aqa gsce business - laurence jackson school

AQA GSCEBusiness

Question PaperPaper 2a

PRACTICE EXAM PAPER

AQA GCSE Business Practice Exam Paper 2a

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Write your name here

Centre Number Candidate Number

Surname

Practice paperTime: 1 hour 45 Minutes

You do not need any other materials Total Marks

Paper reference

Paper 2a

Other names

GCSE BusinessPaper 2a:

Materials For this paper you must have: • a calculator

Instructions • Use black ink or black ball-point pen • Fill in the boxes at the top of this page • Answer all questions • You must answer the questions in the spaces provided. Do not write outside the box, around each page or on blank pages • Do all rough work in this answer book. Cross through any work you do not want to be marked

Advice • The marks for each question are shown in brackets • The maximum mark for this paper is 90

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ANSWER ALL QUESTIONS IN THIS SECTION

AQA GCSE Business Paper 2aSection A

01.1 What are the features of a “question mark” or “problem child” in the Boston Matrix?

A High market share in a high-growth market B High market share in a low-growth market C Low market share in a high-growth market D Low market share in a low-growth marke

(1 mark)

01.2 Which of the following pricing methods involves setting an initially high price and then lowering it after a period of time?

A Cost-plus pricing B Loss leader pricing C Price penetration D Price skimming

(1 mark)

01.3 Conducting an in depth, face to face interview is an example of which type of market research?

A Quantitative, primary market research B Qualitative, primary market research C Quantitative, secondary market research D Qualitative, secondary market research

(1 mark)

Only one answer per question is allowed.

For each answer completely fill in the circle alongside the appropriate answer.

Correct method: Wrong methods:

If you want to change your answer you must cross out your original answer as shown.

If you wish to return to an answer previously crossed out, ring the answer you now wish to select as shown.

7 3


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01.5 Which of the following is not a solution to a cash flow problem?

A Increasing production

B Increasing the proportion of purchases made using credit

C Recovering debts from customers quicker

D Organising an overdraft

(1 mark)

01.6 Which of the following is a non-current asset?

A Inventories

B Machinery and equipment

C Payables

D Receivables

(1 mark)

01.4 Which of the following is an advantage of setting up a new business as a partnership?

A If one of the partners leaves, the business can carry on as normal

B If one of the partners runs up debts, these will be applied to all partners

C It can use a partnership agreement to sort out disputes

D It provides the owners with unlimited liability

(1 mark)

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01.7 Using Figure 1, identify the business with the highest and the lowest market share in March.

(2 marks)

Figure 1

45%

10%

15%

30%

Soopomarket

Megamarket

Hyposales

Cheaposales

Supermarket sales for March

Total March Sales = £40 million


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01.8 Explain one disadvantage to a business of using qualitative market research.

(2 marks)

01.9 Explain one reason why a start-up business may have liabilities.

(2 marks)

01.10 Explain one personal characteristic of a successful entrepreneur.

(2 marks)

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01.11 Explain one reason why producing financial statements would benefit a business.

(2 marks)

01.12 Explain one factor that would influence the location of a manufacturing business.

(2 marks)

01.13 Explain how using product differentiation could help a business to be successful.

(2 marks)

End of Section ATurn over for Section B


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ANSWER ALL QUESTIONS IN THE SPACES PROVIDED

Section B

Open All Hours is a traditional corner shop, owned by Ronnie Stores. It opens at 6am, when the newspapers arrive, and closes at 10pm when the last customers are heading home from an evening out. As well as stocking food and drink, it sells a wide range of household goods and gifts. The store also provides a local delivery service to its customers. For smaller deliveries, Open All Hours uses a bicycle, whereas for bigger orders, the owner’s van is used.

Although the shop has a large number of customers, each customer tends to spend very little money in store, buying often just a newspaper, a bottle of milk or some other item they have run out of at home. Customers then visit nearby supermarkets to complete their main weekly shop.

Ronnie, the owner, has recently decided to run a series of sales promotions in order to try and increase sales. His current ideas include: •Improvedwindowdisplays

•Moneyoffcoupons,giventocustomers,offering10%offtheirnextshop

•2for1offers

•Freesamplesoflocalproductsnotstockedbythesupermarket

In addition, Ronnie is planning to introduce some permanent price reductions on some basic goods, such as bread and milk. He also intends to stop selling such a wide range of household goods and gifts, as the sales of these products are very low.

02 Item A: Open All Hours

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02.1 Analyse one benefit to Ronnie of using sales promotion techniques.

(6 marks)


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02.2 Ronnie is aware that he should undertake some market research before he changes his product range and reduces his prices. He is considering the following options:

•Handingoutquestionnairestoallhisexistingcustomers.Everycompletedquestionnairewouldbe entered into a prize draw for a free box of chocolates

•Arrangingacoupleofeveningsatalocalhotel,whichwouldincludedinner,withsomeofhis existing customers that would act as a focus group

Recommend which is the better option for Ronnie to take. Give reasons for your advice.

(9 marks)

Question 2 continues on the next page

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Ronnie has recently been invited to run a stall at the local carnival where he would be able to sell hot pasties. These are a popular local product, which Ronnie has recently introduced in his shop.

If Ronnie goes ahead with the stall, he has calculated it would cost him £70 to employ an additional member of staff. He would also have to pay £100 to the carnival for the pitch and to use a heated display cabinet to keep the pasties in during the carnival. Ronnie knows that each pasty costs him 50p to buy from his suppliers, which he would then sell onto the carnival goers for £1. The carnival organisers have told Ronnie that he should sell 500 pasties, based on last years figures.

Using all of this information, Ronnie has decided to produce the following break-even chart, to help him determine whether it would be worth him having the stall:

Item B: Open All Hours

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02.3 Using the graph, identify the break-even output and margin of safety for the stall, assuming Ronnie sells 500 pasties.

(4 marks)

Break-even output =

Margin of safety =


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02.4 In the end, Ronnie decided to go ahead and run the stall at the carnival. He sold 460 pasties at £1 each and the last 40 pasties at 50p each. His costs were as expected.

Calculate the net profit margin for the pasty stall. State the formula used and show all your workings. Give your answer to two decimal places.

(5 marks)

Formula

Workings

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02.5 Ronnie has allowed some customers to have accounts at his shop. This means that they can take goods without paying. At the end of each month he sends these customers a bill, which he expects to be paid straight away.

Following an increase in unemployment in the area, Ronnie has noticed that there has been a rise in the number of customers having accounts and wishing to pay later for their shopping. Whilst these customers are important to the shop, this change is making Ronnie’s cash flow very difficult to manage and he has now arranged an overdraft on his bank account to cover the shortfalls in cash.

To overcome his cash flow problems more permanently, Ronnie is considering the following two options:

•Makeallcustomerspaywhentheyreceivethegoods

•Allowcustomerstopaylaterfortheirshopping,butarrangealoanwiththebank,ontopofthe overdraft he has already organised

Recommend which would be the better option for Ronnie to take. Give reasons for your advice.

(9 marks)


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End of Section BTurn over for Section C

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ANSWER ALL QUESTIONS IN THIS SECTION

Section C

Kellogg’s is the market leader in the competitive UK breakfast cereal market. It has a 37% market share and produces a wide range of products, including 25 different brands of cereal, cereal bars and snacks. The company’s aim is to produce products that meet consumer needs exactly, which can be bought in easy to access locations. Pricing and promotional methods are carefully chosen by Kellogg’s, to ensure they are best suited to each product’s target audience.

Recently Kellogg’s launched a new innovative promotional campaign, based on the very popular Crunchy Nut Cornflakes brand, in Manchester. This involved the company giving away bowls of cereal in 13 city centre restaurants. The firm served over 9,000 customers in 12 days and gave away over 8,000 50p-off coupons from their next purchase of Crunchy Nut. Many of these vouchers were used.

During this campaign, customers were invited to leave feedback on social media channels, such as Facebook and Twitter. As a result of this promotional campaign, Kellogg’s reached almost a million people, in addition to the 2 million shoppers who were made aware of it through free television coverage.

03 Item C: Kellogg’s

03.1 Explain why Kellogg’s chooses to spend money on promotional events such as free breakfasts.

(4 marks)


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Item This year ($million) Last year ($million)

Sales 13.53 14.58

Cost of Sales 8.63 9.27

Expenses 4.13 4.49

03.2 The following data is an extract from the end of year accounts for Kellogg’s worldwide operation.

Calculate the gross profit margin for this year. State the formulae used for gross profit and the gross profit margin. Show all your workings. Give your answer to two decimal places.

(5 marks)

Formulae

Workings

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Brand Price Taste test

Kellogg’s £1.75 ***

Morrison’s M-Saver 38p *

Tesco Own Brand 99p **

Whole Earth Organic £1.49 *

03.3 Recent market research into the price of cornflakes has shown that Kellogg’s is the most expensive brand for this type of cereal. Despite this, Kellogg’s still remains the market leader for this product and consistently has the best results in consumer taste tests.

Adapted from Basic Britain survey

Analyse the benefit to Kellogg’s of having a successful brand image for its cornflakes brand.

(6 marks)


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A recent report on Kellogg’s product portfolio, produced by the Kellogg’s marketing department, has illustrated how the Boston Matrix can be used to classify the different products in its product range. A simplified version, relating to some of Kellogg’s products, is shown in Figure 1:

Item D: Kellogg’s

Figure 1

Market share (%)

Market growth(%)

High Low

High Special KNutrigrain bars

All BranProtein Shakes

LowCornflakes

Rice KrispiesCrunch Nut Cornflakes

SmorzSource: US Marketing Weekly

03.4 Analyse the benefit to Kellogg’s of having a balanced product portfolio.

(6 marks)

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03.5 Explain two sources of finance that would be suitable for a company that wishes to expand its operation.

(4 marks)

Source 1

Source 2

Question 3 continues on the next page

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Kellogg’s has been making cereals for well over 100 years and has been manufacturing in the UK for nearly 80 years. The company is a both a big employer, based in Manchester, and one of the most familiar consumer brands in the UK.

Kellogg’s has recently introduced a policy seeking to ensure that its production process is as environmentally friendly as possible. This campaign has been called “thinking outside the box”, as it will result in its cereal boxes being 100% recyclable. Other areas included in the policy are minimising the use of water, energy and waste. Packaging is currently seen as a costly and wasteful area, particularly with certain products, such as cereal packs which may have three layers of wrapping.

Kellogg’s also has a very powerful marketing strategy spending over one billion dollars on its worldwide advertising. As well as the money spent on TV advertisements, the company invests a large amount of time and money on promotion through its packaging designs. This is especially important for its younger customers, who are encouraged to recognise characters linked to different products.

The last year has not been easy for Kellogg’s. The company is losing sales to healthy porridge type cereals and supermarket own brands. The company is also being affected by the reduction in birth rates in many developed countries. In 2016, the company also received a “caution” in the UK for health claims made in its TV adverts. Finally, Kellogg’s was criticised for the high salt/sugar content of some of its cereals and the heavy targeting of advertisements at children.

Item E: Kellogg’s


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03.6 Analyse the impact on Kellogg’s continued future success of its recent “thinking outside the box” campaign. You should consider:

•Marketingconsiderations

•Environmentalimplications

You must evaluate which of these areas will have the biggest impact on the company’s future success. Use evidence to support you answer.

(12 marks)

aqa gsce business - laurence jackson school

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