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Unit 3 - Revision QP

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0% found this document useful (0 votes)

11 views17 pages

Unit 3 - Revision QP

Uploaded by

Pooja Katyal

We take content rights seriously. If you suspect this is your content, claim it here.

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Download as DOCX, PDF, TXT or read online on Scribd

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1

1 Following the end of a recession in country X, Beena wants to start up a hairdressing business. One option
is to purchase a franchise from an established hairdressing business. Beena has $800 in savings and knows
having enough working capital will be important for her business. She plans to use market research to help
her decision-making. Beena knows there are many ways to segment a market.

Do you think it is always better for a start-up business to use primary market research, rather than secondary
market research, when making decisions? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
2

2 SSG manufactures mobile (cell) phones using batch production. Quality control is important. SSG has 130
employees who all receive on-the-job training. The Marketing Manager is analysing cost and output data
for
product X. An extract is shown in the table below. As product X is in the maturity stage of the product life
cycle SSG is considering possible extension strategies.

Extract from SSG’s cost and output data for product X

Rent and other expenses per month $300 000

Variable cost per unit $80

Output per month 12 000

Do you think adding new features to a product is the best extension strategy for a manufacturing business to
use? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
3

3 MTD manufactures specialist cleaning products including soap. Batch production is used. The business
uses
just-in-time inventory control. MTD took 18 months to develop its latest environmentally friendly cleaning
product. The Marketing Manager has to decide on the packaging and method of promotion for this new
product. She said: ‘All our stakeholders, including pressure groups, are important. MTD wants to
contribute
to sustainable development.’

Do you think using social media is the best way for a business to promote a new product? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]

4 Identify one beneﬁt and one cost to a business of developing new products.

Beneﬁt: ....................................................................................................................................................

..................................................................................................................................................................

Cost: ........................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
4

5 Pamela is a successful entrepreneur. She is the owner of a gift shop selling celebration cards, toys and
candy
(sweets). When Pamela started her business 30 years ago she had no help to manage the shop. She now has
5 employees. Pamela knows maintaining customer loyalty is important. She uses competitive pricing. Most
of her marketing budget is spent on sales promotion. Pamela does not use e-commerce.

Outline two possible threats to Pamela’s business of using e-commerce.

Threat 1: ..................................................................................................................................................

..................................................................................................................................................................

Threat 2: ..................................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]

6 MTD manufactures specialist cleaning products including soap. Batch production is used. The business
uses
just-in-time inventory control. MTD took 18 months to develop its latest environmentally friendly cleaning
product. The Marketing Manager has to decide on the packaging and method of promotion for this new
product. She said: ‘All our stakeholders, including pressure groups, are important. MTD wants to
contribute
to sustainable development.’

Outline two factors MTD should consider when deciding on the packaging for its new product.

Factor 1: ...................................................................................................................................................

..................................................................................................................................................................

Factor 2: ...................................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]
5

7 Pamela is a successful entrepreneur. She is the owner of a gift shop selling celebration cards, toys and
candy
(sweets). When Pamela started her business 30 years ago she had no help to manage the shop. She now has
5 employees. Pamela knows maintaining customer loyalty is important. She uses competitive pricing. Most
of her marketing budget is spent on sales promotion. Pamela does not use e-commerce.

Explain two methods Pamela’s business can use to maintain customer loyalty.

Method 1: ................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

Method 2: ................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
6

8 Nancy wants to be an entrepreneur. She has analysed market research data and decided to start up a book
shop. Nancy has identiﬁed a suitable location and prepared a business plan. Nancy is calculating her total
costs. She will use this information to help her complete a break-even chart as shown in the ﬁgure below.
Nancy is also considering using e-commerce.

Do you think the threats of e-commerce are greater than the opportunities for a new business? Justify your
answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
7

9 D2G is a driving school. Mattan started D2G 3 years ago to teach people to drive a car. As the business has
been successful Mattan plans to buy a new vehicle. He has been analysing D2G’s income statement. An
extract is shown in the table below. Mattan wants to understand the difference between proﬁt and cash. He
also wants to know how an increase in competition and changes in the business cycle might affect D2G.

Extract from D2G’s income statement for the year ending 31 December 2021 ($)

Revenue 20 000

Gross proﬁt 12 000

Proﬁt for the year 2000

Explain two ways D2G might respond to an increase in competition.

Way 1: ......................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

Way 2: ......................................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
8

10 SBG makes a range of products including specialist paints. It has 6 factories and 700 employees. All
SBG’s
employees are encouraged to be involved in decision-making. SBG’s products are 3 exported to 16
countries
using wholesalers as its main channel of distribution. The Managing Director said: ‘Our objectives are to
grow and make a proﬁt.’ He also recognises that all business activity creates externalities for SBG’s
stakeholder
groups.

Do you think using wholesalers is the best way for a large business to distribute its products? Justify your
answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
9

11 After identifying a gap in the soft drinks market, Jerome developed a low sugar drink. He borrowed $5 000
from family and friends to start-up a business and to provide working capital. Jerome operates as a sole
trader.
To promote his product, Jerome handed out free samples in the town centre. In the ﬁrst year, Jerome’s
business
sold 10 000 units. This is 200 units more than his break-even output. Jerome is considering ways to
increase
added value.

Do you think giving out free samples is the best method of sales promotion for a business to use when
promoting a new food product? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]

12 Deﬁne ‘marketing mix’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
10

13 Raul owns a small farm that grows oranges. His farm is based in country Z. Like all primary sector
activities,
farming creates external costs and external beneﬁts. Raul sells all 600 tonnes of his oranges direct to a
drinks
manufacturer in country E. The Government of country E plan to introduce either import tariffs or quotas.
Raul said: ‘This might help country E’s Government achieve one of its economic objectives but how will it
affect companies that export to country E?’

Explain two advantages to Raul’s business of selling direct to a manufacturer.

Advantage 1:.............................................................................................................................................

..................................................................................................................................................................

Explanation:.............................................................................................................................................

..................................................................................................................................................................

Advantage 2:.............................................................................................................................................

..................................................................................................................................................................

Explanation:.............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]

14 Deﬁne ‘customer loyalty’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
11

15 WYP is a business partnership. Greg and his 3 friends started the business 7 years ago. WYP make
eyeglasses
(spectacles) which are only sold through its website. The price of each pair of glasses is $95. This is $200
cheaper than its main competitor. Greg said: ‘It was difﬁcult at the start as we could not get trade credit. We
also knew it would take time to develop customer loyalty.’Greg thinks choosing the right method of
promotion
is important to the success of any new product.

Explain two possible problems for WYP of selling products at low prices.

Problem 1:................................................................................................................................................

..................................................................................................................................................................

Explanation:.............................................................................................................................................

..................................................................................................................................................................

Problem 2:................................................................................................................................................

..................................................................................................................................................................

Explanation:.............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]

16 Deﬁne ‘cost-plus pricing’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
12

17 Deﬁne ‘market segmentation’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

18 RJJ manufactures women’s shoes. It sells the shoes to a niche market using e-commerce. RJJ is a public
limited company and its shareholders benefit from limited liability. The Managing Director is planning to
expand the business. RJJ could take over a competitor. Last year profit decreased by $50 000. The Finance
Director has to decide on a source of finance to fund the expansion.

Outline two opportunities for consumers of using e-commerce when purchasing RJJ’s products.

Opportunity 1: .........................................................................................................................................

..................................................................................................................................................................

Opportunity 2: .........................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]
13

19 Gino owns a fast-food restaurant selling fried chicken and potato fries. He employs 5 full-time chefs and
12
part-time workers to serve the food. Communication is important and Gino has regular meetings with his
part-time employees to keep them informed about any changes in the menu. It took 3 years before Gino’s
business was able to break-even. He aims to achieve a Return on Capital Employed (ROCE) of 10%. Gino
is always looking for ways to increase the number of customers. Inﬂation may be a problem for Gino’s
business.

Explain two ways Gino could increase the number of customers.