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Business - 2017 Past Paper Questions and Answers (2c. Describe the costs…
Business - 2017 Past Paper Questions and Answers
1b (ii) Discuss the costs and benefits of using the method of distribution stated in (b)(i).
Road
Difficult to carry large amounts
Slower method of distribution compared with sea/rail/air
Cheaper than rail/air transport
Not environmentally friendly
Direct distribution
Increases pollution
Sea
Cheaper than rail/air transport
Large items can be transported
Slower method of transport than road/rail/air
Requires additional transport/not direct
Rail
Quicker than road/sea
Reduces carbon footprint
Large items can be transported
Requires additional transport/not direct
Air
Expensive method
Fast method of distribution
1a (i) Identify the methods used to promote the business
Shop/Shop premises
Branding
Website
Social Media
Restaurant reviews in newspapers
d. Compare the features of a private limited company to a sole trader.
A sole trader is owned by one person whereas a private limited company is owned by shareholders
Sole traders have unlimited liability whereas private limited companies have limited liability
A sole trader makes the decisions in a business whereas a managing director/board of directors/shareholders make decisions in a private limited company
Both belong to the private sector of the economy
A sole trader is run by an individual whereas a private limited company is run by a managing director/board of directors
Legal documents required on forming a private limited company whereas a sole trader does not require any formal paperwork
1a (ii) Explain the benefits of branding to the business
Customer loyalty which will lead to repeat purchases
Perception of quality which means customers will choose over rivals
Reduces spending on promotion/increases sales/increases profits
Ability to charge higher prices which leads to increased revenues/profits
Brand advertises/promotes the product which increases brand recognition
2a (i) From the case study, identify the markets targeted by iQ.
Beauty conscious
Chocolate Lovers
Health conscious
Ethical Buyers
Lifestyle
Organic Buyers
1b (i) State a suitable method that could be used to distribute the products to butchers across the UK.
Sea
Rail
Road
Air
c. Describe the effect of external factors on the business.
Competition
Rivals could try to steal customers from the business
Which would reduce sales/profits/market share
Technology
Social media increases customer awareness
Political
Will increase costs to provide these
Health and safety standards affect the business as they will have to provide safety equipment/clothing
Health and safety standards affect the business as they will have to train staff to follow guidelines
EU legislation protects the brand name
Reduces impact of competitors
Social
Change in taste can lead to increased/higher demand
2a (ii) Outline the benefits of target marketing for a business
Appropriate places to sell product will be chosen
Reduces likelihood of wasted investment in wrong product/promotions
Pricing strategy will be appropriate to target market
Can offer a range of products to suit different markets
Able to adapt product to suit target market
2b (i) Describe a suitable method of production for making iQ products
Flow production – where products are made in stages on a production line with processes being added at each stage
Batch production – where a group of identical products are made with all processes being carried out simultaneously
2b (ii) Discuss the costs and benefits of using the method of production described in (b)(i)
Batch
Batch Advantages
Batches can be customised which is meeting customers needs
Economies of scale gained
Large amounts can be made
Batch Disadvantages
Mistakes may lead to loss of whole batch
Equipment needs to be cleaned between batches
Careful production planning required
Expensive initial outlay for equipment
Flow
Flow Advantages
Economies of scale gained which causes lower cost per unity of production
Machines can work 24/7
Standardisation of quality of products
High quantity of products
Flow Disadvantages
Expensive initial outlay for equipment
Maintenance costs
Lack of output if machines are broken
2c. Describe the costs and benefits of having an ethical approach to sourcing and distribution of product
Helps business to meet government targets
Efficiency may fall, ethical distribution may reduce amount of deliveries
Costs of using ethical suppliers may be higher
Gives a competitive edge over rivals
Reduces environmental damage/pollution
Creates a positive image for the business/good CSR
More expensive to purchase environmentally friendly/hybrid vehicles eg LPG fuel/electric
2d. Explain how stakeholders identified in the case study can influence the business.
Suppliers
Can increase price which increased production cost
This reduces profit margins
Customers/Independant Retailers/Health Centres
Customer satisfaction will impact upon sales and revenues
Customer loyalty which means repeat purchases
Customer recommendations which leads to increased sales
Owners
Invest more money which can aid expansion
Make decisions this could affect product development