Understanding External Influences on Business (Edexcel GCSE Business)

Exam Questions

1 hour27 questions
11 mark

Which one of the following is a definition of an exchange rate?

Select one answer.

  • The flow of goods and services into a country

  • The value of one currency in terms of another currency

  • A tax on a particular good or service

  • When businesses operate on an international scale

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22 marks

Which two of the following areas are covered by employment law?

Select two answers.

  • Consumer rights

  • Discrimination

  • E-commerce

  • Health and safety

  • Quality of products

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32 marks

Case Study

Last Course Patisserie Ltd is a small private limited company based in Devon which produces hand-made desserts and puddings. The business was established in 1986. Its owners previously worked in the food industry but felt they could offer better value for money to customers. All of the desserts are made fresh to order which has provided Last Course Patisserie with a reputation for being flexible when meeting customer needs.

Getting the best ingredients for the desserts is a vital part of the business. Last Course Patisserie found excellent suppliers of free range eggs and dairy products close to its business location. This means all ingredients could be delivered quickly when needed.

Last Course Patisserie has recently employed a new head chef from Switzerland who has introduced a new range of products to the menu. This has proved to be very popular with customers and the business now struggles to keep up with demand. Last Course Patisserie is receiving increased orders for desserts but, due to the size of its business premises, struggles to meet this increase in demand. The owners have decided that it is the right time for Last Course Patisserie to expand and possibly relocate to new premises.

Outline one impact on a stakeholder group of Last Course Patisserie if it relocates to new premises.

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41 mark

Case Study

Aphrodite is a clothes shop that was formed in 1994 by two brothers, Andrew and Duncan McKenzie. They opened the shop because they had a lifelong enthusiasm for new fashion.

Andrew and Duncan visit Paris, Milan and London each year to buy their stock. They aim to buy well-known brands, such as Stone Island and Hugo Boss, and to also stock clothes from new designers. This range of stock helps provide them with an advantage over their competition.

Customer service has always been an important part of Aphrodite’s success. A polite and friendly attitude greets all customers on arrival at the shop. In 2007 the business launched its website, which sells its range of clothing using e-commerce. The owners looked to maintain existing high standards of service for customers using their website.

A new opportunity was created when the shop premises next to Aphrodite became available to buy. Andrew and Duncan are considering buying the shop in order to convert the two shops into one large premises. They have calculated that this will cost them £250 000 but are undecided on the best way to finance this.

Table 3 shows the value of the pound (£) in euros (€) from June to September.

Month

Number of euro (€)
per pound (£)

June

1.13

July

1.11

August

1.09

September

1.14

Table 3

Identify, from Table 3, which month was best for Aphrodite to import clothes from Paris.

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52 marks

Case Study

On Your Bike is a family owned business that first opened in London in 1983. Its customers include children buying their first bikes and scooters, through to experienced enthusiasts in road cycling and mountain biking.

The business offers a wide range of bikes, many imported from abroad. These include high quality brands such as Brompton, Cannondale and Ridgeback. It also stocks a wide range of clothing and helmets including brands such as Endura and Altura.

On Your Bike has large workshop facilities in its shop where qualified mechanics maintain and repair all makes of bike. All mechanics go on regular training courses to ensure they keep their skills and knowledge up to date with the latest cycling technology. This allows On Your Bike to offer exceptional customer service and advice.

The cycling market has grown over recent years. Market research has shown that an increasing number of tourists like to rent bikes when on holiday. In response to this, On Your Bike operates one of the largest bike rental services in London. Bikes can be hired by the day or week with a choice including road and electric bikes.

Outline one impact on On Your Bike of an increase in the value of the pound.

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61 mark

Case Study

Stand up paddleboarding is a sport which is similar to surfing but the riders use a paddle whilst standing on the board. Joe Thwaites opened Loco in 2012 as he spotted a gap in the market manufacturing stand up paddleboards (SUPs). Joe felt that he could compete using innovative designs and by changing the shape of the SUPs he made. He spent a few weeks in Fuerteventura, Spain, working with professional SUP riders where he developed designs for three Loco boards.

Since then Loco has surrounded itself with creative talent. This includes world class SUP shapers, graphic designers and team riders, who compete in competitions using its boards. Within months of its new SUPs becoming available, one of the team went on to win the British National Championship and represent Team GB in the World Championships.

Loco now sells an extensive range of SUPs, surf and kite boards throughout the UK and Europe and is ready to further extend its brand. Joe feels that the use of digital marketing using social media is vital in this growth. This combination of creative marketing and Joe’s active role in the business, by offering advice to customers, has provided him with a firm belief that Loco can compete against larger manufacturers.

State one stakeholder of Loco.

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71 mark

Case Study

Stand up paddleboarding is a sport which is similar to surfing but the riders use a paddle whilst standing on the board. Joe Thwaites opened Loco in 2012 as he spotted a gap in the market manufacturing stand up paddleboards (SUPs). Joe felt that he could compete using innovative designs and by changing the shape of the SUPs he made. He spent a few weeks in Fuerteventura, Spain, working with professional SUP riders where he developed designs for three Loco boards.

Since then Loco has surrounded itself with creative talent. This includes world class SUP shapers, graphic designers and team riders, who compete in competitions using its boards. Within months of its new SUPs becoming available, one of the team went on to win the British National Championship and represent Team GB in the World Championships.

Loco now sells an extensive range of SUPs, surf and kite boards throughout the UK and Europe and is ready to further extend its brand. Joe feels that the use of digital marketing using social media is vital in this growth. This combination of creative marketing and Joe’s active role in the business, by offering advice to customers, has provided him with a firm belief that Loco can compete against larger manufacturers.

Table 3 shows the interest rate paid on savings between 2014 and 2017.

Year

Interest rate (%)

2014

1.49

2015

1.40

2016

1.25

2017

1.00

Table 3

Using the information in Table 3, identify the best year for Loco to save any retained profit it may have.

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82 marks

Which two of the following are types of technology that could be used by a business?

Select two answers.

  • Consumer law

  • Crowd funding

  • Digital communication

  • Marketing mix

  • Payment systems

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92 marks

Case Study

Sports Tours Ltd was established in 1989 and is one of the leading online specialist sports tour operators in the United Kingdom. It arranges tours for teams to destinations in the United Kingdom and Europe in sports such as football, rugby, hockey and netball. The business not only organises travel, accommodation and meals, but it also arranges games and entry to tournaments for the sports team whilst on tour.

Sports Tours Ltd has very high standards. It carries out full risk assessments for all tours including possible pre-tour inspection visits. Tours are licensed and authorised through official agencies. All tours have regular contact with a member of staff from Sports Tours Ltd.

In recent years the business has faced increasing competition. This is not only from other sports tour operators but also from teams organising their own tours. Changing levels of consumer income and exchange rates have also had an impact on demand for tours by sports teams.

Sports Tours Ltd are confident that the high level of service they offer will help them to remain competitive. However, it is always looking for more ways to add value to its business activities.

Outline one likely impact of changing levels of consumer income on Sports Tours Ltd.

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101 mark

Case Study

Last Course Patisserie Ltd is a small private limited company based in Devon which produces hand-made desserts and puddings. The business was established in 1986. Its owners previously worked in the food industry but felt they could offer better value for money to customers. All of the desserts are made fresh to order which has provided Last Course Patisserie with a reputation for being flexible when meeting customer needs.

Getting the best ingredients for the desserts is a vital part of the business. Last Course Patisserie found excellent suppliers of free range eggs and dairy products close to its business location. This means all ingredients could be delivered quickly when needed.

Last Course Patisserie has recently employed a new head chef from Switzerland who has introduced a new range of products to the menu. This has proved to be very popular with customers and the business now struggles to keep up with demand. Last Course Patisserie is receiving increased orders for desserts but, due to the size of its business premises, struggles to meet this increase in demand. The owners have decided that it is the right time for Last Course Patisserie to expand and possibly relocate to new premises.

Identify one external stakeholder of Last Course Patisserie Ltd.

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111 mark

Outline one principle of consumer law.

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121 mark

During Max's first year of trading, interest rates increased from 2.0% to 5.5%. Identify a possible effect of this on Max's business.

  • A reduction in fixed costs due to lower repayments on his overdraft

  • An increase in sales due to higher levels of consumer spending

  • A greater chance of rivals entering the market

  • A fall in sales due to higher levels of consumer saving

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13 marks

Explain one disadvantage to a small business of an increase in interest rates.

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22 marks

Sports Tours Ltd has been organising football tours to Munich, Germany since 2010. The price of a hotel room in Munich in 2010 was €100.

Table 2 shows the value of the pound (£) in euros (€) in June 2010 and June 2019.

Number of euro (€)
per pound (£)

June 2010

1.23

June 2019

1.13

Table 2

Using the information in Table 2, calculate, to 2 decimal places, the price in pounds (£) of a hotel room in 2010. You are advised to show your workings.

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31 mark

In 2019 the cost of a hotel room had increased to €130.

Using the information in Table 2, calculate, to 2 decimal places, the price in pounds (£) of a hotel room in 2019. You are advised to show your workings.

Number of euro (€)
per pound (£)

June 2010

1.23

June 2019

1.13

Table 2

£ ..............................................................

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46 marks

Case Study

Last Course Patisserie Ltd is a small private limited company based in Devon which produces hand-made desserts and puddings. The business was established in 1986. Its owners previously worked in the food industry but felt they could offer better value for money to customers. All of the desserts are made fresh to order which has provided Last Course Patisserie with a reputation for being flexible when meeting customer needs.

Getting the best ingredients for the desserts is a vital part of the business. Last Course Patisserie found excellent suppliers of free range eggs and dairy products close to its business location. This means all ingredients could be delivered quickly when needed.

Last Course Patisserie has recently employed a new head chef from Switzerland who has introduced a new range of products to the menu. This has proved to be very popular with customers and the business now struggles to keep up with demand. Last Course Patisserie is receiving increased orders for desserts but, due to the size of its business premises, struggles to meet this increase in demand. The owners have decided that it is the right time for Last Course Patisserie to expand and possibly relocate to new premises.

UK consumer incomes are expected to rise over the next 10 years.

Analyse the likely impact on Last Course Patisserie of this changing level of consumer income.

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56 marks

Case Study

On Your Bike is a family owned business that first opened in London in 1983. Its customers include children buying their first bikes and scooters, through to experienced enthusiasts in road cycling and mountain biking.

The business offers a wide range of bikes, many imported from abroad. These include high quality brands such as Brompton, Cannondale and Ridgeback. It also stocks a wide range of clothing and helmets including brands such as Endura and Altura.

On Your Bike has large workshop facilities in its shop where qualified mechanics maintain and repair all makes of bike. All mechanics go on regular training courses to ensure they keep their skills and knowledge up to date with the latest cycling technology. This allows On Your Bike to offer exceptional customer service and advice

The cycling market has grown over recent years. Market research has shown that an increasing number of tourists like to rent bikes when on holiday. In response to this, On Your Bike operates one of the largest bike rental services in London. Bikes can be hired by the day or week with a choice including road and electric bikes.

Analyse the impact on On Your Bike of customers using social media to review the business.

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63 marks

Explain one reason why a small business may choose not invest in the latest technology.

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73 marks

Explain one possible conflict between business owners and employees.

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86 marks

Discuss the impact of lower unemployment rates on a small high-tech electronics manufacturer.

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93 marks

Explain one way a small business may respond to a change in employment law.

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104 marks

A UK-based small business has the following costs in September:

September cost

Raw materials imported from German suppliers

£20,000

Raw materials from UK suppliers

£14,000

Expenses

£22,000

Exchange rate

£1 = €1.25

In October, the exchange rate has changed to £1 = €1.10. 

Assuming all other data remain the same, calculate the change in the businesses profit in October.

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116 marks

Discuss the impact on a small fashion retail business of rising inflation.

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123 marks

Explain how one economic factor may affect demand for a small businesses goods or services.

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19 marks

Case Study

On Your Bike is a family owned business that first opened in London in 1983. Its customers include children buying their first bikes and scooters, through to experienced enthusiasts in road cycling and mountain biking.

The business offers a wide range of bikes, many imported from abroad. These include high quality brands such as Brompton, Cannondale and Ridgeback. It also stocks a wide range of clothing and helmets including brands such as Endura and Altura.

On Your Bike has large workshop facilities in its shop where qualified mechanics maintain and repair all makes of bike. All mechanics go on regular training courses to ensure they keep their skills and knowledge up to date with the latest cycling technology. This allows On Your Bike to offer exceptional customer service and advice.

The cycling market has grown over recent years. Market research has shown that an increasing number of tourists like to rent bikes when on holiday. In response to this, On Your Bike operates one of the largest bike rental services in London. Bikes can be hired by the day or week with a choice including road and electric bikes.

To expand its business in response to the growth in the cycling market, On Your Bike is considering two options:

Option 1: open a second shop

Option 2: start to use e-commerce on its website.

Justify which one of these two options On Your Bike should choose.

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29 marks

Case Study

Stand up paddleboarding is a sport which is similar to surfing but the riders use a paddle whilst standing on the board. Joe Thwaites opened Loco in 2012 as he spotted a gap in the market manufacturing stand up paddleboards (SUPs). Joe felt that he could compete using innovative designs and by changing the shape of the SUPs he made. He spent a few weeks in Fuerteventura, Spain, working with professional SUP riders where he developed designs for three Loco boards.

Since then Loco has surrounded itself with creative talent. This includes world class SUP shapers, graphic designers and team riders, who compete in competitions using its boards. Within months of its new SUPs becoming available, one of the team went on to win the British National Championship and represent Team GB in the World Championships.

Loco now sells an extensive range of SUPs, surf and kite boards throughout the UK and Europe and is ready to further extend its brand. Joe feels that the use of digital marketing using social media is vital in this growth. This combination of creative marketing and Joe’s active role in the business, by offering advice to customers, has provided him with a firm belief that Loco can compete against larger manufacturers.

In order to make improvements to the business, Loco is considering two options:

Option 1: introduce a digital payment system e.g. PayPal

Option 2: hold online meetings using digital communication.

Justify which one of these two options Loco should choose.

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32 marks

Case Study

Last Course Patisserie Ltd is a small private limited company based in Devon which produces hand-made desserts and puddings. The business was established in 1986. Its owners previously worked in the food industry but felt they could offer better value for money to customers. All of the desserts are made fresh to order which has provided Last Course Patisserie with a reputation for being flexible when meeting customer needs.

Getting the best ingredients for the desserts is a vital part of the business. Last Course Patisserie found excellent suppliers of free range eggs and dairy products close to its business location. This means all ingredients could be delivered quickly when needed.

Last Course Patisserie has recently employed a new head chef from Switzerland who has introduced a new range of products to the menu. This has proved to be very popular with customers and the business now struggles to keep up with demand. Last Course Patisserie is receiving increased orders for desserts but, due to the size of its business premises, struggles to meet this increase in demand. The owners have decided that it is the right time for Last Course Patisserie to expand and possibly relocate to new premises

Evaluate the importance to Last Course Patisserie of following all relevant employment laws. You should use the information provided as well as your knowledge of business.

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