Year 10 Paper 3: Running the Business
Enterprise and entrepreneurship, business aims and objectives, cash flow, the marketing mix and external influences on business.
Year 10 here means a typical teaching order, not a syllabus rule. No exam board defines what belongs to Year 10, and schools sequence the course differently. Check it against your own scheme of work before using it to decide what a class has covered.
Questions
Question 1 [2 marks]
Business Aims and Objectives
State two objectives, other than making a profit, that a new business might set in its first year of trading.
Question 2 [2 marks]
Cash Flow
State two differences between cash flow and profit.
Question 3 [2 marks]
External Influences on Business
State two examples of government legislation that could affect how a business operates.
Question 4 [3 marks]
The Marketing Mix
Explain one reason why branding, such as a distinctive logo and name, is an important part of a business's product.
Question 5 [3 marks]
Enterprise and Entrepreneurship
Explain one reason why being decisive is a useful characteristic for an entrepreneur running a new business.
Question 6 [4 marks]
Business Aims and Objectives
A driving school currently helps 40 pupils pass their driving test each year. Its objective is written as: to pass more pupils.
Rewrite this as a SMART objective that increases the number of pupils passing to 55 within 18 months, then calculate the percentage increase this target represents.
Question 7 [5 marks]
Cash Flow
A landscaping business forecasts the following for June: cash inflows of 8400 pounds, cash outflows of 9600 pounds, and an opening balance of 900 pounds at the start of the month.
Calculate the net cash flow for June and the closing balance at the end of June. The business has an agreed overdraft limit of 1000 pounds; calculate how much of this overdraft limit remains unused at the end of June.
Question 8 [5 marks]
Business Aims and Objectives
A family-owned garden centre has always balanced modest profit with an objective of supporting the local community, such as running free gardening workshops for schools.
Explain two reasons the family might continue to prioritise this social objective, even though a purely profit-focused garden centre could probably earn more.
Question 9 [5 marks]
The Marketing Mix
A new gourmet burger van wants to build repeat custom in the local area.
Explain two ways, other than price discounts, the van could use promotion to encourage customers to become repeat visitors.
Question 10 [5 marks]
Business Aims and Objectives
A clothing manufacturer is considering adding an objective to reduce the amount of water used in its dyeing process, even though this will increase costs in the short term.
Explain two reasons why the manufacturer might set this environmental objective.
Question 11 [6 marks]
Cash Flow
A building supplies merchant is considering offering 60 days' credit to trade customers for the first time, to compete with a rival merchant who already offers credit, even though the merchant currently sells everything for cash on collection.
Evaluate whether the merchant should start offering 60 days' credit to trade customers.
Question 12 [6 marks]
The Marketing Mix
An established brand of savoury snacks, popular with older customers for over twenty years, is considering a bold rebrand of its packaging and advertising to attract younger customers.
Evaluate whether the brand should go ahead with this rebrand.
Question 13 [6 marks]
Cash Flow
A cafe's cash flow forecast is shown below.
March: opening balance of 400 pounds, inflows of 8000 pounds, outflows of 8300 pounds. April: opening balance equal to March's closing balance, inflows of 8600 pounds, outflows of 8100 pounds.
Calculate the closing balance for March and for April, and evaluate whether the cafe needs to take any action based on this forecast.
Question 14 [6 marks]
Business Aims and Objectives
A manufacturing business is considering cutting its workforce by 15 percent to reduce costs and increase profit for its shareholders.
Evaluate the likely conflict between the interests of shareholders and employees if this objective is carried out.
Model solutions
| Question 1[2 marks] | |
|---|---|
| Answer or working | Marks |
| a valid objective, such as survival | B1 |
| a second valid objective, such as building a customer base, gaining market share, or a social or ethical objective | B1 |
| Final answer: Any two of: survival, building a customer base, gaining market share, social or ethical objectives | |
| Question 2[2 marks] | |
|---|---|
| Answer or working | Marks |
| a valid difference, such as cash flow measuring money moving in and out day to day while profit measures total income minus total costs over a period | B1 |
| a second difference, such as a business being able to make a profit but still run short of cash because of timing differences such as credit | B1 |
| Final answer: Cash flow tracks money in and out day to day; profit is income minus costs over a period; a business can be profitable yet still short of cash due to timing, for example when it sells on credit | |
| Question 3[2 marks] | |
|---|---|
| Answer or working | Marks |
| a valid example, such as minimum wage law or health and safety law | B1 |
| a second valid example, such as consumer protection law, environmental regulations, or employment rights law | B1 |
| Final answer: Any two of: minimum wage law, health and safety law, consumer protection law, environmental regulations, employment rights law | |
| Question 4[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that branding helps customers recognise and remember the product among many competitors | B1 |
| developing this, such as building trust and loyalty over time, so customers choose it again without comparing every option each time | B1 |
| concluding that this can allow the business to charge a higher price than an unbranded alternative | B1 |
| Final answer: Branding helps customers recognise and remember a product, building trust and loyalty so they choose it again, and can support charging a higher price than an unbranded alternative | |
| Question 5[3 marks] | |
|---|---|
| Answer or working | Marks |
| identifying that a new business often needs quick decisions | B1 |
| developing this, such as there being no established procedures or senior colleagues for the entrepreneur to consult before deciding | B1 |
| concluding that being decisive lets the business respond to problems or opportunities before they are lost | B1 |
| Final answer: Decisiveness lets an entrepreneur respond quickly to problems or opportunities, without established procedures or senior colleagues to consult, before they are lost | |
| Question 6[4 marks] | |
|---|---|
| Answer or working | Marks |
| a rewritten objective stating the specific target of 55 pupils passing within an 18-month timeframe | B1 |
| calculating the increase = 55 minus 40 | M1 |
| dividing the increase by the original 40 and multiplying by 100 | M1 |
| a percentage increase of 37.5 percent | A1 |
| Final answer: Increase pupils passing from 40 to 55 within 18 months, a 37.5 percent increase | |
| Question 7[5 marks] | |
|---|---|
| Answer or working | Marks |
| net cash flow = 8400 minus 9600 | M1 |
| a net cash flow of negative 1200 pounds | A1 |
| closing balance = 900 plus the net cash flow | M1 |
| a closing balance of negative 300 pounds | A1 |
| calculating that 700 pounds of the 1000-pound overdraft limit remains unused | B1 |
| Final answer: Net cash flow = negative 1200 pounds; closing balance = negative 300 pounds; 700 pounds of the 1000-pound overdraft limit remains unused | |
| Question 8[5 marks] | |
|---|---|
| Answer or working | Marks |
| identifying a reason, such as building reputation and goodwill with the local community | B1 |
| developing it, such as this encouraging loyal repeat custom and positive word of mouth that supports sales in the long run | B1 |
| identifying a second reason, such as the personal values and satisfaction of the owning family | B1 |
| developing it, such as private owners being free to prioritise objectives beyond pure profit, unlike a business answering to outside shareholders | B1 |
| a concluding link, such as this showing that objectives are not purely financial and can reflect the priorities of the people who own the business | B1 |
| Final answer: Two developed reasons, such as building loyal local goodwill that supports sales long-term, and the family's own values, which as private owners they are free to prioritise over pure profit | |
| Question 9[5 marks] | |
|---|---|
| Answer or working | Marks |
| identifying a method, such as a loyalty stamp card, for example buy nine burgers and get the tenth free | B1 |
| developing it, such as giving customers an ongoing reason to return to this van rather than a rival while working towards the reward | B1 |
| identifying a second method, such as building a social media following posting the van's daily location and menu | B1 |
| developing it, such as keeping past customers informed and reminded, encouraging them to visit again next time the van is nearby | B1 |
| a concluding link, such as both methods building repeat custom without permanently lowering prices | B1 |
| Final answer: Two developed methods, such as a loyalty stamp card and a social media following reminding past customers of the van's location, both encouraging repeat visits without permanently lowering prices | |
| Question 10[5 marks] | |
|---|---|
| Answer or working | Marks |
| identifying a reason, such as improving the business's reputation with increasingly environmentally-conscious customers | B1 |
| developing it, such as this potentially increasing sales or allowing a premium price if marketed well | B1 |
| identifying a second reason, such as reducing the risk of future regulation or fines relating to water use | B1 |
| developing it, such as acting early meaning the change can be planned and its cost spread over time, rather than rushed later | B1 |
| a concluding link, such as this showing the objective can support the business's long-term position even though it raises short-term costs | B1 |
| Final answer: Two developed reasons, such as improving reputation with ethically-conscious customers and reducing the risk of future regulation, both supporting the business's long-term position despite the short-term cost | |
| Question 11[6 marks] | |
|---|---|
| Answer or working | Marks |
| a point in favour, such as attracting trade customers who need credit terms and currently buy from the rival merchant instead | B1 |
| developing it, such as this potentially increasing sales revenue and market share | B1 |
| a point against, such as cash coming in much more slowly, since payment is delayed by up to 60 days | B1 |
| developing it, such as this risking a cash flow shortfall if the merchant still has to pay its own suppliers quickly | B1 |
| a further factor, such as checking the creditworthiness of trade customers before offering credit, to reduce the risk of late or non-payment | B1 |
| a justified conclusion on whether the extra sales from offering credit are likely to outweigh the cash flow risk, related to the merchant's own cash position | B1 |
| Final answer: A justified judgement weighing the extra sales and competitiveness of offering 60 days' credit against the cash flow risk of delayed payment, related to checking customer creditworthiness and the merchant's own cash position | |
| Question 12[6 marks] | |
|---|---|
| Answer or working | Marks |
| a point in favour, such as the rebrand potentially attracting new, younger customers and keeping the brand relevant for the future | B1 |
| developing it, such as widening the total customer base beyond its currently ageing core market | B1 |
| a point against, such as risking alienating loyal, older customers who valued the familiar packaging and image | B1 |
| developing it, such as these existing customers making up a large, reliable share of current sales that could be lost | B1 |
| a further factor, such as researching younger customers' reactions first, or rebranding gradually rather than all at once | B1 |
| a justified conclusion weighing the potential to attract new customers against the risk of losing loyal existing ones | B1 |
| Final answer: A justified judgement weighing the potential to attract younger customers against the risk of alienating loyal existing customers, considering whether gradual change or prior research could reduce that risk | |
| Question 13[6 marks] | |
|---|---|
| Answer or working | Marks |
| March's net cash flow = 8000 minus 8300 | M1 |
| a March closing balance of 100 pounds | A1 |
| April's net cash flow = 8600 minus 8100 | M1 |
| an April closing balance of 600 pounds | A1 |
| identifying that the balance stays positive throughout, though it dips to a thin 100 pounds in March before recovering in April | B1 |
| a justified conclusion that no emergency action, such as an overdraft, is needed since the balance never turns negative, but non-essential March spending should still be watched closely given how thin the margin is | B1 |
| Final answer: March closing balance = 100 pounds; April closing balance = 600 pounds; a justified judgement that no emergency action is needed, but March's thin margin means spending should be watched closely that month | |
| Question 14[6 marks] | |
|---|---|
| Answer or working | Marks |
| identifying the shareholders' interest, such as wanting higher profit and dividends | B1 |
| developing it, such as cutting 15 percent of the workforce reducing wage costs and increasing profit available for dividends | B1 |
| identifying the employees' interest, such as wanting job security and fair treatment | B1 |
| developing it, such as the cuts directly threatening the jobs and income of affected staff and harming the morale of remaining staff | B1 |
| a further point, such as the effect on other stakeholders, or the long-term risk to shareholders if lower morale reduces productivity or quality | B1 |
| a justified conclusion on whether the short-term shareholder gain is likely to outweigh the employee and wider stakeholder cost | B1 |
| Final answer: A justified judgement weighing shareholders' short-term profit gain against employees' job security and morale, and the wider knock-on effects on stakeholders such as customers or the local community | |