GCSE Edexcel Business Studies – Unit 3: Building a Business3 marker questions
ANSWERS
Example points and answers!
Think about your structure!!!
Finance – June 2014
Possible drawbacks include:
• Higher cost.
• Much higher risk.
• May not get a loan due to size of the business.
• Interest rates could rise.
• Bank could ask for immediate repayment.
E.g. Ecovation is a small business and has only raised £2000 in share capital (1 mark). This makes it highly unlikely that any bank will lend Ecovation any money to allow them to expand (1 mark). This is because the business will be too much of a risk (1 mark).
Branding – June 2013
Possible advantages include:
Increased profit margins.
Ability to charge premium prices.
Customer loyalty.
More repeat purchases.
Increased likelihood of product trial.
Perceived higher quality.
E.g. The business can charge higher prices (1 mark). This is because the customer thinks that a branded product is better (1 mark), therefore they will pay more because it is more of a necessity to them (1 mark).
Marketing mix – June 2013
Possible benefits include:
Lower costs so profits increase.
Gives ability to lower prices.
Allows computers to be built around customers’ exact needs.
Enables the use of JIT system of stock control.
Increases efficiency of Dell.
E.g. Using the Internet gives Dell the ability to lower its prices (1 mark). This is because selling on the Internet is cheaper than having retail stores (1 mark) therefore Dell’s costs are lower (1 mark).
Managing Stock – June 2014
Possible drawbacks include:
• Loss of revenue/profit if unable to supply at short notice.
• Loss of productivity if components do not arrive.
• Damage to the brand if unable to supply at short notice.
• Increased costs of raw materials by not placing bulk orders.
E.g. Portakabin Limited prides itself on being able to build quickly (1 mark). If supplies do not arrive on time production may be halted (1 mark). This means Portakabin Limited might lose sales (1 mark).
Ethics – June 2010
Possible answers include:
• Better reputation/branding.
• Could allow Co-op to add value.
• Source of differentiation.
• Gives the Co-op a clear USP compared to other supermarkets.
• Focuses on a clear market segment.
E.g. Becoming an ethical business will improve the Co-op’s brand (1 mark), this will allow it to charge more for its products (1 mark), this is because consumers will be willing to pay more for food like coffee that does not exploit people in LEDCs (1 mark).
Motivation – June 2012
Possible answers include:
• Satisfies physical needs.
• Increases ability to buy goods and
services.
• Increases overall remuneration package.
• Makes Sainsbury’s a better place to work.
• Makes checkout staff feel more valued.
E.g. An increase in pay will make checkout staff feel more valued (1 mark). As a result workers will not apply for jobs at rival supermarkets such as Tesco (1 mark). It will also give them the ability to satisfy their physical needs (1 mark).
Productivity – June 2012
Possible benefits include:
• Lower costs per passenger.
• Ability to charge lower prices.
• Out-compete rival airlines such as BA and
Ryanair.
• More efficient use of planes.
• Ability to offer more services/routes.
E.g. Easyjet will be able to lower its average total cost (1 mark) since more output will be produced in an hour. This will then allow Easyjet to lower its prices (1 mark).