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GCSEBusinessEdexcelExam Questions2. Building a Business2.3 Making Operational Decisions

Making Operational Decisions (Edexcel GCSE Business)

Exam Questions

2 hours27 questions
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11 mark

Case Study

In August 2017, UK supermarket group Sainsbury’s decided to cut its costs by £500 million to remain competitive.

One of the changes Sainsbury’s made was to end its membership of Fairtrade. The Fairtrade scheme gives farmers in countries such as Kenya a higher price for their crops, such as tea. In return, Sainsbury’s can use the Fairtrade logo on its products. This makes its groceries, such as bananas, more attractive to ethically-minded customers.

Sainsbury’s has decided to replace Fairtrade with its own scheme called ‘Fairly Traded’. Critics of the change believe that it confuses customers. Protests about this change have already been held in London

Sainsbury’s also decided to reduce its head office workforce by 1,000. This allowed the company to increase wages for its shop floor employees, including checkout operators and shelf stackers, by 4.4% to £8 per hour. This reduced the wage difference with Aldi, which pays £8.53 per hour. Sainsbury’s wants to retrain shop floor employees to improve the customer service in its stores.

State one stage of the sales process.

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22 marks

Case Study

In August 2017, UK supermarket group Sainsbury’s decided to cut its costs by £500 million to remain competitive.

One of the changes Sainsbury’s made was to end its membership of Fairtrade. The Fairtrade scheme gives farmers in countries such as Kenya a higher price for their crops, such as tea. In return,

Sainsbury’s can use the Fairtrade logo on its products. This makes its groceries, such as bananas, more attractive to ethically-minded customers. Sainsbury’s has decided to replace Fairtrade with its own scheme called ‘Fairly Traded’. Critics of the change believe that it confuses customers. Protests about this change have already been held in London.

Sainsbury’s also decided to reduce its head office workforce by 1,000. This allowed the company to increase wages for its shop floor employees, including checkout operators and shelf stackers, by 4.4% to £8 per hour. This reduced the wage difference with Aldi, which pays £8.53 per hour. Sainsbury’s wants to retrain shop floor employees to improve the customer service in its stores

Outline one advantage to Sainsbury’s of improving its customer service.

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31 mark

Which one of the following is a stage in the sales process?

Select one answer.

  • Product knowledge

  • Product quality

  • Production

  • Productivity

Choose your answer

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42 marks

Case Study

Kentucky Fried Chicken (KFC) is a fast food chain that sells fried chicken. Amongst its most popular products are Popcorn Chicken, Boneless Chicken boxes and Zinger Tower burgers. These are freshly cooked in batches in each of its 900 restaurants across the UK.

In 2017, KFC changed the company it used to transport its supplies of chicken. It replaced Bidvest with DHL. Bidvest had three distribution centres across the UK, but DHL only had one. In February 2018, DHL started to have logistical problems causing many KFC restaurants to run out of chicken. This led to a temporary closure of many KFC branches due to poor supplier reliability.

As a result of these closures, KFC started losing market share to rival fast food restaurants such as Burger King. KFC used social media and a viral advertising campaign to apologise to customers. It also considered lowering the prices of its most popular food items to win back lost customers and recapture market share

Outline one benefit to KFC of using batch production in its restaurants.

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5
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Case Study

Kentucky Fried Chicken (KFC) is a fast food chain that sells fried chicken. Amongst its most popular products are Popcorn Chicken, Boneless Chicken boxes and Zinger Tower burgers. These are freshly cooked in batches in each of its 900 restaurants across the UK.

In 2017, KFC changed the company it used to transport its supplies of chicken. It replaced Bidvest with DHL. Bidvest had three distribution centres across the UK, but DHL only had one. In February 2018, DHL started to have logistical problems causing many KFC restaurants to run out of chicken. This led to a temporary closure of many KFC branches due to poor supplier reliability.

As a result of these closures, KFC started losing market share to rival fast food restaurants such as Burger King. KFC used social media and a viral advertising campaign to apologise to customers. It also considered lowering the prices of its most popular food items to win back lost customers and recapture market share.

Figure 2 shows a bar gate stock graph which details the delivery of chicken portions to KFC’s Exmouth restaurant during February 2018. During this time it received two deliveries of chicken portions. These are marked as A and B.

Portions of chicken

fig-2-paper2-nov2020-edexcel-gcse-business

Figure 2

Using the information in Figure 2, calculate the size of order A. You are advised to show your workings.





............................................................. portions of chicken.

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61 mark

Procurement involves a business having a strong relationship with which one of the following stakeholder groups?

Select one answer.

  • Local community

  • Managers

  • Pressure groups

  • Suppliers

Choose your answer

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7
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Case Study

Kentucky Fried Chicken (KFC) is a fast food chain that sells fried chicken. Amongst its most popular products are Popcorn Chicken, Boneless Chicken boxes and Zinger Tower burgers. These are freshly cooked in batches in each of its 900 restaurants across the UK.

In 2017, KFC changed the company it used to transport its supplies of chicken. It replaced Bidvest with DHL. Bidvest had three distribution centres across the UK, but DHL only had one. In February 2018, DHL started to have logistical problems causing many KFC restaurants to run out of chicken. This led to a temporary closure of many KFC branches due to poor supplier reliability.

As a result of these closures, KFC started losing market share to rival fast food restaurants such as Burger King. KFC used social media and a viral advertising campaign to apologise to customers. It also considered lowering the prices of its most popular food items to win back lost customers and recapture market share.

Portions of chicken

fig-2-paper2-nov2020-edexcel-gcse-business

Figure 2

Using the information in Figure 2, calculate the number of days that KFC’s Exmouth restaurant ran out of chicken. You are advised to show your workings.







............................................................. days.

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81 mark

Which one of the following is a feature of flow production?

Select one answer.

  • Bespoke products are manufactured

  • Specialist, skilled workforce is required

  • Labour-intensive process

  • Standardised output

Choose your answer

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92 marks

Outline one benefit to a business of producing good quality products.

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102 marks

Case Study

Iceland is a supermarket that sells frozen food. Although the grocery industry is very competitive, Iceland enjoyed a successful 2017. Sales revenue increased by 2.0% allowing profits to increase by £9.5 million to £160 million.

Iceland believes this success has been due to improved marketing. It has introduced new products using the Slimming World and Millie’s Cookies brand names. It also launched a new advertising campaign called ‘The Power of Frozen’. In addition it has developed a new store format called ‘The Food Warehouse’. These stores are much larger than a normal Iceland store which allows them to stock more luxury products. Iceland hopes that The Food Warehouse will help it to appeal to high-income customers and it plans to open more stores.

Figure 3: Iceland’s new packaging
Figure 3: Iceland’s new packaging

In 2018, Iceland received positive publicity from its decision to ban all plastic packaging on its own-brand products by 2023. It intends to replace plastic with recycled paper, as shown in Figure 3. A survey of 5,000 of its customers showed that 80% of them agreed with the change. Pressure groups, such as Friends of the Earth, have welcomed Iceland’s decision. Plastic waste has caused pollution of the world’s oceans and has killed marine life. Pressure groups hope that Iceland’s decision will be repeated by other supermarkets in the UK.

Outline one impact for Iceland of using just in time (JIT) stock control in its new Food Warehouse stores.

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111 mark

Which one of the following is likely to lead to a business seeking a new supplier for a key component?

  • Flexible deliveries

  • Availability of extended credit terms

  • Long lead times

  • Convenient after-sales service

Choose your answer

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122 marks

Which two of the following are common features of a business that has adopted a quality assurance system?

Select two answers.

  • Quality is the responsibility of every employee

  • Quality is inspected at the end of the production process

  • Quality standards, such as ISO 9000 are met

  • Suppliers are not involved in quality management

  • A small percentage of defective products is to be expected

Choose your answer

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1
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Explain one drawback to a business of using job production.

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2
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Explain one advantage to a business of producing a high quality product.

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3
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Explain one benefit to a business of having a good relationship with its suppliers.

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4
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Explain one disadvantage to a business of having poor customer service.

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5
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Explain one reason why having a post-sales service may be important to a business.

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6
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Case Study

Kentucky Fried Chicken (KFC) is a fast food chain that sells fried chicken. Amongst its most popular products are Popcorn Chicken, Boneless Chicken boxes and Zinger Tower burgers. These are freshly cooked in batches in each of its 900 restaurants across the UK.

In 2017, KFC changed the company it used to transport its supplies of chicken. It replaced Bidvest with DHL. Bidvest had three distribution centres across the UK, but DHL only had one. In February 2018, DHL started to have logistical problems causing many KFC restaurants to run out of chicken. This led to a temporary closure of many KFC branches due to poor supplier reliability.

As a result of these closures, KFC started losing market share to rival fast food restaurants such as Burger King. KFC used social media and a viral advertising campaign to apologise to customers. It also considered lowering the prices of its most popular food items to win back lost customers and recapture market share

Analyse the impact on KFC of providing poor customer service.

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76 marks

Case Study

Kentucky Fried Chicken (KFC) is a fast food chain that sells fried chicken. Amongst its most popular products are Popcorn Chicken, Boneless Chicken boxes and Zinger Tower burgers. These are freshly cooked in batches in each of its 900 restaurants across the UK.

In 2017, KFC changed the company it used to transport its supplies of chicken. It replaced Bidvest with DHL. Bidvest had three distribution centres across the UK, but DHL only had one. In February 2018, DHL started to have logistical problems causing many KFC restaurants to run out of chicken. This led to a temporary closure of many KFC branches due to poor supplier reliability.

As a result of these closures, KFC started losing market share to rival fast food restaurants such as Burger King. KFC used social media and a viral advertising campaign to apologise to customers. It also considered lowering the prices of its most popular food items to win back lost customers and recapture market share

Analyse the impact on KFC of poor supplier reliability.

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8
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Discuss the disadvantage to a business of using a just in time (JIT) system of stock control.

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9
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Case Study

Tesla is a public limited company based in California, USA. Its founder and main shareholder, Elon Musk, wanted to produce an electric car that is affordable to a large number of potential customers. This car is called the Tesla Model 3 (Figure 3).

Introduced in 2017, the basic version of the Model 3 was originally priced at $50 000 and the company wanted to reduce this price to $35 000 by 2019. However, this was difficult to achieve because Tesla’s California factory suffered from low levels of productivity. These problems resulted in Tesla making a $976 million loss in 2018.

Figure 3: Tesla Model 3 electric car
Figure 3: Tesla Model 3 electric car

Following the introduction of tariffs on US imports by the Chinese government in 2018, Tesla decided to invest $5 billion in the construction of a new car factory in Shanghai, China. This factory will use flow production. However, with only $2.4 billion of available capital, Tesla needs to raise external finance to fund it.

In 2019, Tesla decided to close most of its showrooms to reduce costs. The company believes customers will be happy to purchase electric cars using e-commerce.

Analyse the benefit to Tesla of using flow production in its new factory.

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10
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Explain one drawback to a business of introducing a system of quality assurance.

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113 marks

Explain one impact of the use of technology on product quality.

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123 marks

Explain one benefit to a business of holding buffer stock.

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1
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Case Study

ASOS plc is an online fashion retailer which targets customers in their 20s. The company started in 2000 and since then it has grown significantly. One of the main reasons for its growth is what Chief Executive Nick Beighton calls, the ‘ASOS Experience’.

The company focuses on high quality logistics to distribute its products and increased use of warehouse technology. This has resulted in a warehouse and distribution system which is almost fully automated (Figure 4). This allows ASOS to deliver customer orders the next day, so long as the order is placed online before midnight. Automation has also given ASOS the ability to increase the range of clothes it can sell on its website.

However, the market for clothes in the UK is becoming increasingly competitive. Despite a significant growth in sales, ASOS’s profits have fallen. This has caused the company’s share price to fall. ASOS has responded by focusing on viral advertising. Its latest campaign is to get customers to use the hashtag #AsSeenOnMe (Figure 5) when they are showing off their latest ASOS outfit on social media. In return, ASOS gives customers the opportunity to be featured on the ASOS Instagram feed which has 7.1 million followers

Evaluate whether high quality logistics will give ASOS a competitive advantage. 
You should use the information provided as well as your knowledge of business.

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29 marks

Case Study

Tesla is a public limited company based in California, USA. Its founder and main shareholder, Elon Musk, wanted to produce an electric car that is affordable to a large number of potential customers. This car is called the Tesla Model 3 (Figure 3).

Introduced in 2017, the basic version of the Model 3 was originally priced at $50 000 and the company wanted to reduce this price to $35 000 by 2019. However, this was difficult to achieve because Tesla’s California factory suffered from low levels of productivity. These problems resulted in Tesla making a $976 million loss in 2018.

Figure 3: Tesla Model 3 electric car
Figure 3: Tesla Model 3 electric car

Following the introduction of tariffs on US imports by the Chinese government in 2018, Tesla decided to invest $5 billion in the construction of a new car factory in Shanghai, China. This factory will use flow production. However, with only $2.4 billion of available capital, Tesla needs to raise external finance to fund it.

In 2019, Tesla decided to close most of its showrooms to reduce costs. The company believes customers will be happy to purchase electric cars using e-commerce.

In order to ensure quality in its new Chinese factory, Tesla is considering two options:

Option 1: Employing quality control inspectors to carry out comprehensive tests on finished vehicles

Option 2: Implementing a system of quality assurance

Justify which one of these two options Tesla should choose.

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39 marks

Case Study

Kentucky Fried Chicken (KFC) is a fast food chain that sells fried chicken. Amongst its most popular products are Popcorn Chicken, Boneless Chicken boxes and Zinger Tower burgers. These are freshly cooked in batches in each of its 900 restaurants across the UK.

In 2017, KFC changed the company it used to transport its supplies of chicken. It replaced Bidvest with DHL. Bidvest had three distribution centres across the UK, but DHL only had one. In February 2018, DHL started to have logistical problems causing many KFC restaurants to run out of chicken. This led to a temporary closure of many KFC branches due to poor supplier reliability.

As a result of these closures, KFC started losing market share to rival fast food restaurants such as Burger King. KFC used social media and a viral advertising campaign to apologise to customers. It also considered lowering the prices of its most popular food items to win back lost customers and recapture market share.

In order to improve its sales process, KFC is considering two options:

Option 1: Introduce a click and collect service

Option 2: Provide table service 

Justify which one of these two options KFC should choose.

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