GCSE Business Paper 4
Covers Enterprise and Entrepreneurship, Spotting a Business Opportunity, Business Aims and Objectives and 9 more.
Questions
Question 1 [3 marks]
Operations Management
Explain one drawback to a business of using flow production for a product with unpredictable, low demand.
Question 2 [3 marks]
Enterprise and Entrepreneurship
A qualified electrician earns 32000 pounds a year working for a large firm and is considering leaving to set up his own electrical contracting business.
Explain one opportunity cost the electrician gives up by leaving his job to start the business.
Question 3 [3 marks]
The Marketing Mix
Explain one reason why a new skincare brand might use social media influencers to promote its product rather than television advertising.
Question 4 [3 marks]
External Influences on Business
Explain one effect an economic boom, when the economy is growing strongly and consumer confidence is high, is likely to have on a business selling non-essential luxury goods.
Question 5 [3 marks]
Human Resources
Explain one benefit to a business of employing part-time staff rather than only full-time staff.
Question 6 [4 marks]
Spotting a Business Opportunity
A new gym is deciding how to segment its target market.
Explain two ways the gym could segment its customers to help target its marketing.
Question 7 [4 marks]
Cash Flow
A plumbing business forecasts the following for March: cash inflows of 6200 pounds, cash outflows of 7050 pounds, and an opening balance of 1400 pounds at the start of the month.
Calculate the net cash flow for March, and the closing balance at the end of March.
Question 8 [4 marks]
Profit and Financial Performance
A cafe's figures are shown below.
Year 1: revenue of 80000 pounds, net profit of 9600 pounds.
Year 2: revenue of 95000 pounds, net profit of 9500 pounds.
Calculate the net profit margin for each year, and state which year shows better financial performance in percentage terms.
Question 9 [5 marks]
Quality and Supply Chains
A window frame factory produces 1800 units a week. Before staff training, 5 percent of units were found to be faulty, at a cost of 12 pounds of wasted material per faulty unit. After training, the faulty rate falls to 2 percent.
Calculate the weekly cost of wasted material before training, the weekly cost of wasted material after training, and state how the cost has changed as a result of the training.
Question 10 [5 marks]
Human Resources
A call centre employs 80 staff. During the year, 12 staff leave and are replaced.
Calculate the labour turnover rate as a percentage.
It costs the business 650 pounds on average to recruit and train each replacement. Calculate the total annual cost of staff turnover.
Question 11 [5 marks]
Business Ownership and Growth
A successful sole trader is considering forming a 50-50 partnership with a friend, sharing all future profits and decisions equally.
Explain two drawbacks to the sole trader of forming this partnership.
Question 12 [6 marks]
Business Aims and Objectives
A small brewery's objective has been survival, and it broke even in year 2, with revenue of 180000 pounds and total costs of 178000 pounds.
For year 3, the owner sets a new objective: a net profit margin of at least 10 percent, on forecast revenue of 220000 pounds and forecast total costs of 198000 pounds.
Calculate whether the year 3 forecast would meet the 10 percent net profit margin objective, and evaluate whether setting this objective now is realistic for the brewery.
Question 13 [6 marks]
Break-even Analysis
A small brewery's taproom has fixed costs of 7000 pounds per month. Each pint sells for 5 pounds and costs 1.50 pounds in ingredients.
The taproom has seating and staffing capacity to serve a maximum of 3000 pints a month.
Calculate the break-even output, and evaluate whether the brewery should proceed with the taproom given this maximum capacity.
Question 14 [6 marks]
Quality and Supply Chains
A fashion retailer is choosing between two overseas fabric suppliers. Supplier A is the cheapest option but has a poor record on worker conditions. Supplier B costs 12 percent more but is independently certified as treating its workers fairly.
Evaluate whether the retailer should choose the more expensive, ethically certified Supplier B.
Model solutions
| Question 1[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that flow production is designed to make identical items continuously in very large quantities | B1 |
| developing this, such as the business risking producing far more stock than it can sell if demand is low or uncertain | B1 |
| concluding that this ties up cash in unsold stock and could lead to waste, especially for perishable items | B1 |
| Final answer: Flow production makes very large quantities continuously; with low or uncertain demand, the business risks producing more than it can sell, tying up cash in unsold stock | |
| Question 2[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying an opportunity cost, such as the guaranteed 32000-pound salary | B1 |
| developing it, such as this being the next best alternative given up by choosing self-employment | B1 |
| linking this to the electrician needing the new business to eventually replace or exceed this income | B1 |
| Final answer: The opportunity cost is the guaranteed 32000-pound salary given up, the next best alternative, which the new business must eventually replace or exceed | |
| Question 3[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that influencer marketing costs far less than television advertising | B1 |
| developing this, such as reaching a targeted audience who already follow and trust that influencer, suiting the brand's likely younger target market | B1 |
| concluding that this gives good value for a new business's likely limited marketing budget | B1 |
| Final answer: Influencer marketing costs far less than television advertising and reaches a targeted, already-engaged audience, giving good value for a new business's limited marketing budget | |
| Question 4[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that consumer confidence and income tend to rise during a boom | B1 |
| developing this, such as customers being more willing to spend on non-essential, luxury items rather than only essentials | B1 |
| concluding that this is likely to increase the business's sales revenue and profit during the boom | B1 |
| Final answer: Rising consumer confidence and income during a boom make customers more willing to spend on non-essential luxury items, increasing the business's sales revenue and profit | |
| Question 5[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that part-time staff let the business match staffing more closely to when it is actually busy | B1 |
| developing this, such as avoiding paying full-time wages during quieter periods when there is not enough work to justify them | B1 |
| concluding that this reduces overall wage costs while still covering the busiest times adequately | B1 |
| Final answer: Part-time staff let the business match staffing to its busiest times, avoiding paying full-time wages during quieter periods and reducing overall wage costs | |
| Question 6[4 marks] | |
|---|---|
| Answer or working | Marks |
| identifying a segmentation method, such as age | B1 |
| developing it, such as offering different class types or pricing for younger adults compared with older members | B1 |
| identifying a second method, such as income or socio-economic group | B1 |
| developing it, such as setting membership prices and payment plans that suit that group's disposable income | B1 |
| Final answer: Two developed methods, such as segmenting by age to vary class types and pricing, and by income to set membership prices and payment plans | |
| Question 7[4 marks] | |
|---|---|
| Answer or working | Marks |
| net cash flow = 6200 minus 7050 | M1 |
| a net cash flow of negative 850 pounds | A1 |
| closing balance = 1400 plus the net cash flow | M1 |
| a closing balance of 550 pounds | A1 |
| Final answer: Net cash flow = negative 850 pounds; closing balance = 550 pounds | |
| Question 8[4 marks] | |
|---|---|
| Answer or working | Marks |
| calculating each year's margin as net profit divided by revenue, multiplied by 100 | M1 |
| a Year 1 margin of 12.0 percent | A1 |
| a Year 2 margin of 10.0 percent | A1 |
| concluding that Year 1 shows better performance, since it converted more of each pound of revenue into profit | B1 |
| Final answer: Year 1 margin = 12.0 percent; Year 2 margin = 10.0 percent; Year 1 shows better performance, converting more of each pound of revenue into profit | |
| Question 9[5 marks] | |
|---|---|
| Answer or working | Marks |
| 5 percent of 1800 | M1 |
| 90 faulty units before training, costing 1080 pounds | A1 |
| 2 percent of 1800 | M1 |
| 36 faulty units after training, costing 432 pounds | A1 |
| correctly stating that weekly wasted material cost has fallen by 648 pounds as a result of the training | B1 |
| Final answer: Cost before training = 1080 pounds a week; cost after training = 432 pounds a week; a fall of 648 pounds a week | |
| Question 10[5 marks] | |
|---|---|
| Answer or working | Marks |
| dividing 12 by 80 | M1 |
| multiplying the result by 100 | M1 |
| a labour turnover rate of 15 percent | A1 |
| multiplying 12 by 650 pounds | M1 |
| a total annual cost of 7800 pounds | A1 |
| Final answer: Labour turnover rate = 15 percent; total annual cost of staff turnover = 7800 pounds | |
| Question 11[5 marks] | |
|---|---|
| Answer or working | Marks |
| identifying a drawback, such as having to share the business's future profits equally with the partner | B1 |
| developing it, such as this reducing the sole trader's own personal income compared with keeping all the profit herself | B1 |
| identifying a second drawback, such as no longer having sole control over business decisions | B1 |
| developing it, such as disagreements with the partner potentially slowing decisions or causing conflict | B1 |
| a concluding link, such as these drawbacks needing to be weighed against the benefits, such as shared workload, before forming the partnership | B1 |
| Final answer: Two developed drawbacks, such as having to share future profits equally, and losing sole control over decisions, both needing to be weighed against benefits such as shared workload before forming the partnership | |
| Question 12[6 marks] | |
|---|---|
| Answer or working | Marks |
| net profit = 220000 minus 198000 | M1 |
| 22000 pounds | A1 |
| dividing 22000 by 220000 and multiplying by 100 | M1 |
| a net profit margin of 10.0 percent, exactly meeting the objective | A1 |
| identifying that this relies on the revenue and cost forecasts being accurate, and forecasts often differ from actual results, particularly for a business with only two years of trading history | B1 |
| a justified conclusion recommending caution, since the forecast only just meets the target and the brewery has limited trading history to base it on | B1 |
| Final answer: Net profit = 22000 pounds; net profit margin = 10.0 percent, which exactly meets the objective; a justified judgement recommending caution given the brewery's limited trading history and how narrowly the forecast meets the target | |
| Question 13[6 marks] | |
|---|---|
| Answer or working | Marks |
| contribution per pint = 5 minus 1.50 | M1 |
| dividing the fixed costs of 7000 by the 3.50-pound contribution | M1 |
| a break-even output of 2000 pints | A1 |
| identifying that 2000 pints is comfortably below the 3000-pint capacity, giving a margin of safety of 1000 pints | B1 |
| developing this, such as the margin providing a reasonable buffer for weeks when footfall is lower than average | B1 |
| a justified conclusion recommending the taproom proceed, provided realistic footfall estimates support demand near or above break-even | B1 |
| Final answer: Break-even = 2000 pints per month, comfortably below the 3000-pint capacity, giving a margin of safety of 1000 pints; a justified recommendation to proceed if realistic footfall supports this demand | |
| Question 14[6 marks] | |
|---|---|
| Answer or working | Marks |
| a point in favour of Supplier B, such as reducing the risk of reputational damage if Supplier A's poor conditions became public | B1 |
| developing it, such as increasingly ethically-conscious customers being willing to pay more for products from an ethically certified supply chain | B1 |
| a point against, such as the 12 percent higher cost reducing profit margins unless prices are raised | B1 |
| developing it, such as this making the retailer less price-competitive against rivals who use cheaper, uncertified suppliers | B1 |
| a further factor, such as the retailer's own brand values and how central ethical sourcing is to its marketing | B1 |
| a justified conclusion weighing the reputational protection and ethical appeal of Supplier B against its higher cost | B1 |
| Final answer: A justified judgement weighing the reputational protection and ethical appeal of choosing Supplier B against its 12 percent higher cost, related to the retailer's own brand values and price competitiveness | |