technician in the town qualified in the latest laser, permanent hair removal techniques.
2.1 Which two of the following are important factors Erin should take into account when setting prices?
a) In a small town people can only afford low prices
b) If there is no competition locally, Erin can set quite high prices on the laser treatment
c) Two months in America would be costly, so she must price high to get her money back
d) If the laser treatment works far better than alternatives, she can charge customers slightly more
e) The higher the price the lower the demand, so she should set prices as low as possible
2.2 Erin wants to persuade customers to try the Laser Hair Removal. Choose the two most likely methods Erin
would use.
a) A ‘treatment of the month’ special price for Laser Hair Removal
b) Set up a stall in the local shopping centre offering trials of Laser Hair Removal
c) Offer customers buy now and pay later for treatment.
d) Offer a 20% discount to customers trying Laser Hair Removal for the first time.
e) Offer customers a free bottle of nail varnish if they have a treatment at the salon.
3. Fill in the gaps about distribution channels.

Distribution channels can be d_______________ or indirect. W_________________ can sell their products to
r____________________ who then sell them to consumer. The c_________________ channel and often the
f_____________________ for the consumer is where m____________________ sell directly to the
c____________________, this is more common due to the growth of the i_________________.
Choose from the following: cheapest customer direct fastest internet manufacturers retailers Wholesalers
4. Explain Why:
4.1 A Chinese takeaway might decide to double its spending on door-to-door leaflets locally.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.2 A producer of top quality fudge might decide to stop distributing through shops – and sell online only.
______________________________________________________________________________________
______________________________________________________________________________________
62. Maslow’s Hierarchy
1. Missing words:
Theories of motivation attempt to explain why people _____________. Knowing what factors motivate employees
to work with enthusiasm can be very useful to businesses. One of the best-known attempts to explain motivation is
the Hierarchy of Needs, developed by Abraham Maslow. He argued that ______________ needs rise up a ladder,
starting with survival needs (food, shelter) and ending with ______________________ needs. These needs have
to be satisfied according to a particular order, or hierarchy. Once a ______________ order need is satisfied,
workers will move on to other needs further up the ________________________.
Hint: words from – psychological, hierarchy, human, lower, work,
2. Matching activity:
Match the type of need, according to Maslow’s hierarchy, to the method of satisfying the need on the right of the
table below:
Type of need Method of satisfying need
a) Setting up and funding regular nights out for employees within the
1. Physiological needs
same department.
2. Security needs b) Providing employees with access to management training.

c) Ensuring that pay rises cover any increases in the cost of living.
3. Social needs d) Ensuring that the job has challenges that push staff to get the best
out of themselves
4. Esteem needs e) Implementing awards such as ‘Employee of the Month’ or ‘Sales
Consultant of the Year’
5. Self-actualisation f) Ensuring that all employees receive regular health and safety
training
3. Exam-style questions
3.1 Which one of the following gives the most accurate definition of motivation?
a) The desire to get promoted as quickly as possible.
b) The desire to work effectively on an individual basis, rather than as a part of a team.
c) The desire to work that comes from within an individual worker.
d) The desire to be as happy as possible at work.
3.2 Identify three advantages to a business from having a more motivated workforce:
1_____________________________________________________________________________________
______________________________________________________________________________________
2_____________________________________________________________________________________
______________________________________________________________________________________
3_____________________________________________________________________________________
______________________________________________________________________________________
4. True or false (a bonus mark for explaining the correct answer):

4.1 Businesses that do not attempt to motivate workers may find it difficult to control labour costs. T/F
Reason________________________________________________________________________________
______________________________________________________________________________________
4.2 According to Maslow, workers will focus on their social needs, once their esteem needs have been satisfied.
T/F
Reason________________________________________________________________________________
______________________________________________________________________________________
63. Mind maps
1. Missing words
Businesses in the music or fashion industries operate in a whirl of changing causes and effects. Therefore it’s
important to see the way business activities ___________ together. A useful method for doing this is to draw up a
mind map. Mind maps are ___________________ that represent a complex idea, problem or situation. A key
word, such as ‘competitors’, is put at the centre of the diagram. Then branches are drawn to show connecting ideas
or issues leading from or to it. The branches can also be drawn and arranged to show the relative
____________________ of some issues over others. Mind maps encourage a brainstorming approach to
________________ - solving and the use of colour and images helps to promote _________________ thinking.
Hint: words from – creative, diagrams, importance, link, problem
2. True or false – one bonus mark for giving the correct reason:
a) Using mind maps eliminates the risk involved in decision-making for businesses T/F
Reason ___________________________________________________________________
b) Using mind maps encourages decision-makers to identify all of the possible consequences of a particular course of
action T/F
Reason ___________________________________________________________________
c) Using mind maps allows decision-makers to attach varying levels of importance to different outcomes
T/F
Reason ___________________________________________________________________

3.1 Which one of the following is not a possible benefit of using mind maps?
a) They can be used to summarise and present large amounts of information
b) They can be used to identify all of the aspects of a complex project
c) They can be used as an aid to thinking of creative solutions to business problems
d) They can be used to guarantee the success of a complex project
3.2 Which one of the following should not be included on a mind map?
a) A key idea at the centre of the diagram
b) Lots of colour
c) Lots of text
d) Lots of images
4. Briefly explain:
4.1 Briefly explain how mind maps can be used to plan ahead: ________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Briefly explain how mind maps can be used to make connections: ___________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.3 Briefly explain how mind maps can be used to make decisions: ____________________________________
______________________________________________________________________________________
______________________________________________________________________________________
64. Mistakes: Good and Bad
1. Missing words
Anyone who starts a brand new business is bound to make mistakes. There are four important categories of mistake:
i. Ones you can cope with (perhaps by putting in a lot more time)
ii. Ones you cannot (easily) cope with, e.g. mistakes that cost a lot of ______________
iii. Ones you ________________ from (and therefore may prove ‘a blessing in disguise’).
iv. Ones you fail to learn from – and therefore may make again.
Having a business ________________ might help prevent one or two mistakes, but that might prevent the huge
amount of learning that takes place when you make a mistake. Hint: words from – learn, money, mentor
Cash balance at month end, JG Seaside Cafe

£80,000
£60,000
£40,000
£20,000
£0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
-£20,000
-£40,000
-£60,000
2.1 JG Café opened in February last year and had a terrific summer. In the Autumn the owner (JG) bought a
company car and hired extra staff. He was confident that the café had built up a large, regular clientele. Examine the
mistake he made.
______________________________________________________________________________________
______________________________________________________________________________________
2.2 In the following year JG was careful to preserve cash in the business, to help it through the winter. In what sense
was his earlier mistake a ‘good mistake’?________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3.1 Which one of the following could be thought of as a good mistake?
a) Forgetting to pay staff their commission – just like last month.
b) Losing the biggest customer’s insurance details – and losing the business
c) Selling a whole batch of awful doughnuts, but only realizing after the customers had left
d) Closing the shop an hour earlier, but switching back to the old times after just 2 weeks, when sales flopped.
3.2 Which one of the following is the best explanation of a ‘bad mistake’.
a) A mistake that is made by a bad employee
b) A mistake that causes bad publicity for the business
c) A mistake that could have been prevented with a bit of care
d) A mistake that is largely due to bad luck
65. Motivation (Unit 3)
1. Missing words
Motivation comes from within the person. In other words it occurs when people do things for themselves – because
they want to. A ________________ or greedy person can be persuaded to work hard on a dull job for money –
but they will not enjoy the process. Indeed they may come to resent it. _____________________ such as Maslow
want people to see that humans need work for far more than just money. People need work for
________________ reasons and for the psychological reasons he called self-actualisation. What no-one doubts is
that people are really lucky if they can earn good money doing the job they love.
Hint: words from – social, hungry, psychologists
2. Look at the bar chart then answer the questions below.
Survey results on motivation of teenage part-timers
Manager is quick to praise
I learn new things
Good social life
Like the people
I need the money
20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80%
2.1 According to the bar chart, which one of the following is not a reason why teenagers take part-time jobs.
a) To fulfil social needs
b) To fulfil self-actualisation (higher order) needs
c) To fulfil security needs
d) To fulfil the objective of career advancement
2.2 Which one of the following is a true statement about the bar chart data?
a) A majority of teenage part-timers are motivated by liking the people they work with
b) A majority of teenage part-timers enjoy learning new things at work
c) Most of the interviewees are not greatly concerned about the amount they earn.
d) The graph proves that all workers are motivated mainly by money.
3. Data response.
In the summer 2009 Damian Duff joined Fulham from the newly-relegated Newcastle. As a former Chelsea star, Duff
had just been included in a list of the Top 10 Richest Footballers in Britain. Duff, aged 30, joined Fulham at lower
wages than he had received at Newcastle. Within ten games for Fulham, Duff was playing his best football for years,
scoring goals, tackling back and loving every success by the team.
3.1 What might explain the clear evidence of Duff’s high level of motivation at Fulham? Outline two possible factors.
______________________________________________________________________________________
______________________________________________________________________________________
3.2 Why may people be motivated to go on working even after earning all the money they need?
______________________________________________________________________________________
66. Organisational structure
1. Missing words
Apart from one-person businesses, all organizations have a structure – a hierarchy. Large businesses have the whole
thing planned out as a huge diagram, showing the chain of _____________________ from top to bottom of the
business. Small firms may have nothing written down, but everyone will know who has the ________________ to
make decisions. Big businesses such as Tesco have to decide whether to ______________________power, i.e.
make all the important decisions at Head Office. The alternative is to decentralise, i.e. pass power down to local
branches or managers.
Hint: choose 3 from this list of possible words: decentralize, command, power, centralize, hierarchy
2. Look at the organizational hierarchy diagrams, then answer the questions below.
Imperial
Computers Boss Vetex
Computers
Dir
5 Managers
V.P.
Snr M’grs 35 shopfloor staff
6 Managers
20 Supervisors
60 Shop floor staff
Imperial Computers has annual sales of £8 million and 112 staff. Competitor Vetex has sales of £6 million a year but
makes more than double the profit. The Vetex boss is hugely proud of his staff and takes everyone out for a meal
every Friday night. The new boss of Imperial is wondering how to achieve Vetex’s high profit level.
2.1a) Which of the two businesses has a wide span of control? _______________________________________
2.1b) Outline one advantage and one disadvantage of the span of control at Imperial Computers.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
2.2 How might Imperial’s profits be boosted by changing its organizational structure? _______________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3. Matching exercise
What the words mean ANSWER The words (or phrases)
1. The number of staff answerable directly to a specific manager 1. = a) Narrow span of control
b) Decentralisation
2. Passing the power from head office to local branches/managers 2. = c) Centralisation
d) Divisional structure
3. Organising staff into departments such as Marketing & Finance 3. = e) Span of control
f) Chain of command
4. The power structure from top to bottom of the business 4. = g) Levels of hierarchy
67. Patents and Copyright.
1. Missing words
If an entrepreneur invents a new product they should file a ________________ application. Although this is
_________________, once the entrepreneur has registered the idea their creation is _____________ and cannot
be copied by others. A patent means they have exclusive ____________ over how their invention is used and who
can manufacture it. Patents are used for registering a new way of doing things. _________________ law protects
recorded and ______________ materials.
Choices: written, protected, rights, patent, expensive, copyright
2. Look at this data on the number of UK patent applications made over a five year period, then
answer the questions below:
Patent Applications from 2003 to 2008
14000
Number of Applications
13500
13000
12500 Patent Applications
12000
11500
11000
2003 2004 2005 2006 2007 2008
Year
2.1 From the list select two of the criteria that must be satisfied for an inventor or entrepreneur such as James
Dyson to be granted a patent on an invention?
a) the idea must be brand new
b) the idea must be able to be used in industry
c) the idea could be musical
d) the idea could be a new variety of plant
e) the idea could have been used by another business already but it has been improved
2.2 Calculate the difference in the number of patent applications made between 2003 and 2008. ______________
2.3 From the list below, identify the two factors most likely to have influenced the number of patent applications
made over the five year period.
a) These days, there’s nothing much left to invent.
b) There has been less investment by businesses into research and development in the UK.
c) With the 2008 downturn in the economy, there were fewer applications for patents.
d) A decline in the amount of manufacturing done in the UK has resulted in fewer patent applications.
e) There are fewer inventors living in the UK now compared with five years ago.
3. Unscramble the following inventions, inventors or key terms.
3.1 Madness Joy (clue – a modern inventor) ___________________________
3.2 Ant Pet ___________________________
3.3 Pole (clue – it’s a dinosaur) ___________________________
3.4 Itchy Gorp ___________________________
3.5 Silence ___________________________
3.6 Do Pi ___________________________
68. Pressure group activity
1. Missing words
In October 2009 _________________________ pressure group Greenpeace announced a ‘Wave March’ to take
place on December 5th 2009. A march in central London would be followed by forming a circle around the House of
Parliament. A huge blue wave (by the marchers) would publicise the group’s message: ‘Action on Climate Change –
Now!’ The Blue Wave idea would attract TV and press and create a day of pressure for more ________________
action. This is a classic pressure group activity, designed to create lots of publicity. A pressure group is a group of
people who share a common ____________. The purpose may be to protect the interests of members (e.g. the
CBI protects the interests of big ________________________) or to promote the cause of change, e.g. Lynx
(which wants to stop people buying real fur coats).
Choices: goal, environmental, businesses, government
2. Data Response.
To promote its environmental messages, last year Friends of the Earth set up:
• 25 training events
• 46 public meetings
• 163 face-to-face meetings with MPs
• 445 street stalls
• 94 media stunts
2.1 Give two possible examples of an environmental ‘media stunt’ _____________________________________
______________________________________________________________________________________
______________________________________________________________________________________
2.2 What might be the point of face-to face meetings with MPs? _______________________________________
______________________________________________________________________________________
2.3 The public meetings included several that were attended by more than 1,000 people. Outline two actions a
pressure group might take to publicise such meetings.
______________________________________________________________________________________
______________________________________________________________________________________
3. ANAGRAMS. Find the name of a pressure group within each jumble of letters. Each group name has 3 words.
3.1 PROTEST WAH Clue: Formed when America and Britain invaded Iraq
3.2 AHOY EMPTY TREK VISOR Clue: Formed to protest at the world’s failure to help the world’s poor.
4. Funding.
Not all pressure groups are funded by individuals. Some get their money from businesses that want to defend their
interests. The pressure group FOREST is a pro-smoking group that allows the tobacco industry to lobby government
at arm’s length. In August 2009 the pressure group Energy Citizens ran public meetings that attacked U.S.
government proposals on climate change. Journalists found out that the pressure group was funded by the U.S. oil
industry.
4.1 Explain why a big business might prefer to communicate through a pressure group, instead of speaking directly.
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Should the law force all pressure groups to state publicly who they get their funding from? Explain your view.
______________________________________________________________________________________
______________________________________________________________________________________
69. Primary Research
1. Missing words
Primary research is gathered ____________-hand – usually from customers or those who might become
customers. It can be time-consuming, because it is carried out for a particular business with specific
__________________ that need to be answered, e.g. does our brand appeal to under 19s? Primary research can
be _________________________, i.e. a survey on a large sample of people. Or it can be __________________,
i.e. in-depth research on a small ___________________ of consumers.
Choices: qualitative, questions, first, quantitative
2. Dos and Don’ts. When writing a questionnaire, make sure: each question is crystal clear; no question asks two
things at the same time; the wording of the questions is not biased (pointing to a particular answer).
Are these questions good or bad? State good or bad then briefly explain your reasoning.
2.1 Would you come to this ice cream shop again and recommend it to your friends? _______________________
______________________________________________________________________________________
2.2 On a scale of 1- 10, do you agree or disagree with the following:
‘I enjoyed the ice cream flavours I chose’ _______________________________________________________
______________________________________________________________________________________
2.3 Which of these three interiors would best fit for a make-over of the ice cream shop?
______________________________________________________________________________________
______________________________________________________________________________________
3. Data Response
Answers to: Have you any suggestions for improving this ice cream
parlour?
Others
Faster service
Women
More flavours Men
More space
No suggestion
0 5 10 15 20 25 30 35 40 45 50 %
3.1 Identify two answers that seem more important to the men than the women___________________________
______________________________________________________________________________________
3.2 Why might men be keener to see ‘more flavours’ than women? ____________________________________
______________________________________________________________________________________
3.3 Why might women be more keen than men to have ‘more space’? __________________________________
______________________________________________________________________________________
3.4 This survey was carried out on 156 adults as they left the ice cream shop. Outline one possible problem with this
sample.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
70. Product Life Cycle
1. Missing words
Most products follow a natural ‘life’ of five stages: development; ______________; growth; maturity and decline.
Different products, though, have very different life times. Crocs shoes had 3-years of growth followed by almost
immediate decline. In other words the _____________________ phase was very short. Cadbury’s Dairy Milk has
been growing for more than 100 years. The graph below shows yearly iPod sales since birth; it shows a classic life
cycle pattern. It also looks like it needs an ________________________ strategy, i.e. a medium-term plan for
extending the product’s life cycle. Missing words from: extension, birth, maturity
2. Data response. Note that the data below shows unit sales for 12 months; source: Apple accounts
2.1 In which year did annual sales of
ipod and iphone life cycles (to 2009)
Units (000s) iPods first hit 50 million units?
60000 ______________________________
2.2 In which phase of its life cycle was
50000
iPod in 2008?
40000
______________________________
iPod
30000 2.3 It was 3 years before sales of iPods
iPhone took off. Outline one possible reason.
20000
______________________________
10000
______________________________
0
______________________________
2001
2002
2003
2004
2005
2006
2007
2008
2009
______________________________
2.4 In which phases of its life cycle was iPhone in a) 2006 ___________________
and b) 2008? ___________________
2.5 Outline one possible extension strategy that Apple could use for the iPod in 2010. ______________________
______________________________________________________________________________________
______________________________________________________________________________________
3. The Life Cycle Phases

In which phase of their life cycles are each of the following products/businesses?
3.1 The Daily Express newspaper _____________________________
3.2 Nintendo Wii _____________________________
3.3 Primark _____________________________
3.4 Twitter _____________________________
3.5 Maltesers _____________________________
4. Explain why:
4.1 Cash flow can be a problem in the birth phase of the life cycle _____________________________________
______________________________________________________________________________________
4.2 It’s a mistake to decide that a business can never reverse a pattern of declining sales._____________________
______________________________________________________________________________________
4.3 Buy One Get One Free (BOGOF) is not an extension strategy. ____________________________________
______________________________________________________________________________________
71. Product Portfolio (Boston Matrix)
1. Missing words
The Boston Matrix is a way to analyse how well a firm’s brands are doing. For example, sales of the Sunday Express
newspaper have been falling for 20 years (it used to be Britain’s biggest seller). Clearly it’s a bit of a ___________.
The Matrix measures a brand’s market _____________ in comparison to the trends in the market as a whole. For
the Sunday Express, the awful truth is that it’s losing share in a declining market. So it’s definitely a dog. If, like
Cadbury, you have lots of brands, the Matrix helps you decide which brands are the big ones for the future, and are
therefore worth supporting heavily with __________________. Words from: advertising, dog, share
2. Multiple Choice
From the list below identify the one drawback to a business of using the Boston Matrix.
a) Able to plan when new products should be introduced or developed
b) A business may decide not to invest in a product which could have been revived.
c) Can decide whether it is worth investing in existing products
d) Knowledge of the markets that their products are in and what their market share is.
e) To ensure that they have range of products available at each stage to ensure a future for the
business.
3. Look at this product portfolio then answer the questions below:
Market Share
High Low
a) Rising Star b) Problem Child
High
Market
Growth c) Cash cow d) Dog
Low
3.1 From the list below match up the definition with the categories above.
i) Poor market share; need to be “put to sleep” ________________________________
ii) Difficult to be sure of its future; needs lots of investment. ________________________________
iii) Steady market; well established products. ________________________________
iv) Likely to give good cash return in future; worth backing with advertising.____________________________
3.2 Explain why a cereal company would want a range of brands in its product portfolio, not just one.
______________________________________________________________________________________
4. Rearrange the following phrase.

growth and market provides a framework sales share the boston matrix to assess
______________________________________________________________________________________
72. Product Trial and Repeat Purchase
1. Missing words
Every day’s sales for every single business could be broken down into two: those buying for the first time (product
trial) and those making a _______________ purchase. This is obvious but very, very important for two reasons: 1.
The factors leading to first-time purchase are different from those leading to repeat purchase (I buy a new Cadbury
Shazan! Bar because of the _______________________; I buy Cadbury’s Dairy Milk because I love the product
quality); 2. It is cheap – free, even – to get people to make repeat purchases; but usually expensive to get them to
make a product trial. Folklore says people are more likely to get divorced than switch their bank account. Gaining
trial is a result of good marketing; turning triallists into repeat purchasers requires high product quality, good
____________________ service and genuine value for money.
Missing words from: advertising, customer, repeat
2. Data Response. Coke has carried out research into two new Coke varieties for a Limited Edition run for next
summer only. They will either launch Coke with Lime or Coke Caribbean. Which should it be?
Research results among 2,000 drinkers of Coca-Cola
24
Coke with Lime
66
Definitely try %
Would buy regularly %
62
Coke Caribbean
38
0 10 20 30 40 50 60 70
2.1 The bar chart shows that although not many people would try Coke With Lime, those that try it are very likely to
buy it regularly. Briefly outline two possible reasons for Coke With Lime’s high % of ‘Would Buy Regularly’
____________________________________________________________________________________
____________________________________________________________________________________
2.2 Which one of these two products should Coke launch for next summer? Explain why you say that.
____________________________________________________________________________________
____________________________________________________________________________________
3. Objective test questions

3.1 Identify two reasons for a low rate of trial on a new Sat Nav product.
a) Customers recognise and like the brand name
b) The product is a lot like others on the market already
c) The product has unique features, but they are very complicated
d) The product is well designed, and comes in a range of colours
e) The product is priced just below the market-leading brand
3.2 Which business term or phrase is explained by each of the following?

a) Sales that come from people who have bought the product before. _________________ _______________
b) People choosing to buy the same brand regularly. _________________ __________________
c) Buying a product or service for the first ever time. _______________________ ____________________
73. Productivity
1. Missing words:
Productivity measures how ________________________ a business produces goods and services. Productivity is
not the same as total _______________________, which looks at the number of goods or services generated by
all of the firm’s resources. Productivity is measured in terms of the amount of output produced per
_______________________. High levels of productivity mean that a firm’s fixed _________________ can be
spread across a higher level of output, reducing costs per unit. If a firm can keep its costs per unit down, it can
perform more effectively against rivals by being able to charge lower ______________. High productivity also may
lead to increased _____________________, generating funds for investment into even more efficient production
techniques. Hint: words from – costs, efficiently, prices, profits, production, worker
2. Key terms:
Definition Key terms
1. A firm’s total costs divided by the level of output. a) Competitiveness
b) Efficiency
2. The level of efficiency with which a firm produces c) Fixed costs
its goods or services. d) Production
e) Productivity
f) Total costs
3. The ability of a firm to compete against rivals in the
g) Costs per unit
marketplace.
3. Productivity - calculations
3.1 Fill in the missing figures in the table below:
Total output Number of workers Output per worker
(units) (units)
Firm A A= 100 10
Firm B 3000 B= 15
Firm C 5000 400 C=
3.2 According to the above table, which business had the highest level of production?
______________________________________________________________________________________
3.3 According to the above table, which firm had the highest rate of productivity?
______________________________________________________________________________________

4.1 Which one of the following would be least likely to lead to an increase in long-term productivity?
a) Introducing new policies designed to motivate staff and boost morale.
b) Paying workers higher overtime rates to encourage them to work additional hours.
c) Increasing the amount spent on training in order to allow staff to acquire new skills.
d) Increasing the level of investment in up-to-date machinery for staff to use.
4.2 Which two of the following are the most likely consequences for a business with falling productivity?
a) Staff are likely to feel more motivated by greater job security.
b) The business may experience a loss in market share.
c) The business will be able to spend more on advertising and promotion.
d) The business will experience a rise in unit costs.
e) The business will experience a fall in unit costs.
74. Profit – How to improve it
1. Missing words:
Profit is the difference between the _____________________ generated by a business and the costs incurred in doing so over
a period of time. New businesses may simply aim to ________________________ when they are first set up. This may also be
the case for established firms during times of ______________________. However, profit is usually seen as an indicator of
business ___________________ and, for most firms, making a particular level of profit will be a key objective. Those firms that
fail to do so will find it increasingly difficult to find the ______________________ needed to operate and expand. There are a
number of steps that a business can take to improve profits: increase revenue, reduce costs or a combination of both.
Hint: words from – break-even, finance, recession, revenue, success
2. True or false (gain a bonus mark for giving the correct explanation):
2.1 A firm can make sure of an increase in revenue and profits by raising prices. T/ F
Reason ________________________________________________________________________________
2.2 A firm may succeed in increasing revenue and profits by cutting prices: T/F
Reason ________________________________________________________________________________
2.3 A firm may need to accept an increase in costs in the short term in order to increase profits in the long term.
T/F
Reason ________________________________________________________________________________
3. Improving profits – calculations:

A new business has generated sales revenue of £30,000 in its first year of trading. Its fixed costs were £12,000 and
variable costs totaled £14,000. Now it wants to improve its profit performance.
Answer the following questions:
3.1 How much profit did the business earn in its first year of trading?__________________________________
____________________________________________________
3.2 What would be the effect on the profits of the business if an advertising campaign managed to increase sales by
50%?__________________________________________________________________________________
3.3 Alternatively, what would be the effect on the profits of the business if it managed to move premises and reduce
fixed costs by 25%?
______________________________________________________________________________________

4.1 Which two of the following are most likely to increase profits by increasing revenues for a firm operating in a very
competitive market:
a) Reducing the level of expenditure on advertising
b) Increasing the price charged to customers.
c) Reducing the price charged to customers.
d) Reducing staff wages.
e) Increasing the level of advertising expenditure.
f) Moving the Head Office to a less expensive location.
4.2 Which one of the following is least likely to increase profits by reducing costs?
a) Cutting back on the number of staff employed by the business.
b) Offering regular ‘buy one, get one free’ sales promotions to customers.
c) Moving to cheaper premises in order to reduce fixed costs.
d) Taking out a layer from the firm’s management structure.

75. Qualitative and quantitative data
1. Missing words
Businesses carry out market research to find out data about the market and the needs of the ____________________ within it.
This is to help improve the __________________ of the decisions it takes. Market research can be used to collect either
quantitative or qualitative data. Quantitative research gathers large quantities of data so that calculations can take place, such as
what _______________________ of chocolate lovers like peanuts?. This means that lots of people will be asked to fill in a
_________________________ in which the questions have Yes/No answers. Qualitative research is more in-depth, involving
smaller groups of consumers, perhaps as part of a _____________ discussion. The aim of qualitative research is to find out
about customers’ __________________ and reasons why they behave the way they do.
Hint: - words from: percentage, customers, group, opinions, questionnaire, quality
2. Key words
Match the definitions on the left to the correct definition on the right:

1. In-depth research into the reasons behind customers’ a) Closed questions
behaviour b) Group discussion
2. Information that is gathered first hand and is for a c) Market research
specific purpose.
d) Open questions
3. The process of gathering and analysing data on a firm’s
market e) Primary research
4. A small number of people who are brought together for f) Qualitative data
a detailed group discussion about their views on a firm g) Quantitative data
and its products
3. Quantitative or qualitative?
Indicate whether the questions in the table below are designed to collect quantitative or qualitative data:
Questions Quantitative or qualitative
1. Why do you shop at Tesco? 1.
2. Have you ever flown with Ryanair? 2.
3. Do you visit the cinema frequently, sometimes, or never? 3.
4. What do you think of Marks and Spencer’s decision to charge 4.
customers for carrier bags?
5. In what ways could your bank improve its customer service? 5.
6. Which do you prefer - Pepsi or Coke? 6.
4.1 Which two of the following statements about qualitative data are not accurate?
a) Qualitative data is collected from a desk, e.g. by using Google
b) Qualitative data is often collected using informal group discussions
c) An example of qualitative data is ‘75% of guests were satisfied with the service they received’
d) The quality of qualitative data depends to a large extent on the way it is interpreted
e) The quality of qualitative data can be affected if one person dominates the group discussion
4.2 Which three of the following statements about quantitative data are accurate?
a) Quantitative data is easy to analyse
b) Quantitative data is collected using in-depth interviews
c) An example of quantitative data is ‘80% of people questioned have tried an Innocent smoothie’
d) Quantitative data is collected to find out the reasons for customers’ behaviour
e) The quality of the quantitative data collected can be affected by questionnaire design
f) Quantitative research data can be used to help forecast sales figures for a new product
76. Questions asked by Entrepreneurs
1. Missing words.
People define entrepreneurs as _________-takers. But there is a lot more. They are initiators, i.e. they go ahead and do
something while others are still thinking about it. They are able to because their minds are ____________ and questioning. Their
questions fall into three main types:
1. Why? In other words: why are things the way they are? This is a question about the present, i.e. now.
2. Why not? In other words: why not do things differently? This is a question about the future.
3. What if? In other words, what if the world was different? This is also about the _________________, but in a much more
imaginative, perhaps unrealistic, way (e.g. What if all cars were abolished?). This can lead to __________________ new ideas.
Hint: - words from: open, creative, risk, future,
2. Matching. Match the questions on the left to the correct category on the right, e.g, 1. = c
Entrepreneurial Questions Category of question

1. Why are pizzas so often delivered a bit cold and flabby?
a) Closed questions
2. Why not place each pizza on a hot metal base that keeps it
perfect until delivered? b) What if? question
3. What if every City in Britain had a congestion charge?
c) Asking: ‘Why?’
4. Is it possible that people will go back to wanting to share
their music, and turn against the iPod? d) Open questions
5. I’d like us to bring all our customers a hot flannel to wash
their hands after they’ve eaten our burgers. e) Asking: ‘Why not?’
6. Whoever thought that people want pickles in their burger?
3. Data Response. At Scoop Ice Cream, staff serve customers this way. Yet there are often huge queues.
2. Help choose ice

1. Greet customer
cream
4. Take money, give

3. Serve ice cream
change
3. Explain how owner Matteo might be helped by asking a) Why? and b) Why not? questions about this approach.
3a) ___________________________________________________________________________________
______________________________________________________________________________________
3b)___________________________________________________________________________________
______________________________________________________________________________________
4.1 Which are the two accurate statements about Why not? questions.
a) They are looking for new solutions to existing problems
b) They ask questions such as ‘Why are football seats sold at a cut price to the over-60s?’
c) They open up a world of imaginative possibilities about how the future might be
d) They examine current products or processes, assessing their strengths and weaknesses
e) Why not? questions are willing to change the way things are done currently
4.2 Which are the two accurate statements about What if? questions?
a) They can be used for careful analysis of what is done at the moment, e.g. the way a Big Mac is made
b) They ask questions with clear yes/no answers
c) They use imagination and creativity to consider how the future might be very different from now
d) They ask questions such as ‘Can’t we increase profits by reducing the pack weight by 10%?’
e) They often start from a blank sheet of paper, i.e. completely original ideas
77. Recruitment.
1. Delete the wrong words.
1.1 Businesses can fill vacancies in a variety of ways. Internal / External recruitment is when a business appoints
someone who already works for them. If the business recruits from outside, there may be a benefit / disadvantage
from bringing new ideas to the company. Some entrepreneurs like to employ young people for their first job, as
there is no risk of bad vibes / habits having been learnt in another workplace.
1.2 The name of the document that summarises a person’s qualifications, work history and hobbies and interests is a
curriculum statement / vitae.
2. Multiple Choice
2.1 Arkam is a tailor who makes high-priced suits for a variety of shops across Britain; his factory is based in the
Midlands. He has advertised for a number of skilled staff in the local newspaper but cannot fill the posts. Give one
possible reasons for this skills shortage.
a) A new textile firm recently opened a new factory locally.
b) There is high unemployment
c) There has been a rise in Polish immigrants.
d) The Textiles teacher retired at the local school.
e) Suits are not fashionable.
2.2 Arkam is ready to get some job applicants. From the list below select the most appropriate option for Arkam to
proceed with the recruitment process.
a) Place an advert in the window of the local newsagents
b) Place a job advert in the Daily Mail newspaper
c) Use a recruitment agency to fill the position
d) Ask some of his current staff to spread the word
e) Advertise on national television
3. Examine the following advertisement then answer the questions that follow.
Barmaid Wanted Urgently

Are you good with people?
Can you work long hours?
Said yes to these questions? Then we want you.
We need good barmaids who will provide the best of
service for our customers.
You must be under 25 years of age
You must be dress size 10 to 14
The White Heart, Prestley Village.
This advert was placed in the window at The White Heart. There are a number of problems with this advert.
Identify the three most serious problems for the business.
a) Not everyone will see the advert.
b) The advert discriminates against certain groups.
c) The advert will put staff off as it says they have to work long hours.
d) There are not enough details in the advert about hours or pay so people will not apply.
e) There are no details of how to apply, when to apply or who to contact.
4. Jumbled up. Put the recruitment and selection process into the correct order.
application forms interview job advertised in appropriate media job description selection
short-listing vacancy arises vacancy filled
78. Regulation and Deregulation
1. Missing Words
In order to ensure that businesses operate in the interests of all _____________________ the government has
introduced a number of __________________ to regulate business activity. These laws cover a wide range of
areas related to business. Business ____________________ groups often refer to regulations as _________
___________ as they create restrictions and can be _______________ and time-consuming to comply with. Many
pressure groups would like to see the removal of regulations on business. If this happened it would be called
_______________________. Words from: laws, costly, deregulation, stakeholders, pressure, red tape
2. Match the regulation with its correct description

Some of the key regulations that affect business are listed below. Match them with their correct definition
The Minimum Wage a) Allow women 39 weeks time off after having a baby
Health and Safety b) A tax paid on profits
Maternity rights c) 2 weeks paid leave for fathers after their baby is born
Paternity rights d) The lowest hourly wage that a business can legally pay a worker
Corporation Tax e) Minimum standards for working environments to protect customers and employees
3. Impact of regulation on business

For each of the following, state whether the impact on business would be positive or negative and explain why.
Situation Positive or Negative? Explanation
An increase in the National
Minimum wage for over 21s
from £5.73 to £6
The UK government reduces
the length of paid maternity
leave from 39 weeks to 35
The EU introduces a regulation
that states that all businesses
must provide air conditioning
units in their offices and stores
The EU increases the length of
paid paternity leave
The government reduces the

level of VAT by 5%
4. Data response – regulation isn’t all bad

While some businesses do as little as possible to comply with Health and Safety regulation, Cadbury’s is seeing the
business benefits of a safety training programme. The project called ‘Deal with It’ is a training course where staff are
given dangerous situations in which they have to make the right decision. Workers enjoy the course because it is
interactive and Cadbury has seen a 45% reduction in accidents at its Bournville factory since introducing the
programme. (adapted from www.bbc.co.uk/workinglunch)
4.1 Explain how Cadbury can benefit from a 45% reduction in factory accidents. ___________________________
______________________________________________________________________________________
4.2 What effect is the training programme likely to have on staff motivation? How does this benefit the business?
______________________________________________________________________________________
______________________________________________________________________________________
4.3 Explain why it may be easier for a large company such as Cadbury to apply Health and Safety regulations than it is
for smaller businesses.
______________________________________________________________________________________
______________________________________________________________________________________
79. Remuneration
1. Match the payment method with its correct definition
Time Rate An agreed, fixed amount of pay which is paid monthly
Piece Rate A lump sum payment made to workers when they have performed well
Salary Workers are paid according to the amount of work they produce
Overtime Benefits received by workers in addition to their normal pay
Commission Payment for a period of time, usually an hour.
Bonus Often paid to sales staff. Workers are paid a basic wage plus an amount for each
item they sell
Fringe Benefits Payment for working longer than normal hours. It is usually paid at the regular
rate plus and extra amount (e.g. double pay)
2. Which method of pay?

For each of the following workers, suggest an appropriate method of payment. Justify your answer. You may choose
a combination of methods.
a) An office cleaner ______________________________________________________________________
b) A car production worker________________________________________________________________
c) A teacher ___________________________________________________________________________
d) A Managing Director ___________________________________________________________________
e) A mobile phone salesperson _____________________________________________________________

3. Calculations
Charlotte works as a care assistant at a private care home for the elderly. Here are details of her pay and perks.
Basic pay - £6 per hour for a standard 40 hour week.
Overtime - averages £27 per week. It is paid at time and a half.
Premium payment for unsocial hours - £20 per week.
Free meals on duty; Free uniform.
Annual lump sum loyalty bonus - £360.
a) What is her basic pay per week? _______________________________________________________
b) What does she earn in total in a typical week? _____________________________________________
c) How much overtime does she do in an average week? _______________________________________
d) What does she earn in a 52-week year? __________________________________________________

4. Data response
You are the team leader in a successful local recruitment business which employs 10 staff. You have recently noticed
that a number of your staff are looking for new jobs. Also, your figures show that there has been a drop in
productivity amongst staff. You know that the owner of the business has said there will be no wage increases this
year as times are tough in recruitment. You have a meeting with the owner of the business next week.
4.1 What improvements could you suggest to the owner to improve staff motivation and productivity? __________
______________________________________________________________________________________
______________________________________________________________________________________
4.2 For one improvement you have suggested, explain the impact of this on both the business and the employees
______________________________________________________________________________________
______________________________________________________________________________________
80. Repeat Purchase
1. Missing words
Repeat purchase occurs when a customer purchases a product __________________ than once. If a customer
continues to buy a product regularly, they can be described as developing brand ________________. While it is
important to get new customers to trial a new product, profit in business comes from having repeat customers.
Repeat customers cost a business ____________________ to attract than a new customer because not as much
money has to be spent on ___________________. There are a number of reasons why a customer will return to
a business over and over again. These reasons include the _______________________ of the product or service,
the consistency of service they receive, and the distinctiveness of the product.
Words from: quality, loyalty, more, less, advertising
2. Data Response
Cadbury’s is the world’s second largest manufacturer of confectionery and owns the number one chocolate brand in
the UK, Dairy Milk. In 2008, Cadbury launched two new varieties of Dairy Milk, the Apricot Crumble Crunch and
the Cranberry and Granola bar.
2.1 Outline one method that Cadbury could have used to encourage product trial _________________________
______________________________________________________________________________________
2.2 Outline one way in which Cadbury could encourage repeat purchase of the two new bars _________________
______________________________________________________________________________________
3. Multiple Choice
3.1 Encouraging repeat purchase and customer loyalty leads to (circle two answers)
a) Increased sales and profits
b) Negative word of mouth
c) Increased chance of survival
d) Increased costs
3.2 Which one of the following strategies is most likely to lead to repeat purchase of a new branded lip gloss?
a) An advertising campaign using a top celebrity and runs for 2 weeks prior to the launch of the product
b) A half price introductory offer for the lip gloss
c) An advertising campaign running regularly throughout the life of the lip gloss using a well known celebrity
d) Using high quality ingredients which makes the lip gloss more expensive than anything else on the market
4. Explain why
4.1 Coca Cola has been able to maintain a high level of customer loyalty and repeat purchase over the years
______________________________________________________________________________________
______________________________________________________________________________________
4.2 A business with a large number of repeat customers is more likely to succeed than a business with very few
repeat customers
______________________________________________________________________________________
______________________________________________________________________________________
5. Explain how
5.1 Apple achieves repeat purchase for its Ipods __________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
5.2 Tesco encourages loyalty amongst its customers _______________________________________________
______________________________________________________________________________________
81. Research and Development
1. Circle the words/phrases that relate to Research and Development
Risky Easy Process One Person Cheap Prototype
Scientific Testing Modifications Quick
Idea Generation Improvements Products always successful
2. Stages of research and development

2.1 Jot down at least 5 reasons why a company such as Cadbury’s wants to develop new products
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
The diagram below shows all of the stages that Cadbury’s go through before launching new chocolate bars.
Production Packaging
processes
Research Consumer Modification Production Product

& Design Trials Launch
Ingredients Tasting
& Recipes
2.2 In the diagram above, explain what you think is happening at these two stages:
a) Research and design _____________________________________________________________________
______________________________________________________________________________________
b) Modification___________________________________________________________________________
______________________________________________________________________________________
At the research stage, Cadbury’s carried out a lot of consumer market research
2.3 Explain why consumer research is important in developing new products such as chocolate bars
______________________________________________________________________________________
______________________________________________________________________________________
3. Data Response
Rolls Royce is a leading producer of engines for a range of different aircrafts. The company is committed to
developing products and services to meet the opportunities presented by the different market segments it serves.
For the period 2007-2016, Rolls Royce has produced the following market outlook data for aircraft demand:
• Passenger Airline traffic will grow on average by 4.9% per year
• There will be demand for 132,000 engines with a value of $701billion
• Markets in Asia will drive much of the increase in demand but Europe and North
A i ill i 6000 i l ld fl
3.1 How can Rolls Royce use this market outlook information in planning its research and development?
______________________________________________________________________________________
______________________________________________________________________________________
3.2 In your view, what factors or developments might make these long term forecasts inaccurate?
______________________________________________________________________________________
______________________________________________________________________________________
82. Risk and Uncertainty
1. Missing words
All business involves risk. Large, well-established businesses face risks (Woolworth’s? General Motors?); so do small,
start-up businesses. Risk tends to be much _______________ for new businesses. A large number of new
businesses fail within their first 3 years of trading. Risk is not a negative word. Taking risks can yield big rewards;
often, the _________________ the risk, the bigger the reward. However, risks need to be managed with care; the
best type of risk to take is a ______________________ risk. This involves considering the _________________
of an event happening plus the ______________ or benefits to the business if the event does happen.
Missing words from: Calculated, chances, higher, bigger, costs
2. Risks and Rewards of starting a new restaurant business
2.1 List 3 risks that you could face in the first 6 months of trading. _____________________________________
______________________________________________________________________________________
2.2 For one of the risks you identified, explain how you could minimise the risk of this happening ______________
______________________________________________________________________________________
2.3 List 3 rewards that you could receive in the first 12 months of trading _______________________________
______________________________________________________________________________________
3. True or False? Write a T or an F by each of the following
3.1 Only small businesses face risk
3.2 Making mistakes always leads to business failure
3.3 Taking a calculated risk involves looking at the chances of success and failure and their impact on the business
3.4 As long as a risk is calculated it will always lead to success
4. The impact of uncertainty

Look at the following sources of uncertainty for your new restaurant in its first few weeks of trading. For each
source of uncertainty, explain the possible impact on your new business:
SOURCES OF UNCERTAINTY POTENTIAL IMPACT ON YOUR START UP
4.1 Soon after you open, a competitor

opens nearby
4.2 You buy too many fresh vegetables in

the first week
4.3 The weather is unexpectedly hot and

the local supermarket sees a surge in
people buying instant barbeques
4.4 A downturn in the economy means

customers cut back on eating out
4.5 Poor marketing means few customers

have heard of you
4.6 Your waiting staff prove poor at

persuading customers to buy a dessert
4.7 A cheap ‘early bird’ menu offered to

people eating before 7pm leads to few
customers booking to eat after this time
4.8 Interest rates increase by 1%
83. Secondary Research
1. Missing Words
Secondary market research is also known as ________________ research. It involves the collection and analysis of
data that already ________________. Businesses can use secondary market research to gather data about the size
of the market, trends in the market, competitors that exist in the market and their market share. It is usually
_______________ than primary research but it may be out of date and may not meet the specific ____________
of the firm. Missing words from: needs, desk, cheaper, exists
2. Which of the following are examples of secondary market research? (Write an S in the space)
a. Population Census b. Financial Times c. Past sales data

d. Questionnaire e. Company annual reports f. Bank of England Inflation report
g. Internet h. Product trial i. Focus Group
3. True or False
a) Secondary research is also known as Field Research
b) Secondary data is always 100% reliable
c) Secondary research is less valuable than Primary research
d) Referring to data published by the government is an example of secondary research
4. Ethical clothing
According to a recent Mintel Report, sales of ethical clothing have quadrupled over the past 5 years. Consumers
want clothing that takes into consideration the impact of production on the environment and on the people behind
the clothes we wear. Amanda is planning to start a new online clothing store selling ethical clothing aimed at women.
4.1 Explain one way Amanda might use secondary data such as this Mintel report.__________________________
______________________________________________________________________________________
4.2 Identify two drawbacks to Amanda in using this type of research. ___________________________________
______________________________________________________________________________________
4.3 Identify two other pieces of secondary research data that might help Amanda in her start up plans.
______________________________________________________________________________________
5. Interpreting Secondary Data

The table below is an example of secondary data. It shows the percentage of people aged 15 and over in the UK who
read a national daily newspaper (www.statistics.gov.uk).
Newspaper 1978 1988 1998 2008

(%) (%) (%) (%)
The Sun 29 25 21 16
Daily Mail 13 10 11 11
Daily Mirror 28 20 14 8
Daily Telegraph 8 6 5 4
The Times 2 2 4 4
Daily Express 16 10 6 3
Daily Star 8 4 3
The Guardian 2 3 3 2
Financial Times 2 2 1 1
Any national newspaper 72 67 56 44
a) What does the data suggest is happening in the newspaper market over time? ______________________
______________________________________________________________________________________
b) A magazine company is considering setting up a new national paper. Explain how the data in the table might
help it make decisions about the type of newspaper it could set up.
______________________________________________________________________________________
______________________________________________________________________________________
84. Sole Traders and Private Companies
1. Cross out the wrong words
When starting a business, you must decide on the form of business organisation. Do you need the protection
provided by limited / unlimited liability? This will stop you and your family becoming responsible personally for any
unpaid business debts / debtors. To achieve this protection, you must form a private / public limited company. If you
are not worried about debts (eg a market trader working on a cash basis) you can safely start up as a sole trader.
2. Multiple Choice
2.1 Another name for a sole trader is:
a) Sole Proprietor
b) Sole Taker
c) One man brand
d) A franchisee
e) A venture capitalist
2.2 There are nearly 4 million sole traders in the UK. From the list identify the best definition of a sole trader.
a) a business which is run solely by one person
b) someone who is their own boss who is responsible for everything
c) an unregistered business
d) a business with one owner and unlimited liability
3. True or False (write a T or an F by each statement)
Decide whether each of the following statements about sole traders and private companies are true or false.
a) Most small businesses are sole traders.
b) The best working hours are when you are a sole trader.
c) A private limited company has PLC after its name.
d) A sole trader has limited liability.
e) Sole traders are unincorporated.
f) Ownership is restricted for private limited companies.
g) A sole trader is their own boss.
h) Unlimited liability is good for a sole trader.
i) Private limited companies have to publish accounts every year.
k) A sole trader can keep all their profits (apart from paying tax).
3. Crossword
ACROSS
2 The letters to represent a private limited company
6 The money invested by shareholders
7 The owners of a company
8 Where the business is not legally separate from its owner
9 Buys the right to trade under the name of another firm
10 The right to trade under the name of another firm
11 A business which has limited liability and is incorporated
DOWN
1 A business with one owner
3 People elected to the board of a company
4 When the owners only risk the money they invest no
matter how big the debt
5 The letters to represent a public limited company
85. Sources of business ideas
1. Missing words
Some ___________________________ are able to set up their businesses on the basis of new ideas for products or ways of
exploiting a ______________ in a particular market. For example, James Dyson was able to develop a highly successful business
after inventing the ‘dual cyclone’ vacuum cleaner. New inventions are usually more likely to lead to successful business start-ups if
they can be protected from being copied by more established ___________________. This can be done by taking out a
_______________. However, new ideas have to be __________________________ in order to become a commercial
success. Other businesses take existing products and seek to add _________________ by improving them in some way,
perhaps by improving quality or reducing price.
Hint: words from – rivals, entrepreneurs, innovative, gap, patent, value
2. Key terms:

1. The process of turning a new idea to a successful a) Copyright
product within the marketplace
b) Innovation
2. A means of giving legal protection from copying to a
new invention c) Invention
3. The creation of a new product or production process
d) Market niche
3. True or false - one bonus mark for giving the correct reason:
3.1 The most successful businesses are based on brand new ideas T/F
Reason ________________________________________________________________________________
3.2 The chances of ideas for new products succeeding can be improved by carrying out market research T/F
Reason ________________________________________________________________________________
3.3 Spotting a gap in the market will ensure the success of a new business T/F
Reason ________________________________________________________________________________
4. Short answer questions

Read the short passage below and then answer the questions that follow:
Curry in a box
Ketan Varu’s idea for a business start-up came from his parents. They were determined to ensure
that he ate healthily while he was away at university, so packed up everything he needed to cook for
himself. His friends were so impressed that they urged him to do something similar. Ketan realized
that many people were put off cooking Indian food by the long list of ingredients for herbs and spices
that were usually only sold in bulk. Therefore, in 2005 he set up Spice-N-tice – a business that
manufactures and sells curry kits consisting of freshly blended herbs and spices; shopping lists of other
necessary ingredients and easy to follow recipe cards.
4.1 Outline the source of Ketan Varu’s idea for a new business:
_ ____________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Briefly explain how Spice-N-Tice adds value for its customers:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
86. Sources of finance – Long and Short Term
1. Missing Words.
Short term finance is when a business needs to borrow money for less than ______________. Medium term
finance is when money is needed for _____________________. Long term finance is when money is needed for
______________________ . In addition there is _____________ capital, which does not have to be paid back at
all. Choose from: share; one to five years; a year; over five years
2. Multiple Choice
2.1 Steve owns a painting and decorating business. Steve needs to buy himself a new van as his old one has just
broken down. Steve needs to raise £13,000 in order to purchase the new vehicle. From the list identify the two
most likely sources of finance that Steve should consider.
a) personal funds
b) retained profits
c) overdraft
d) hire purchase
e) share capital
f) bank loan
2.2 Steve knows he is getting paid from a job he has done in three days time but he needs to buy some new supplies
for his next job costing £150. Steve only has £30 in his bank account. From the list identify what he should do.
a) ask his brother to lend him the money
b) contact the bank to arrange an overdraft
c) use a debt factoring agency to pay
d) take out a bank loan
e) not buy the supplies.
3. True or False
Decide whether each of the following statements is true or false.
a) Banks will always allow a business to have an overdraft. __
b) If personal funds are available these should always be used first. __
c) Owners are best off securing their personal assets against a loan. __
d) Government grants can depend on the location of a business. __
e) A mortgage is the best source of finance for buying property. __
f) Share capital does not have to be repaid to shareholders. __
g) A venture capitalist will keep their shares forever. __
h) Businesses that use trade credit get a bad reputation. __
i) Banks will ask for security before giving a loan. __
j) Selling assets is a high risk method of raising finance. __
4. Word Search
l a t i p a c e r u t n e v g
m a n b g w s i k s r m z o t cost
q g g e w n n g e s b o v d i debentures
f o n k z t i r t i m e n m d debt factoring
u l l i e b u s z u r f a o e flotation
j i o r r t d p a n v b o r r government grant
r y e t n o f x m e k h l t c interest
f s f e a o t e t b l a j g e leasing
t x b k d t n c o s t t v a d loan
t e s y f t i x a p q t v g a mortgage
d i r g g r v o h f q d b e r overdraft
r e j r u q c d n h t a o d t profits
n u a s t i f o r p y b y l l risk
y n o v e r d r a f t j e a m trade credit
t a y h x e g a v g v h i d a venture capital
87. Sources of finance for start up
1. Multiple Choice.
Tasneem has spotted a business opportunity; she has found out through market research that there is a gap in the
market in her town for a taxi firm run by women for women. Tasneem has always been keen to start her own
business and is excited about the idea. She has put together a business plan and has found out what her financial
requirements are.
1.1 Identify the three appropriate reasons why Tasneem will need to find finance.
a) To purchase stock
b) To purchase equipment
c) To advertise
d) To pay herself a big starting salary
e) To pay wages
f) To pay for copyright
1.2 From the list below identify the 4 most appropriate sources of finance that Tasneem should consider.
a) Bank loan
b) Mortgage
c) Retained Profits
d) Family and friends
e) Trade Credit
f) Leasing
g) Outside investors
h) Own funds
2. Look at this data on sources of finance for new businesses then answer the questions that follow:
Sources of finance for new businesses
Owners own funds

Percentage
Friends and family Bank Loan
Government Grant
Business Angels
2.1 The graph shows that most new businesses are financed by the owners own funds. Select the three most likely
reasons for this
a) banks are reluctant to lend money that is unsecured
b) some businesses might find it hard to meet the criteria for a grant
c) business angels mostly invest in existing businesses
d) friends and family do not like to give money to each other
e) an owner retains control over their business if they use their own funds
2.2 As many as 40% of entrepreneurs fund their start-up partly by using their personal credit card. Explain one
reason why this is unwise.
______________________________________________________________________________________
______________________________________________________________________________________
3. Unscramble the following anagrams on sources of finance
3.1 Baseline Snugs
3.2 Balk Anon
3.3 Remnant Vent Grog
88. Stakeholders
1. Missing words:
A firm’s stakeholders are individuals or ________________ with an interest in how the business is run. Even a
small, new business will have customers, suppliers and possibly employees. It may have also taken out
______________ from the bank. These groups are sometimes referred to as __________________
stakeholders, because they are seen as being essential to the firm’s success or failure. Secondary stakeholders, on
the other hand, are those groups who feel they are involved in the business, such as pressure groups or the local
community. Perhaps the stakeholder with the most interest in the performance of the business is the owner or
owners. These are known as _______________________ if the business is a __________________ company.
Hint: words from: limited, loans, primary, shareholders, groups
2. True or false – earn a bonus mark for giving the correct reason:
2.1 Only the owners of a business are classed as primary stakeholders T/F
Reason ________________________________________________________________________________
2.2 Looking after the interests of staff may increase costs in the short run but lead to falling costs in the longer term
T/F
Reason ________________________________________________________________________________
2.3 A business that improves the quality of service provided to customers may experience a fall in profits in the
short term but an increase in profits in the longer term T/F
Reason ________________________________________________________________________________
3. Short answer questions:
Read the short passage below and answer the questions that follow:
Two years ago, Jo Freeman opened a small café in the centre of the village where she lives. The business has been
so successful that she is thinking about keeping the café open in the evenings until 10 pm and extending the premises
to create more space. She intends to hire two new staff to add to the three people she currently employs. All
employees will be expected to work some evening shifts. Jo plans to finance the move by using a bank loan.
3.1 Identify two stakeholders in Jo’s business who are likely to benefit if the proposed expansion is a success (justify
your answer):
______________________________________________________________________________________
3.2 Identify two stakeholders in Jo’s business who are likely to suffer if the proposed expansion is a success (justify
your answer):
______________________________________________________________________________________
4.1 Moonpig sells greetings cards that customers can order and customise on-line. Which two of the following
stakeholders are most likely to suffer in the short-term from the company’s decision to switch its printing from
London to Guernsey?
a) Moonpig’s shareholders
b) The firm’s customers
c) The printing staff employed in London
d) Guernsey’s Government
e) The firm’s bank: Natwest
4.2 A UK firm producing luxury goods has decided to outsource its production to a lower cost business, based in
India, in order to reduce costs. Which one of its stakeholders is most likely to benefit in the short term?
a) Its employees
b) Its existing suppliers
c) Its customers
d) Its shareholders
89. Start-up failure
1. Missing words
Around 36,000 companies failed in the UK in 2009. Many of these businesses had been operating for less than
twelve months. Most firms find it more difficult to survive when there is a ___________________ than when the
economy is booming. However, some firms will often fail because of poor ________________________, rather
than unfavourable economic conditions. Some businesses fail to find out whether there will be sufficient
__________________ for their goods or services, by ignoring market research. Inadequate planning is also a
common cause of business failure. Some entrepreneurs are too confident about the likely number of
____________________ and the prices they will be willing to pay. Others fail to identify all of the
_________________ involved in running a business. This leads them to underestimate the __________________
needed to get the business up and running.
Hint: words from costs, customers, demand, recession, finance, management,
2. Key terms
1. Where a firm’s total costs are greater than its sales revenues a) Break-even
b) Liquidation
c) Loss
2. Where there is a downturn in economic activity, with falling
d) Negative cash flow
consumer spending and a reduction in firms’ sales and
production e) Net cash flow
f) Profit
g) Recession
3. Where a firm’s total costs are equal to its sales revenue
3. True or false? – one bonus mark for giving a correct reason:

3.1 Cutting back on advertising during an economic downturn (in order to reduce costs) could increase the risks of
business failure T/F
Reason ________________________________________________________________________________
3.2 Carrying out market research before setting up a new business will increase start-up costs but reduce the risks
of making a loss T/F
Reason ________________________________________________________________________________
3.3 Profitable firms cannot become business failures T/F
Reason ________________________________________________________________________________
4. Short answer questions. Read the short passage below and answer the questions that follow:
No passion for perfume!
In 2009, fragrance retailer, Passion for Perfume, closed down, with a loss of 185 jobs. The company was set up in
2004 and quickly expanded, opening 45 shops around the UK. During 2006, it generated annual sales of £5.9 million
and expected to begin making a profit in 2007. However, the company’s administrators claimed the business had
become a victim of “challenging trading conditions and reduced consumer demand”. Attempts had been made by
the founders to sell the business, rather than continue to finance its losses, but had not managed to find a buyer.
4.1 Briefly explain why a perfume retailer, such as Passion for Perfume, might experience a fall in demand during an
economic downturn:
______________________________________________________________________________________
4.2 State two other possible reasons why Passion for Perfume did not succeed:
______________________________________________________________________________________
______________________________________________________________________________________
90. Start-up legal and tax
1. Missing words
There are a number of laws that affect the way in which businesses are run. These laws have been created by the
Government to protect the ____________________ of customers, employees and the environment. It is
important, therefore, that anyone setting up a new business is aware of this legislation in order to avoid being
______________. There are also many taxes that businesses have to pay, such as national __________________
on every employee, plus VAT ( _____________ Added Tax) and, eventually, a tax on the ________________ the
business makes. Therefore it is vital that a new business informs the tax authorities that it has started up, and keeps
accurate records of all of its financial dealings. This will reduce the risk of either paying too much or too little tax.
Any attempt to deceive the taxman can end up with seriously huge fines later on.
Hint: words from – value, interests, profits, fined, insurance
2. Key terms. Match the definition on the left to the correct key term on the right:
Definitions Key Terms
1. An individual or business that is recognised by law as having a) Corporation tax

its own rights and responsibilities
b) Income tax
2. A tax on goods and services bought by consumers that is
collected and handed over to the government by the
c) Legal entity
business that sells them
d) Limited company
3. A tax that is paid by companies based on the level of
3.1 In the UK, entrepreneurs are only required to inform the Inland Revenue if they set up a limited company:
T/F
Reason ________________________________________________________________________________
3.2 National insurance contributions are a tax paid by employees, not employers T/F
Reason ________________________________________________________________________________
3.3 Businesses that don’t keep records of their transactions can get fined very heavily T/F
Reason ________________________________________________________________________________

4.1 Which two of the following are legal requirements for all UK businesses?
a) They must charge VAT on all the goods or services they sell to customers
b) They must ensure that they employ the same number of women as men
c) They must pay tax on any profits made
d) They must publish their financial accounts at least once a year
e) They must tell the truth about their products in packaging and advertisements
4.2 Which two of the following are firms not legally required to do when employing workers
a) Make sure that all employees are members of a trade union
b) Make national insurance contributions, based on employees’ salaries
c) Avoid age discrimination when recruiting or promoting staff
d) Avoid racial discrimination when recruiting or promoting staff
e) Make sure that all employees are motivated and have high levels of job satisfaction
91. Start up Location
1. Missing words
When starting a business, the decision of where to locate is crucial. This is especially true for businesses such as
restaurants, shops and _______________. Sometimes, the best location may be where there is no
_______________________ (a petrol station, for example). But many retail businesses are most successful when
grouped together. For manufacturing firms, speedy and reliable deliveries are vital, so _______________________
networks are a critical factor. For every new business, the cost of the land and buildings will be crucial, as it will be a
major cost. Choices: transport, hotels, competition.
2. Look at this (accurate) data on shop rents in Yorkshire, then answer the questions below:
Prime retail rents per square foot (per year)

£340
£320
£300
£280
£260
£240
£220
£200
£180 Rent May 2006
£160
£140 Rent May 2007
£120
£100
£80
£60
£40
£20
£0
Harrogate Ripon Skipton York Leeds
2.1 From the list below circle the two most likely reasons why a new fashion shop owner might choose the location
in Leeds rather than Ripon?
a) More fashion conscious customers in a big city than a small town
b) It costs more so it must be better
c) Potential for more profit per item sold, as city dwellers are prepared to pay more
d) Because shop rents are falling in Ripon, which is a worry
e) There is a potential earn more GDP
f) Because the government is likelier to give bigger grants in a bigger city
2.2 The new clothes shop will need 2,000 square foot of shop space. Select the year’s rental in Leeds.
a) £62,000 per year
b) £620,000 per year
c) £600,000 per year
d) £64,000 per year
e) £310,000 per year
3. Pick two location features to match each business? (You can use a feature more than once)
Business Location feature Location feature
1. A local independent chemists’ A. Good housing and schools V. Excellent, traffic-free access to
shop nearby motorways
2. A spring water bottling factory B. Located near to rival firms W. No similar competitor nearby
3. A new computer games software C. Lots of low-wage workers X. Good access to staff with the
company nearby right skills
4. A new Italian restaurant D. Nearness to raw materials Y. Close to an international airport
5. Speedo Car Hire E. Nearness to the target market Z. Free parking available nearby
92. Start-up objectives
1. Missing words
An objective is a goal or _________________ that someone sets out to achieve. A key business objective,
particularly at start-up, is to survive. This will mean having enough money to meet its _____________________
when they need to be paid. Although a firm may rely initially on _______________ and finance from its owners,
eventually it will need to generate enough __________________ from sales to cover costs.
Although every business needs profit to survive and grow, some entrepreneurs start up because they have social
objectives. Duncan Goose started One Water in order to ‘do something with his life’. That something was paying for
clean water pumps in Africa, financed by profits from selling bottled water in Britain.
Hint: words from – expenses, loans, profit, target
2. Key terms
1. A specific target or goal, often expressed in financial terms a) Added value

b) Copyright
2. A way of giving legal protection to a newly developed c) Mission
product d) Objective
e) Patent
3. Developing a product in some way so that it appears to be f) Profit
worth more to customers g) Social enterprise
h) Survival
4. Starting an organization using business methods with the
3. True or false? – one bonus mark for giving the correct reason:
3.1 All new businesses aim to make a profit for their owners T/F
Reason ________________________________________________________________________________
3.2 A product with low added value will generate the highest levels of profit T/F
Reason ________________________________________________________________________________
3.3 Firms can use patents to try and increase profits from new product ideas T/F
Reason ________________________________________________________________________________

4.1 Sian Jackson has just set up a web design firm. Which two of the following are likely financial objectives for her
new business?
a) To make enough money to retire within six months of start-up
b) To start making a small profit within twelve months of start-up
c) To work fewer hours than would be necessary if employed by another firm
d) To make enough profit to match the salary in her current job
e) To be able to work from home
4.2 Which two of the following would be least likely to increase the chances of a new firm meeting its long term
profit objectives?
a) To take out a patent in order to protect a product based on a newly-invented idea
b) To increase the level of added value by giving a product unique features
c) To use low quality materials in order to keep costs as low as possible
d) To ensure that the business keeps its costs below its sales revenue at all times
e) To pay workers wage rates below the legal minimum
93. Start-up success
1. Missing words
Achieving a successful business start-up requires more than just a good initial ___________. Understanding
_____________________ needs and staying focused on them is vital because these needs may change over time. A business
also needs to ensure that its ___________________ lives up to its promises. Otherwise customers may become frustrated, and
switch their demand to competitors. Careful business ___________________ should reduce the risk of overestimating sales or
_______________________ costs. However, sometimes start-up success may depend to a large extent on luck and timing.
For example, Innocent Drinks would have found it much harder to launch a range of ____________________ priced fruit
smoothies during the 2008/09 recession than in the more favourable economic conditions of 5 years before.
Hint: choose from – customer, underestimating, idea, planning, premium, product
2.1 Once an entrepreneur has a good idea, it is vital that they stick to it and do not change at all T/F
Reason ________________________________________________________________________________
2.2 Careful and detailed business planning can eliminate the risk of business failure T/F
Reason ________________________________________________________________________________
3.1 Which two of the following are least likely to help a business achieve a successful start-up?
a) A flexible business plan that allows for changes in the market
b) An owner who keeps everything in his head, to avoid any paperwork
c) Avoid borrowing money from banks and other lenders
d) Coming up with ideas to add greater value to products
e) Regular market research

3.2 Which three of the following are essential to business start-up success?
a) A booming economy
b) Good luck
c) A clear focus on customer needs
d) A unique idea
e) Sufficient finance
f) Unlimited liability
4. Short answer questions. Read the passage below and answer the questions that follow:
Tyrrell’s Potato Chips was set up by Herefordshire potato farmer, Will Chase, in 2002. His idea was to move away from
relying on a low value-added product to producing a high value, premium brand of gourmet crisps. All stages of production were
carried out in converted farm buildings, using farm potatoes in order to guarantee high levels of quality. He raised the £2.5
million required to get the business up and running by using personal finance and taking out a bank loan.
By 2005, the company was making sales turnover of £3.5 million and profits of £1.5 million. By 2007, revenue had increased to
£14 million, with the company continuing to generate high profit margins and selling crisps in 34 countries. In 2008, Will sold a
75% share of his company for over £40 million, using some of the money to start up a new business.
4.1 State two pieces of evidence that support the view that Tyrrell’s is a successful company:
______________________________________________________________________________________
______________________________________________________________________________________
4.2 Give two possible reasons why Tyrrells has been so successful:
______________________________________________________________________________________
______________________________________________________________________________________
94. Supply and Demand
1. Missing words
_________________ refers to how much of a product or service is customers want to buy at a given price.
_______________ refers to the amount of a product or service that a producer is willing to produce at a given
price. Where demand and supply are in balance, the ______________ of an item is fairly stable. This is called
market ____________________. This can be shown on a demand and supply diagram. The price of different
products and services will __________________ according to the balance between supply and demand.
Words from: Price, Change, Supply, Demand, Equilibrium
2. Supply and Demand diagram
P1
P2
Q2 Q1
a) Label the demand and supply diagram accurately using the following words: equilibrium, price, demand,
quantity, supply
b) At P1Q1 there is too much demand / supply (circle the correct answer)
c) At P2Q2 there is too much demand / supply (circle the correct answer)
3. Multiple Choice
A local supermarket orders 200 trays of eggs each week from a local farmer and sells them at a price of £6 per case.
At the end of the first week, they have only sold 160 trays. What situation is the supermarket facing and what will
have to happen to price in order to achieve equlibrium?
a) surplus; price will rise.
b) surplus; price will fall.
c) shortage; price will rise.
d) shortage; price will fall.
e) nothing since the market is in equilibrium.
4. Data response. The following table shows the daily supply and demand for burgers at a local burger bar.
Price (£) Quantity Demanded Quantity Supplied

2.10 800 7200
1.80 1600 4800
1.60 2400 2400
1.40 3200 800
1.20 4100 200
4.1 What is the equilibrium price? What makes you think this?________________________________________
______________________________________________________________________________________
4.2 If the burger bar owner set the price at £1.80, how many burgers would be sold each day? ________________
4.3 Apart from price, outline one other factor that might affect the demand for burgers at this burger bar.
______________________________________________________________________________________
95. Training
1. Missing Words
Training is important in any successful business and many businesses invest a lot of ______________ in training
their staff. Training is provided for a number of reasons. These include; increasing workforce _______________ to
boost the quality of the work, to learn about new technology that the business may be introducing and to
_______________ workers who may have been in the business for a long time. Many businesses recruit new staff
for their _____________ rather than their skills and therefore initial induction training has to focus upon essential
work skills such as IT. Words from: attitudes, retrain, skills, money
2. Induction, on the job or off the job?
Are the following examples of Induction, on-the-job or off-the-job training?
a) A new employee needs to know about the history of the business
b) An employee has to be trained on a new machine that will arrive in 8 weeks
c) An employee needs to be retrained to operate an existing machine in the company
d) An employee in his second week needs to know about the health and safety policies of the business
e) An employee needs to gain a higher qualification and his employer will pay for training outside of work
3. Advantage or Disadvantage?
Place the following in the correct column in the table. You may wish to place some answers in more than one box.
a) Expensive b) Cheap c) Ensures workers are familiar with the business
d) Application of skills e) Builds skills f) Delivered by specialists
g) Workers are not productive while training h) Motivating for workers
i) Can take place outside of working hours j) Can lead to qualifications
k) The person training is not productive while training
TYPE OF TRAINING ADVANTAGE DISADVANTAGE

Induction
On the Job
Off the Job
4. Data Response
Steve owns his own hotel in a small seaside town. He employs 10 staff including 2 chefs, 2 waitresses, 2 cleaners, and
a receptionist.
a) Identify two skills Steve needs in order to run his restaurant successfully. _________________________
______________________________________________________________________________________
b) Steve ensures that all of his staff are trained on a regular basis. For each of the employees mentioned above,
state the skills that they would need to be trained in. For each skill, suggest whether on-the-job or off-the-
job training would be better for teaching/updating these skills.
______________________________________________________________________________________
______________________________________________________________________________________
c) Outline two benefits to Steve from having well-trained staff
______________________________________________________________________________________
______________________________________________________________________________________
d) What are the benefits to Steve’s employees of receiving training from their employer?
______________________________________________________________________________________
______________________________________________________________________________________
96. Treating Staff Fairly
1. Missing words
A business cliché is for a boss to say: ‘Our staff are our greatest _____________’. In fact, it at least should be true.
It’s clear that Liverpool FC means little without players and a top manager. Even in a Tesco store, a good store
manager can generate 20% higher profit than a weak one – largely through the ______________________ and
organisation of staff. So a boss who treats staff unfairly is risking a huge amount. In Autumn 2009 the Post Office was
in turmoil as postmen went on official and unofficial ____________________ to protest at pay cuts amounting to
£80 a week. They contrasted their treatment with Chief Executive Adam Crozier’s £3 million pay package in 2008.
Staff who feel unfairly treated rarely stay in a job for long.
Choices: strikes, asset, motivation
2. Exam-style questions. Look at this graph then answer the questions below.
% of staff leaving each year - Asco Stores

50%
45%
40%
35%
30%
Derby
25%
20% Nottingham
15%
10%
5%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009
2.1 Identify two correct statements from the following:

a) The Nottingham store enjoyed improving figures up until 2003. Since then they’ve got worse.
b) Derby’s figures for staff leaving have risen to worrying levels in the period 2007-2009.
c) Derby’s figures for staff leaving have improved by leaps and bounds since 2001.
d) It looks like an impressive new manager was appointed to Nottingham in 2003.
e) Both Derby and Nottingham seem to have a very poor record for staff leaving.
2.2 Which are the two most likely explanations for the trend at Nottingham between 2003 and 2009?
a) The Notts manager brought in a scheme that allows staff to work longer per day to create more days’ off.
b) Nottingham enjoyed a boom up until 2008, with lots more stores opening.
c) A new, highly paid H.R. manager was appointed at Nottingham in 2007.
d) The Nottingham branch has developed a reputation for being a really nice place to work.
e) The store manager at Nottingham has been receiving big pay rises every year since 2003.
3. Give two reasons why:

3.1 A business might benefit from a generous policy of time-off for couples with a new baby __________________
______________________________________________________________________________________
3.2 Senior managers should not pay themselves bigger % pay rises than are being paid to staff _________________
______________________________________________________________________________________
3.3 Treating staff fairly will eventually lead to better quality recruits_____________________________________
______________________________________________________________________________________
97. Unit 1 Revision 1. – Objective Test Questions
1. When calculating this month’s net cash flow, which one of the following would not be included as part of a firm’s
total payments?
a) Cost of supplies, bought this month on credit
b) Weekly wages paid to staff
c) The cost of buying new computer equipment
e) Fees paid to a firm of accountants
2. In which two of the following situations is a business least likely to produce a business plan?
a) At start up, in order to attract investors
b) At start up, in order to obtain a bank loan
c) During negotiations with staff over wage increases
d) During a period of cash flow problems in order to secure an overdraft
e) When it has just been declared insolvent
3. Which one of the following statements gives the best definition of deliberate creativity?
a) The ability to inspire employees to do what you want.
b) The ability to organize resources in order to set up and run a business effectively.
c) The ability to follow a logical thought process in order to generate ideas.
d) The ability to listen to others before making a decision.
e) The ability to turn a good idea into a brilliant one.
4. Which two of the following would be likely reasons why a firm would use primary research to find out more
about customer needs?
a) The firm has very limited financial resources and understanding of marketing techniques.
b) Existing customer needs have not changed significantly for a number of years.
c) The firm is looking to target a new segment of the market in which it operates.
d) The firm needs the information immediately and cannot afford to wait.
e) The firm has developed a new version of an existing product and wants to test the reaction existing customers.
Are these statements true or false? Write a T or an F on the space provided.

5. Net cash flow is equal to a firm’s total revenue minus total costs ______
6. Net cash flow is the sum of a firm’s cash inflows and cash outflows ______
7. Net cash flow is the difference between a firm’s cash inflow and cash outflow ______
8. Study the information in the following table and answer the question that follows:
Price of cocoa Demand for cocoa Supply of cocoa
($ per tonne) (in tonnes) (in tonnes)
500 1 5
400 2 4
300 3 3
200 4 2
100 5 1
Based on the information above, which two of the following statements are true?
a) At a price of $500, there is likely to be a shortage of cocoa.
b) At a price of $400, there is likely to be excess supply of cocoa
c) At a price of $200, there is likely to be a shortage of cocoa
d) At a price of $100, there is likely to be an excess supply of cocoa
e) At price of $200, demand and supply of cocoa are likely to be the same.
98. Unit 1 Revision 2. – Objective Test Questions
1. A small firm manufactures hand-cooked, gourmet style potato snacks which are sold by retailers at a price level
significantly above the market average. Which two of the following would be most likely to contribute to an
effective marketing mix for the product?
a) Securing deals to stock the snacks with up-market supermarkets Waitrose and Booths
b) Reducing the price significantly in order to compete against bigger manufacturers like Walkers
c) Regularly running an advertising campaign on national TV at peak viewing times
d) Choosing potato varieties that have the best taste and are grown organically
e) Choosing potato varieties that are cheap in order to keep costs as low as possible. ANS = ______________
Appleyards is a garden maintenance business.

2. Select two variable costs that Appleyards might have.
a) Fuel for lawnmower
b) Advertising
c) Skip hire for rubbish disposal
d) Rent unit for garden equipment storage
e) Loan repayment for van
f) Insurance ANS = _______________
3. Select two most likely reasons why Appleyards may want to forecast their costs.
a) To calculate how much to charge for their service.
b) To monitor their cash levels
c) To decide how much to pay their staff
d) To estimate potential profit.
e) To know how many lawns to mow. ANS = _______________
4. Which two of the following are not likely to be included in the customer research for a new delicatessen?
a) Watching groups of shoppers in local supermarkets and recording what they buy.
b) Asking suppliers for their experience dealing with local supermarkets.
c) Asking friends and family to fill in a questionnaire about their opinion of local supermarkets.
d) Finding out information on importing French wine and cheese from the Internet.
e) Attempting to assess the likely level of demand by carrying out a street survey.
5. Match each of the definitions on the left to the correct key term on the right. Draw arrows to link left and right.

1. Where sales in a market are dominated by one a) Commodity
supplier. b) Demand
2. The quantity of a good or service that a firm is willing c) Market
to produce.
d) Monopoly
3. Where the supply of a product exceeds the demand
for it e) Price
4. Any situation where buyers and sellers of a product f) Shortage
come together. g) Supply
5. A product for which all supplies are similar or the h) Surplus
same.
6. Which two of the following statements about supply are true?

a) A shortage of supply of a commodity will lead to a fall in its price.
b) An increase in the price of a product may lead to an increase in the number of firms producing it.
c) A market in which supply is at the same level as demand over a long period of time is likely to have relatively
stable prices.
d) A monopoly supplir has no control over the price it charges for its products.
e) An increase in the demand for a product will lead to an immediate increase in supply.
99. Unit 3 Revision Test 1.
1.1 Which one of the following would be most likely to improve a firm’s cash flow in the short term?
a) Agreeing to increase existing customers’ credit terms from one month to three months in order to win new sales.
b) Buying additional stocks from suppliers in order to take advantage of discounts being offered for cash purchases.
c) Getting suppliers to agree to extend credit periods from one month to two months.
d) Reducing prices in order to attract credit sales from new customers ANS = ______________
1.2 State two ways in which a firm’s cash flow can suffer during an economic slowdown or recession.
______________________________________________________________________________________
______________________________________________________________________________________
2.1 Which one of the following is most likely to be seen as a problem to a newly-set up business from an increase in
the rate of the national minimum wage?
a) Staff vacancies may be filled more quickly as more people are willing to work.
b) Sales revenue may not be high enough to cover the costs, leading to an increase in borrowing.
c) Existing staff may work harder, increasing productivity.
d) The number of staff leaving to join other businesses may fall. ANS = _______________
2.2 State two ways in which workers may benefit from a rise in the National Minimum Wage
______________________________________________________________________________________
______________________________________________________________________________________
3. Break even key formulae – fill in the gaps
3.1 Total revenue = _________________ x quantity sold
3.2 Total costs = Fixed costs + ______________________
3.3 Break even point = ______________________ / contribution per unit (price – variable cost per unit)
3.4 Margin of safety = current output – ___________________________
Hint: words from – sales price, variable costs, fixed costs, break-even output.
4.1 Which one of the following is likely to create a barrier to effective communication?
a) If the person sending the message uses jargon or technical language.
b) If the person sending the message makes every effort to explain themselves clearly.
c) If the person sending the message uses an appropriate medium.
d) If the person receiving the message has the opportunity to send feedback. ANS = _______________
4.2 State two ways in which workplace communication can affect workplace efficiency
______________________________________________________________________________________
______________________________________________________________________________________
5.1 Which one of the following can not be called a damaging environmental effect of business activity.
a) Global warming
b) Resource depletion
c) Recycling
d) Deforestation ANS = _______________
5.2 State two actions a supermarket could take to avoid actions by environmental pressure groups
______________________________________________________________________________________
______________________________________________________________________________________
100. Unit 3. Revision Test 2.
1. Data response
David is a mechanic who runs a successful local garage. His work involves servicing and maintaining cars. He has
recently seen a slight drop in demand for his services after a competitor opened up 2 miles away. He is also
concerned about a mechanic he employed recently. Since employing him, a number of customers have had problems
after having their car serviced. David is aware of the need to focus on quality of service if he is to avoid losing even
more custom.
1.1 Suggest two ways David can improve quality in his garage _________________________________________
______________________________________________________________________________________
1.2 Outline one way customers can judge quality in a business such as a garage
______________________________________________________________________________________
______________________________________________________________________________________
1.3 David has decided to introduce a quality assurance system in his garage. Explain how he could set about doing
this.
______________________________________________________________________________________
______________________________________________________________________________________
2. Look at the break-even chart for Dave’s Deli, then answer the questions below.
£s
Break-even chart for Dave's Diving School
120000
100000
80000 Revenue
Variable costs
60000
Fixed costs
40000 Total costs
20000
0
0 200 400 600 800 Output (units)
2.1 What is the break-even output level for Dave’s Diving School? _____________________________
2.2a) What revenue is created by sales of 400 units? ____________________________
2.2b) What profit does Dave get if there are sales of 400 units? _________________________
2.3 Dave is thinking of moving to cheaper premises for his diving school. Explain the impact that would have on the
break-even chart.
______________________________________________________________________________________
3. Andrew is due to open his new private limited estate agent business. He will employ two full time members of
staff. In addition he will hire a temporary worker on a daily basis as and when he needs one. This will be to help with
administration and if the office gets busy at weekends.
3.1 Suggest an appropriate package of payment and fringe benefits for:
a) The 2 full time members of staff ____________________________________________________________
b) The temporary worker___________________________________________________________________
c) Andrew as owner/manager ________________________________________________________________

3.2 Andrew decides to pay his full time staff on a commission basis. They receive around £500 for each house they
sell. Outline one positive and one negative impact on Andrew’s business of choosing this as a payment method.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________

Questions Complete

Cargado por

Información del documento

Derechos de autor

Formatos disponibles

Compartir este documento

Compartir o incrustar documentos

Opciones para compartir

¿Le pareció útil este documento?

¿Este contenido es inapropiado?

Copyright:

Formatos disponibles

Questions Complete

Cargado por

Copyright:

Formatos disponibles

1.

2. Spot the brand:

3. Branding and differentiation – matching definitions

Definitions Key terms

1. The extent to which a product is seen to be a) Branding

4. Branding and differentiation – multiple choice questions

2.1 At an output level of zero the firm is making a loss of £2,000

3.1 The selling price charged by the firm is equal to:

2.1 What is Gentle Garments’ monthly revenue at present? ________________________

2.3 What is Gentle Garments’ margin of safety at the moment? ____________________________

3 Business cycle – multiple choice questions. Circle the right letters.

Definitions Key terms

Definitions Key terms

4. Financial objectives – true or false?

Hint: words from: job, not-for-profit, objectives, profit

3. True or False? (Write a T or F by each of the following statements)

Definitions Key terms

3. Business plan - multiple choice question:

Definitions Key terms

3. The part of Promotion that means spending money d) Place

3. Building the marketing mix – Spot the P:

2. Calculated risk – matching activity

3. Calculated risk – true or false?

4. Calculated risk – multiple choice questions

ii) Should he be concerned about this?

• Fixed costs (per month): £100,000

• Variable costs (per unit): £2.00

• Current output (per month): 50,000 units

a) £120,000 b) £150,000 c) £200,000 d) £300,000

Prove it: _________________________________________________________________________

a) £190,000 b) £200,000 c) £210,000 d) £220,000

Prove it: ___________________________________________________________________________

a) £160,000 b) £170,000 c) £180,000 d) £190,000

Prove it: ___________________________________________________________________________

4. Calculating total costs – true or false?

2.1 Profit = total costs – total revenue __________________________________________________

2.2 Sales revenue = sales price + quantity sold __________________________________________________

2.3 Total costs = fixed costs – variable costs __________________________________________________

3. Changing profit over time:

2007 250 500 ii) 175

2008 310 620 355 iii)

2009 400 iv) 400 340

Now, match the following answers to the questions below:

4. Calculating profit – true or false?

b) What’s the month’s profit at £60?___________________________________________________________

2. Improving cash flow: multiple choice questions:

2. Cash flow problems: multiple choice questions:

3. Cash flow calculations:

2.1 staff wages cash sales credit purchases office rent

2.2 credit sales owner’s capital loan repayment cash sales

Definitions Key terms

5. Explain two ways:

4. Multiple choice questions:

Definitions Key terms

3. Communication – one-way or two-way?

4. Communication - multiple choice questions:

% share of Pizza Takeaway in Bromley

Definitions Key terms

2. Identifying a consumer need that is not being met c) Consumer

3. Competition – strength or weakness

4. Competitor strengths and weakness - multiple choice questions:

a) Carrying out a competitor analysis guarantees success for a new business.

3. Competitive advantage – multiple choice questions

Definitions Key terms