Total marks: 80 · Duration: 1 hour 30 minutes
Instructions to candidates
- Answer all the questions.
- Section A contains 15 multiple-choice questions. Choose one answer for each.
- Section B is based on the case study about Tidewater Paddle Ltd. Read it carefully before you answer.
- You may use a calculator. Show your working for calculations.
- The number of marks for each question is shown in brackets [ ].
- Quality of extended response is assessed in the questions marked with an asterisk (*).
- The business in this paper is fictional.
Paper
Section A — Multiple choice (15 marks)
1 Which is a feature of a private limited company? [1] A) Its shares are sold to the public on the stock exchange B) Its owners have unlimited liability for its debts C) Its owners have limited liability and its shares are not sold to the public D) It must have exactly one owner
2 Which of these is a SMART objective? [1] A) Increase online sales by 10% within the next 12 months B) Become the best-known brand in the country C) Improve the standard of customer service D) Grow the business as quickly as possible
3 Which is a method of primary market research? [1] A) Reading government population statistics B) Studying a newspaper report on the industry C) Looking at a competitor's website D) Holding a focus group with customers
4 At which stage of the product life cycle do sales usually rise quickly as competitors start to enter the market? [1] A) Introduction B) Growth C) Maturity D) Decline
5 What is meant by price skimming? [1] A) Setting a low price to win market share quickly B) Setting a high price at launch and lowering it later C) Adding a fixed percentage to the cost of each unit D) Setting the same price as the main competitors
6 Which of these is an internal stakeholder? [1] A) Suppliers B) The local community C) Customers D) Employees
7 What does it mean if a manager has a wide span of control? [1] A) The manager is directly responsible for many workers B) The business has many layers of management C) The manager is responsible for very few workers D) Only the owner can make any decisions
8 Which is a non-financial method of motivation? [1] A) Commission B) A bonus C) Job rotation D) Profit sharing
9 Which law requires employers to pay most workers at least a set hourly rate? [1] A) The Equality Act B) The Health and Safety at Work Act C) The Consumer Rights Act D) National Minimum Wage legislation
10 Which statement describes a franchisee? [1] A) It pays a fee and royalties to trade using another firm's brand B) It owns the brand and sells the right to use it C) It is free to ignore the rules set by the brand owner D) It is a business that has been taken over by a rival
11 A gym targets "busy professionals who want short workouts before work". Which method of market segmentation is this? [1] A) Age B) Lifestyle C) Gender D) Location
12 Which is an example of internal (organic) growth? [1] A) Taking over a rival business B) Merging with a supplier C) Opening new branches using retained profit D) Buying a chain of shops from another company
13 Which is a barrier to effective communication? [1] A) Using technical jargon the receiver does not understand B) Sending a clear, short message C) Choosing a suitable medium for the message D) Asking the receiver for feedback
14 Which is an advantage of external recruitment? [1] A) It is cheaper than internal recruitment B) It is quicker than internal recruitment C) It always raises the morale of existing staff D) It brings new ideas and skills into the business
15 A business employs an average of 40 people. During the year, 6 of them leave. What is its labour turnover? [1] A) 6% B) 15% C) 24% D) 40%
Section B — Case study: Tidewater Paddle Ltd (65 marks)
Tidewater Paddle Ltd hires out stand-up paddleboards and kayaks, runs lessons and sells water-sports equipment from a beach hut on the Pembrokeshire coast. Carys Lewis and Dev Patel started the business in 2019 as a partnership. In 2023 they became a private limited company so that two friends could invest in the business.
Sales. Last year Tidewater had sales revenue of £420 000. Hire made up 55% of revenue, lessons 30% and retail sales 15%. The total value of the local water-sports market (all hire, lessons and equipment sales in the area) was £2.4 million.
Market research. Last summer Tidewater asked 200 customers to fill in a short online survey after their session. The results included:
Finding Result Customers aged 25–44 visiting as a family 46% Customers aged 16–24 visiting with friends 31% Customers who first heard of Tidewater through social media 62% Customers who would buy a board if they could "try before you buy" 28% People. Carys is the managing director and Dev runs operations. Two supervisors each look after a team of instructors. Tidewater employs 4 full-time staff all year and recruits about 16 seasonal instructors each summer, giving an average of 20 employees. Last year 5 employees left during the season, mostly to take jobs with year-round contracts. Instructors are paid the National Minimum Wage. Training is "on the job": new instructors shadow an experienced colleague for two days.
The future. Paddleboarding has grown rapidly in the UK, but Dev thinks the market may now be reaching maturity, with more competitors opening each year. The directors are considering two options for growth:
- Option A: open a second centre at an inland lake 40 miles away. The lake is sheltered, so lessons could run from March to November instead of May to September. It would cost £85 000 to set up.
- Option B: launch an own-brand range of inflatable paddleboards, sold online and from the beach hut. The boards would be made by a manufacturer abroad. Set-up costs, including the website and first stock, would be £60 000.
16 (a) State two objectives, other than making a profit, that Tidewater might have. [2]
16 (b) Explain one benefit to Carys and Dev of changing Tidewater from a partnership to a private limited company. [3]
16 (c) Analyse one possible conflict between two of Tidewater's stakeholder groups. [4]
17 (a) Calculate Tidewater's share of the local water-sports market last year. Show your working. [2]
17 (b) Calculate Tidewater's revenue from lessons last year. [2]
17 (c) Explain one limitation of Tidewater's market research survey. [3]
17 (d) Analyse how Tidewater could use the results of its survey to segment its market. [4]
17 (e)* Tidewater is deciding how to price its new own-brand paddleboards. It could use penetration pricing or premium pricing. Recommend which pricing method Tidewater should use. Justify your answer. [9]
18 (a) Using the case study, calculate Tidewater's labour turnover last year. [2]
18 (b) Explain one way in which high labour turnover could affect Tidewater. [3]
18 (c) Analyse one benefit to Tidewater of training its seasonal instructors to gain a recognised coaching qualification. [4]
18 (d) Explain one financial and one non-financial method Tidewater could use to motivate its instructors, and analyse how each might reduce labour turnover. [6]
19 (a) Identify two methods of promotion that would be suitable for Tidewater's lessons. [2]
19 (b) Explain two ways in which Tidewater could improve communication with its seasonal instructors. [4]
19 (c) Analyse the possible impact on Tidewater of paddleboarding reaching the maturity stage of its product life cycle. [6]
19 (d)* Tidewater's directors must choose between Option A (a second centre at an inland lake) and Option B (an own-brand range of paddleboards). Recommend which option Tidewater should choose. Justify your answer. [9]