Comp 1 past paper Questions

• Question: Outline three factors that are likely to affect the demand


  Price, income, lifestyle, advertising, availability of substitutes, quality, weather/season, population size.

  Explanation: Factors affecting demand include price sensitivity, income levels, and lifestyle choices.
• Question: Define marketing mix and explain its importance
• Question: Explain why it is important for businesses to understand their customers' needs and wants
• Question: Describe how market research can be used by businesses to gather information about customer preferences
• Question: Describe how market research can be used to identify target markets
• Question: Explain why it is important to segment your market
• Question: How does product differentiation contribute to successful marketing strategies
• Question: How does a business decide which products or services to offer based on market research findings?
• Identify one normal good and one inferior good outlining the reasons for your choice.

  Normal good: Restaurant meals (demand increases with income); Inferior good: Supermarket own-label baked beans (demand decreases with income).

  Normal goods are those for which demand increases with income, while inferior goods experience a decrease in demand as income rises.
• Explain the implications of unlimited liability


  Sharon is personally responsible for all debts of the café, risking personal assets like her house in case of insolvency.

  Unlimited liability means Sharon is financially responsible for all debts of her business, potentially risking personal assets.
• Describe why the manager at the bank told Sharon that it was important for her to write a business plan.

  Answer: A business plan helps Sharon understand her market, competition, and financial needs, aiding in securing loans and monitoring business progress.Explanation: A well-written business plan provides clarity on the business's goals, operations, and financial projections, crucial for securing financing and guiding decision-making.
• Outline three suitable methods of market research that Sharon might undertake before starting her business.


  Primary research (surveys, focus groups), secondary research (internet, trade journals), observational research (field studies).
• Discuss the reasons why consumers sometimes need protection from exploitation by businesses.


  Answer: Quality assurance, fair pricing, accurate product descriptions, protection against misleading advertising.Explanation: Consumer protection safeguards consumers against deceptive practices, ensuring fair transactions and product safety.
• Evaluate two different types of pricing strategies that can be used by a supermarket.

  Answer: Penetration pricing (attracting new customers), promotional pricing (stimulating sales through discounts).Explanation: Pricing strategies impact sales and profitability, with options like penetration and promotional pricing aiming to influence consumer behavior.
• Explain two impacts on a business if it does not control its cash flow effectively.

  Answer: Inability to pay suppliers (halt in operations), difficulty in meeting financial obligations (bankruptcy risk).Explanation: Poor cash flow management can lead to disrupted operations and financial instability, affecting relationships with suppliers and creditors.
• Evaluate ways in which the cash flow situation of a business can be improved.


  Answer: Increasing revenue (raising prices), reducing costs (streamlining operations), managing inventory efficiently.Explanation: Improving cash flow involves strategies like boosting income, trimming expenses, and optimizing inventory management.
• Discuss the impact of lean production on a manufacturing business, such as GE Appliances.


  Answer: Reduced waste, improved efficiency, enhanced product quality, increased competitiveness.Explanation: Lean production methods optimize manufacturing processes, resulting in cost savings, higher productivity, and better product offerings.
• With reference to the various leadership styles and theories, discuss the view that the leadership style of one individual can be appropriate for all different types of business.


  Answer: Leadership adaptability, situational leadership, business-specific demands, organizational culture influence.Explanation: Effective leadership entails adjusting styles to fit organizational needs, considering factors like culture, industry, and business objectives.
• Give one example of a business using batch production and describe two benefits of this method of production.


  Answer: Example: Bakery producing multiple loaves of bread simultaneously. Benefits: Economies of scale, reduced unit costs, flexibility in production scheduling.Explanation: Batch production involves producing a specific quantity of items at a time, offering advantages like cost efficiency and flexible production.
• Outline the meaning of the term external economies of scale.


  Answer: External economies of scale refer to cost savings experienced by multiple firms within an industry due to factors like shared infrastructure or skilled labor availability.Explanation: External economies occur when factors beyond a single firm's control lead to cost reductions for all firms in the industry.
• Discuss the importance of carefully controlling stock for Twinkly Toys


  Answer: Importance: Avoiding stockouts, ensuring smooth production, meeting customer demand, minimizing storage costs, optimizing working capital.Explanation: Effective stock control is vital for Twinkly Toys to maintain production efficiency and meet customer demand without excessive costs.
• Discuss the ways in which social enterprises differ from other private sector businesses.

  Answer: Differences: Social mission, reinvestment of profits, stakeholder focus, alternative governance structures, impact measurement.Explanation: Social enterprises prioritize social or environmental goals alongside financial objectives, distinguishing them from traditional profit-driven businesses.
• Describe the main features of an oligopoly with reference to the market share chart provided.

  Answer: Few large firms, interdependence, barriers to entry, differentiated products, non-price competition.Explanation: Oligopolies are characterized by a small number of firms dominating the market, often engaging in non-price competition to gain market share.
• Definition of Entrepreneur


  Answer: An entrepreneur is a person who takes an idea and starts a business, undertaking financial risks in the hope of making a profit.Explanation: Entrepreneurs are individuals who venture into business endeavors, often driven by innovation and a desire for financial gain.