Theme 1 Exam Questions Flashcards
(6 cards)
4 Marks
Explain one benefit to Banjamin of forming a partnership.
Knowledge/understanding: 1 mark for knowing what is meant by partnership, e.g.
* A business which is usually owned by between 2 and 20 people
Application: up to 2 marks or contextualised examples, e.g.
* Benjamin convinced his brother Edward to form a partnership
* Edward invested £15,000 of his own savings, helping to avoid the need for loan finance
* Although the pair work long hours, the partnership allows them to work alternative
Saturdays
* A partnership will make it easier for Benjamin and Edward to take holidays as they can
cover for each other
Analysis: 1 mark for explaining the benefit of forming a partnership, e.g.
* The partnership allowed the twins to avoid loan finance and therefore the need for
expensive loan repayments which reduces the costs of the business
Knowledge 1 Application 2 Analysis 1
4 marks
Explain one chatracteristic Benjamin needs as an entreprenur.
Knowledge/understanding: 1 mark for knowing what is meant by entrepreneur, e.g
* Someone who starts a business and is willing to take a risk to achieve a reward, such
as profit.
Application: up to 2 marks for contextualised examples, e.g.
* Benjamin needs to be self-confident, e.g. that the business would be a success,
especially as he left a secure and highly paid job as a solicitor
* Benjamin needs to be self-motivated, especially as running the store involves working
long hours
* Benjamin needs to be persuasive, e.g. he convinced his brother James to form a
partnership and invest £15,000 of his own savings
Analysis: 1 mark for explaining the need of the characteristic, e.g.
* By being self-confident, Benjamin resigned from his secure job as a solicitor and is
subsequently earning more money from running the store than his previous
employment
Knowledge 1 Application 2 Analysis 1
4 marks
Explain one opportunity cost faced by Benjamin
Knowledge/understanding: 1 mark for knowing what is meant by opportunity cost, e.g.
* The next best alternative foregone when making a business decision
Application: up to 2 marks for contextualised examples, e.g.
* Benjamin does not have every weekend free as he did when he was a solicitor
* Benjamin doesn’t have the security of a regular income as he did when he was a
solicitor
* Benjamin may work longer hours than he did when he was a solicitor
Analysis: 1 mark is available for explaining the opportunity costs, e.g.
* Benjamin works every other weekend and long hours meaning that he may have less
time for other areas of his life, for example, his family, hobbies and interests
Knowledge 1 Application 2 Analysis 1
8 marks
Assess two difficulties Richard might have when developing from an entreprenur to a leader.
- Developing from an entrepreneur to a leader may be caused by an increase in
employees, customers and sales revenue - The pub has seen sales revenue increase by 45% and the number of staff increase by
600% - Richard will need to trust others within the pub and perhaps delegate more given the
increase in customers and staff within the business. This may cause difficulties as
previously Richard may be used to having a much more hands on roll, especially as
his previous pubs were small - To expand the business, Richard has taken on outside investment and now needs to
share ownership and control. This could be resented by Richard and he may find not
having 100% control over the direction of the pub difficult - Richard may find developing from entrepreneur to leader stressful, given that previously
the pub only employed 6 staff and therefore Richard has far more responsibility
Potential counterbalance
* The Eagle and Child Inn previously had 6 staff therefore Richard may be used to
delegating and trusting other people within the pub, albeit on a much smaller scale,
therefore minimising the difficulty
* Richard is the majority shareholder with 80% of the shares therefore he still maintains
overall control over the direction of the business
* Richard has a lot of experience within the pub trade and therefore may quickly adapt to
the transition from entrepreneur to leader
* Richard is considering appointing a general manager. This would allow Richard to
appoint someone with perhaps more leadership experience and alleviate some of the
difficulties associated with this transition
Knowledge 2, Application 2, Analysis 2, Evaluation 2
10 marks
Assess whether customer satesfaction needs to be the main business objective of Mears DIY and Pets Supplies.
- A business objective is a future target set by the business
- For a retailer in the tertiary sector, customer satisfaction may need be the main
business objective in order to differentiate themselves from larger rivals like Screwfix
and B&Q, especially as the business is in a local village - Their USP is exceptional customer service which is achieved by offering a friendly and
professional service to customers with free local delivery - Advertising is word-of-mouth therefore by satisfying customers it creates more
awareness within the village - Customer satisfaction may lead to customer loyalty which could result in repeat sales
- As a small business, they may not be able to compete on areas such as price and
product range, therefore customer satisfaction may be even more important
Potential counterbalance
* Survival could be a more important objective in the short term, especially given the
scale of competition within the DIY market
* Benjamin used to be a solicitor and earned a high salary. Profit maximisation may
therefore need to be the main business objective
* The brothers invested £15,000 each, therefore maximising profit may need to be the
main objective so that they can see a return on their investment
Potential judgement (conclusion)
* Customer satisfaction could be deemed to be the most important objective given that
this is one of the businesses USP’s. The brothers also enjoy the interaction with
customers and their reputation within the village
* Profit maximisation could be deemed to be the most important objective given that
Benjamin previously earned a high salary and the brothers invested £15,000 each into
the business
Knowledge 2, Application 2, Analysis 3, Evaluation 3
20 marks
Richard Timms is looking at opening a pizza takeaway and delivery business. Richard could set up his own independent business or buy a Papa John’s franchise.
Evaluate these two options and reccomended wich one Richard should choose to maximise profits.
Indicative content option 1
* An independent takeaway would enable Richard to set his own prices which could
reflect local conditions enabling the business to be more price competitive against rival
takeaway businesses
* An independent takeaway would enable Richard to set the menu, which could offer
a USP compared to other takeaways in the area e.g. Richard would be able to offer
pizzas and toppings which Papa John’s may not permit to franchisees. This creates
more customer satisfaction and revenue potential
* Without paying 10% of net sales in fees there is more potential for greater profit for
Richard
* Increased motivation for Richard due to more independence and control over decisions.
This could mean he is more willing to work longer hours and provide better service to
customers which again could boost revenue
* There would not be any initial fee of £18500 + VAT thus lowering costs with this option
Indicative content option 2
* The 5 week management training should enable Richard to be aware of how to
maximise the performance of his staff and how to prepare pizza to the best possible
standard. This can lead to improved customer satisfaction and greater revenue
especially as Richard currently has no experience within this industry
* Papa John’s is globally recognised, leading to much greater sales potential as some
customers may prefer to choose leading brands rather than unrecognised takeaways
* Strict quality and safety procedures from head office will mean that customers are
likely to have more consistent quality which could lead to repeat sales and word of
mouth promotion
* The huge national advertising budget created from the 5% of net sales ought to boost
potential customers and revenue
Potential recommendation (conclusion)
* Setting up an independent takeaway may be a better option as it allows Richard to
exert more control over the business than a franchise as well as avoiding the need to
pay 10% of net sales to Papa John’s
* Purchasing a Papa John’s franchise may be a better option given Richards lack of
experience in the industry, training programme and globally recognised brand
Knowledge 4, Application 4, Analysis 6, Evaluation 6
Franchise (2x paragraphs)
* Benefit
* However… is the drawnack point (2nd paragraph)
Independent (2x paragraphs)
* Benefit
* However… is the drawnack point (2nd paragraph)
Conclustion (reccomendation)
