Total marks: 60 · Duration: 1 hour 30 minutes
Instructions to candidates
• Answer all questions. • Use black ink or black ball-point pen. • The number of marks is given in brackets [ ] at the end of each question or part question. • You may use a calculator. • Some questions relate to the case study below; read it carefully. • The total number of marks for this paper is 60.
Case study: FreshBox
Leo and Aisha are two friends who have started a business called FreshBox, a partnership that delivers boxes of fresh, ready-to-cook meal kits to customers in their local area. Customers order online and choose recipes for the week. Leo and Aisha spotted a gap in the market because many local people said they wanted to cook healthy meals but had little time to shop and plan. The business is growing, but the two owners are finding it hard to manage rising demand, and a national meal-kit company has started advertising in the same area. Last month FreshBox had sales revenue of £18,000, fixed costs of £6,000 and variable costs of £9,000.
Paper
Section A — Structured Questions (44 marks)
1. Enterprise and risk
(a) State what is meant by an entrepreneur. [2]
(b) Explain two characteristics that entrepreneurs like Leo and Aisha need to run FreshBox successfully. [4]
(c) Explain one risk and one reward of starting a business such as FreshBox. [4]
2. Marketing
(a) FreshBox spotted a gap in the market. Explain what is meant by a gap in the market. [2]
(b) Explain two ways FreshBox could use market research to understand its customers. [4]
(c) Explain how selling online (e-commerce) benefits a small business like FreshBox. [4]
3. Finance
(a) Using the figures in the case study, calculate FreshBox's total costs and its profit for last month. [4]
(b) Explain the difference between a fixed cost and a variable cost, using an example from FreshBox for each. [4]
(c) Leo and Aisha need finance to grow the business. Explain one suitable source of finance and one drawback of using it. [4]
4. Making the business effective
(a) Explain one advantage and one disadvantage for Leo and Aisha of running FreshBox as a partnership rather than as sole traders. [4]
(b) Explain why good customer service is important for FreshBox. [4]
(c) Explain two aims, other than profit, that Leo and Aisha might have for FreshBox. [4]
Section B — Extended Response (16 marks)
5. FreshBox is facing rising demand and new competition from a national meal-kit company.
Discuss the challenges FreshBox faces as it grows, and advise Leo and Aisha on how they could respond to these challenges. In your answer you should consider managing the growth, the new competition, and how to keep customers loyal. [16]