Practice Paper 1 (Edexcel IGCSE Business)

[case-study] *The Alternative Drum School (TADS) *was set up in the wealthy area of Cricklade, England in 2008 by Ollie Tanner who had a passion for and enjoyed drumming. Ollie invested all of his savings into the drumming school. He saw the potential of being located away from other drumming schools.

Ollie promotes his business by writing columns in local papers, performing at local music festivals and by word of mouth recommendations. He has invested heavily in computer technology to allow students to produce the music they enjoy playing.

Ollie finds it difficult to maintain a good work-life balance. Ollie currently works 60 hours a week in a business that does not have reliable profits.

In May 2019 the exchange rate was £1 = €1.05. *TADS *continued to provide the Italian drumming school with five lessons a week.

What effect would this change in the exchange rate have on the Italian drumming school?

Select one answer.

[case-study] Kraft Heinz has different functional areas within the business. These functional areas work together to ensure that Kraft Heinz maintains high standards of production with limited waste material.

*Kraft Heinz *aims to be involved in the local area through various methods such as charity and sporting events.

State one financial objective* Kraft Heinz* might have.

Define the term primary sector.

Define the term trade bloc.

[case-study] Saving the environment in which we all live is important. The Chairman ensures that *Emirates *works hard to recycle many of the materials it uses and to reduce atmospheric pollution from the fuel that powers its aircraft. Water consumption for washing aircraft has been reduced, newspapers and other paper products collected from *Emirates *aircraft cabins are recycled. Emirates uses a variety of methods to monitor its employees when carrying out these jobs. For these roles *Emirates *uses a short chain of command.

*Emirates *used 13,457,776 litres of petrol in 2016–2017. In 2017–2018 it reduced this figure by 12.5%.

Calculate the number of litres of petrol that *Emirates *used in 2017–2018. You are advised to show your workings.

Explain one impact of an increase in interest rates on a business

[case-study] The Alternative Drum School (TADS) was set up in the wealthy area of Cricklade, England in 2008 by Ollie Tanner who had a passion for and enjoyed drumming. Ollie invested all of his savings into the drumming school. He saw the potential of being located away from other drumming schools.

Ollie promotes his business by writing columns in local papers, performing at local music festivals and by word of mouth recommendations. He has invested heavily in computer technology to allow students to produce the music they enjoy playing.

Ollie finds it difficult to maintain a good work-life balance. Ollie currently works 60 hours a week in a business that does not have reliable profits.

At the moment TADS operates as a sole trader. As it becomes more successful Ollie is considering becoming a private limited company.

Evaluate whether TADS should consider becoming a private limited company. You should use the information provided as well as your own knowledge of business.

Explain one measure a business can use to judge its success.

[case-study] Kraft Heinz is a world-wide producer of food products with factories in over 29 countries. It has over 24 different brands, including Greenseas in Australia and Maxwell House in America.

Outline one problem Kraft Heinz may face from ineffective communication

[case-study] *Posh Pets Spain (PPS) *is a pet hotel in the village of Alhaurin el Grande, Spain. It is run by Rachel Goutorbe, an animal enthusiast, and her team of four pet specialists. *PPS *offers overnight accommodation with room for seven dogs or cats, a pet grooming service and a shop selling pet products, such as dog coats and dog leads. Pet grooming involves washing, cutting and combing a pet’s coat.

State one reason why PPS motivates its employees.

Which one of the following departments would send an invoice to a supplier?

Select one answer.

[case-study] Most people recognise Heinz for the phrase ‘57 varieties’ even though it now produces many more than the original 57 varieties. H J Heinz, the founder of the Heinz business, believed the phrase sounded lucky.

Kraft Heinz is a worldwide producer of food products. It was formed from the merger of Kraft Foods and Heinz in 2015. This created the third-largest food and drinks business in the USA and the fifth-largest food and drinks business in the world. Kraft Heinz has over 24 different brands, including Greenseas in Australia and Nutri+Plus in New Zealand. America has the largest number of brands, from Maxwell House to Cool Whip. Kraft Heinz produces many different products, including tomato sauce, ‘Mac&Cheese’, pasta and its famous baked beans that are used and eaten by many people.

Kraft Heinz uses many methods to advertise its products. These include posters, billboards and leaflets in supermarkets.

Kraft Heinz will need to recruit more managers to take responsibility for new production lines. It is considering two options:

Option 1: promote existing employees

Option 2: advertise managerial positions externally.

Justify which one of these two options* Kraft Heinz* should choose.

[case-study] Apex is a technology company that develops cybersecurity software for large businesses. It employs 120 specialist software engineers and is expanding rapidly due to growing demand for its products.

Outline one reason why Apex might choose off-the-job training for its software engineers.

[case-study] The *LEGO *Group is a privately-owned business in Denmark. The business was founded in 1932 by the Kristiansen family. The family still owns it. The name *LEGO *is an abbreviation of two Danish words, ‘leg godt’ which means ‘play well’. It is now one of the world’s largest manufacturers of toys with 15 factories and over 18,000 employees around the world.

LEGO manufactures toys, games and art materials for boys and girls of all ages, and products from films such as Star Wars and Harry Potter. It believes that children are the role models of the future and playing with LEGO can support children in a developing and complex world.

*LEGO *sells pineapple pencil holders for 148.00 DKK. The markup is 15%.

Calculate, to two decimal places, the cost of making the pineapple pencil holders. You are advised to show your working.

Which one of the following would be a benefit to a business delaying paying its suppliers?

Select one answer.

Figure 1 shows selected financial information for a pottery business.

Figure 1

Which one of the following is the total revenue for a day?

Select one answer.

Define the term gross profit.

[case-study] The Better Toy Store (TBTS) is a children’s toy shop. *TBTS *has three shops in Singapore. Two of the shops are located in busy shopping malls and the third is located at the Jewel Changi Airport. *TBTS *has a website for customers looking to buy toys online.

*TBTS *selects toys to sell that are excellent for play, value, design and quality. All *TBTS *toys are environmentally friendly.

*TBTS *wants to sell a wider variety of toys. It is planning to buy these toys from other suppliers. This will need new finance.

*TBTS *is considering two options:

• Option 1: using retained profits
• Option 2: getting a bank loan.

Justify which one of these two options *TBTS *should choose.

Explain one benefit to a business of using secondary market research.

[case-study] Presto is a supermarket chain operating in Portugal. The table below shows information about the Portuguese supermarket industry.

	2023	2024
Total market size (€m)	20,000	22,000
Presto's sales (€m)	3,400	3,900

Calculate Presto's market share in 2024.

Which one of the following functions is responsible for public relations?

Select one answer.

[case-study] Nexus is a large supermarket chain operating across Brazil. It has grown significantly over the past decade and now runs over 600 stores. It competes with several other large supermarket chains for customers across the country

Analyse how achieving economies of scale might help Nexus to remain competitive.