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Newlands
Girls’ School

Home Learning - Business

Year 10

Please review your notes and the PowerPoint slides, located on Teams. Then, complete each case study, using data from the case studies and the templates provided for you, which you stuck into the inside cover of your exercise book at the start of the course. You may also wish to utilise the AQA GCSE Business course companion, for more information.

Specification topic: Technology

Case Study: Item A – Marketing for Businesses (M4B)

Marketing for Businesses (M4B) was set up ten years ago, by Maranda and Byren as a business partnership. To start with, M4B mainly produced marketing material for small and medium sized businesses in the local area. Although this was successful to a certain extent, most of M4B’s work now comes from businesses that are selling goods and services in other countries, as these businesses do not have the appropriate language skills to produce their own marketing materials. M4B also receives work from businesses in other countries that want advertisements and publicity materials translated into English.

The growth of the internet has meant that the partners can now transfer work electronically to their customers. It also means that they can use a number of home based employees with specialist language skills who can translate the text. This then leaves Maranda and Byren time to design the marketing materials for its customers.

Most enquiries now come via M4B’s website, which provides a clear description of the firm’s marketing services in the most commonly used languages.

Exam-style questions:

1. Identify two benefits to a business of using e-commerce (2 marks)

2. Analyse the benefits to M4B of using digital communication (6 marks)

Case Study: Item B – Marketing for Businesses (M4B)

With the increased number of customers in other countries, payments have become more complicated for M4B. Although M4B can send invoices by email, the business is still relying on payments being made through a local bank or by sending a cheque in the post. This is often inconvenient for customers or takes a long time for the payment to arrive with the partners, which affects the firm’s cash flow.

Maranda and Byren are currently investigating the possibility of introducing an e-payment system, which would allow direct payments into M4B’s bank account. Maranda is concerned however, that there are risks with using such a system and the change may also not suit all customers. Byren is keen to progress the idea, as he believes the system could also be used to pay the many employees who provide the translation services. These employees are based all around the UK and occasionally in different countries. As a result, Byren believes they would prefer a system of e-payments for the work that they do for M4B.

Exam-style questions:

3. Recommend whether Marketing for Businesses should introduce a system of electronic payments (9 marks)

Specification topic: Ethical and environmental considerations

Case Study: Item A – Bottles for Life Ltd

Bottles for Life Ltd is a new firm that is making a real difference to the recycling of plastic bottles. In the UK, over 36 million bottles a year are thrown away and are either sent to landfill sites or end up polluting the environment, rather than being recycled. As a response to this information, Bottles for Life Ltd produce and supply a range of soft drinks in plastic bottles, which are sold by most supermarkets. The selling price of these drinks includes a deposit of 5p for a small bottle and 20p for a large bottle. This is refunded when the bottle is returned through a machine that the company installs at all large supermarkets.

The company also has an environmentally friendly production process, where new bottles are produced from 100% recycled plastic, in order to avoid the business using up scarce resources. The firm also does not use artificial flavours in any of its drinks. Its environmental policy has resulted in considerable publicity. However, the Marketing Director of the company is clear that the company’s motives are focussed pre-dominantly on ethics, rather than increasing sales and profits.

Bottles for Life Ltd has many competitors in the market. As well as large multinationals, most supermarkets have their own brand products, including value ranges. So far, the company’s rivals have been competing with Bottles for Life Ltd through price, rather than improving their own recycling situation.

Exam-style questions:

1. Explain one way in which consumers can demonstrate greater environmental responsibility (2 marks)

2. Explain one financial benefit to Bottles for Life Ltd of being environmentally friendly (4 marks)

Case Study: Item B – Bottles for Life Ltd

Some of the stakeholders in the company are less convinced that the recycling idea is a good one. There are high costs for supplying and maintaining the machines for the bottle returns and the company’s profits have fallen in the last two years, due to increasing costs and a lack of growth in sales. Wages have not increased for three years and have fallen behind wages in similar low skilled production jobs.

The Board of Directors is now considering the firm’s future strategy. If the business is to continue with the recycling scheme, which they believe in, the firm will need to increase sales. The Marketing Director has requested a big increase in the budget for promotion, so that more consumers are aware of the company’s products, the recycling scheme and its benefit in providing a sustainable economy. Other directors are concerned that this will not work, as it is not solving the problem of high costs and the low prices that the company faces with its competitor products.

Exam-style questions:

3. Analyse the impact of continuing with the recycling scheme. In your answer you should consider:

  •  The effect on shareholders
  • The implications for the marketing department

You must evaluate which area will have the biggest impact on the business. You must use evidence to support your answer (12 marks)

 

Specification topic: The economic climate on businesses

Case Study: Item A – Sporty Cars plc

After spending on a house or flat, buying a car is the next most expensive item of household expenditure. The state of the economy will, therefore, have a considerable effect on how much money is available for individuals to spend on cars. Over the last ten years, the UK has benefited from low and stable interest rates, which has helped car sales reach record levels. One of the main growth areas for new car sales is in SUVs. These sports utility vehicles, sometimes called suburban utility vehicles, are now the most popular new car sold in the UK.

Sporty Cars plc is a UK based car company that has grown considerably in the last ten years, both in terms of its manufacturing operations and its number of car dealerships. As well as its traditional range of sports car designs, the company’s biggest success has been a sporty looking SUV. As employment has continued to grow in the UK, consumer income and demand is high, although most customers still tend to buy a car through borrowing money. Low interest rates on loans, make this a very attractive option to pay for a car. Sporty Cars plc has been offering special interest rates on loans to its customers for the last five year, when buying one of its cars.

With the possibility of rising interest rates in the economy, Sporty Cars plc is hoping that it will continue to experience increasing sales and profits in the future, the same that it has seen in recent years.

Exam-style questions:

1. Explain one way that an increase in interest rates could affect a business (2 marks)

2. The sporty SUV is currently priced at £20,000. If prices were to increase by 5% in each of the next two years, calculate the selling price of the SUV in 2 years’ time? Show all your workings     (3 marks)

Case Study: Item B – Sporty Cars plc

Sporty Cars plc is considering bringing out a new range of sporty SUVs. This range will have many luxury features and will be aimed at the high income end of the market. Prices will be higher than the current SUV model. The business does not plan to offer special interest rate deals, in order to encourage customers to take out one of Sporty Cars plc’s loans to buy one of these cars.

Some managers are concerned however, that there is considerable change occurring in the UK economy, which is outside of Sporty Cars plc’s control. Factors such as the UK leaving the European Union, which may affect the company’s large number of European sales, the possibility of rising costs and therefore increasing prices which could lead to falling demand and increases in unemployment, all mean that these managers believe it may not be the best time for such an expensive decision to be taken.

Exam-style questions:

3. Recommend whether Sporty Cars plc should introduce its new range of sporty SUVs (9 marks)

 

Specification topic: Globalisation

Case Study: Item A – British Jets plc

British Jets plc make aeroplanes. It is a large British company, formed by a merger between two famous British aircraft firms. One of these firms specialised in making aircraft engines, the other one had always made the bodies of the aircraft, including the wings. Making an aircraft is very expensive. The Dreamliner, one of the company’s aircraft, is estimated to cost £90 million each to make. The rewards are however, great. The Dreamliner would be sold to airlines all over the world, for a selling price of £160 million pounds.

The profits made on an individual aircraft have to be used to pay for the very expensive research and development that is essential, in such a high technology business. One way firms, such as British Jets plc, have been able to afford these costs is by sharing research with other large businesses, many of which are based in other countries. These businesses would tend to have expertise in a particular area, such as electronics or wheels and brakes. British Jets plc would also often buy parts from these other international businesses, as they would have higher quality, cheaper costs and therefore the prices charged would be less expensive.

Exam-style questions:

1. Explain one benefit of globalisation to British Jets plc (4 marks)

2. Calculate the gross profit margin for each Dreamliner aircraft. State the profit margin formula and show all your workings. Give your answer to two decimal places (5 marks)

Case Study: Item B – British Jets plc

In the last two years, the value of the pound has fallen significantly. This has affected British Jets plc in many different ways, as it both imports parts from other countries and sells finished aircraft to foreign airline companies. British Jets plc also is facing increasing competition for sales in the UK, from foreign companies such as Boeing.

British Jets plc employs about 150,000 workers in the UK, who mainly make aircraft bodies and engines, as well as assemble the aircraft.  Although many parts are imported, there are also at least another 150,000 workers in the UK who have jobs that are indirectly linked to British Jets plc, for example workers at UK steel making firms. Being such a large manufacturing company in the UK would mean that any fall or rise in the firm’s profits would not just affect British Jets plc, but the UK economy as a whole.

Exam-style questions:

3. Analyse the impact of the significant reduction in the value of the pound. In your answer you should consider:

  • The effect on British Jets plc
  • The effect on the UK economy

You must evaluate which area the change will have the biggest impact. You must use evidence to support your answer (12 marks)

 

Year 11

Please review your notes and the PowerPoint slides and then complete each Case study, using data from the case studies and the templates provided for you, which you stuck into your exercise book at the start of the course. Also available on Teams. You may also wish to utilise the AQA GCSE Business course companion, for more information.

Specification topic: Sources of finance

Case Study: Item A – Damon’s Digital Printing

Damon is a sole trader and has run the town’s photographic shop for a number of years. As well as selling a small selection of cameras and pictures frames, Damon also takes photographs of families, weddings and other important events. He has always sent away the digital images that he takes, as he does not have the correct machinery to produce the high quality images that his customers demand. This process is however, expensive and means his prices are high.

Damon is now finding he is being increasingly asked whether he can print off images for his customers himself, rather than them being sent away. He has found that his customers are asking for a range of prints, for example sets of holiday prints or more and more large high quality prints for display or publicity purposes.

With his current business making a small profit, but with the prospect of little growth, Damon is now wondering if it is the right time to invest in the latest high quality printing machines, such as the ones found in large retailers. Machinery such as this, would allow him to produce high quality photographic print images up to A3 size. The machine would cost £6,000 to purchase, but the price would include some free ink and photographic paper.

Damon is considering whether to get a bank loan in order to purchase the machine, to add to the overdraft facility that he currently has on his business bank account. The interest rate, on a one year bank loan, would be a 5% fixed rate of the sum borrowed and repayments, including the interest, would be monthly.

Exam-style questions:

1. Identify one benefit of a business having an overdraft facility (2 marks)

2. Calculate Damon’s monthly repayments if he decides to buy the printing machine (3 marks)

3. Explain one benefit to Damon of using a bank loan to purchase the machine (4 marks)

Case Study: Item B – Damon’s Digital Printing

Damon has recently been given the opportunity to buy the shop premises from where he operates and currently rents. He is now considering whether this would be a good idea, as he would need to obtain a mortgage. He is worried as he operates as a sole trader business, but he can see the attraction of owning his own shop, as his current rent payments are very expensive.

Taking out a mortgage would be a big commitment for Damon and he is wondering whether he would be able to earn enough from his photography business to meet the required re-payments.

Exam-style questions:

4. Recommend whether Damon should take out a mortgage to allow him to buy the shop premises. Give reasons for your advice (9 marks)

 

Specification topic: Cash flow

Case Study: Item A – Hunley Ice Cream

Hunley Ice Cream is a sole trader business that is located in a small tourist town, called Hunley. The business has been trading for over 30 years and hand produces the 20 different flavours of ice cream from the kitchen located at the back of its store, from where it sells its ice creams, together with snacks and drinks. The business has always been hugely popular and people travel from miles around to purchase its ice creams. At times, this results in queues forming outside of the shop, but sales are very weather dependent. The business employs 6 people on full time permanent contracts, to either make the ice cream or serve in the shop.

Exam-style questions:

1. Identify two benefits of Hunley Ice Cream of producing ice cream by hand (2 marks)

2. Analyse the impact on Hunley Ice Cream of employing full time members of staff (6 marks)

Case Study: Item B – Hunley Ice Cream

The town of Hunley currently has three cafes located along its small high street, in addition to Hunley Ice Cream. During the summer, two of these cafes started selling ice cream from another local producer at cheaper prices. The price of their snacks and beverages are also cheaper. This has affected Hunley Ice Cream sales, as has the availability of cheaper luxury ice cream products in supermarkets. The costs of buying the ingredients to make the ice cream has also risen, which has affected the firm’s cash flow negatively, particularly as Hunley Ice Cream must pay its suppliers immediately for these ingredients.

Exam-style questions:

3. Recommend the best way that Hunley Ice Cream could improve its cash flow. Give reasons for your answer (9 marks) 

 

Specification topic: Financial terms and calculations - break-even

Case Study: Item A – Polly Potter

Polly Potter has two children, one of whom who was recently invited to a pottery party at a local café. After leaving the party, Polly kept thinking what a wonderful business opportunity it would be to open a café and offer customers the chance to create some artwork to take home, whilst enjoying a drink and a snack. As a result, Polly decided to investigate this business idea further.

Polly decided firstly to investigate the costs and revenue of setting up such a business. She split the costs into fixed and variable and also calculated her estimated selling price. She then produced a break-even chart, as shown in Figure 1.

Exam-style questions:

1. Identify and state the break-even point for Polly’s café (2 marks)

2. Identify the margin of safety, if Polly serves 400 customers in a month (2 marks)

Case Study: Item B – Polly Potter

Polly thought it was important to conduct some market research and decided to interview a group of close friends and family about her business idea. Her husband also stressed the importance of reviewing the break-even chart she had produced, by seeing the impact a change in either her costs or selling price would have on her break-even point. Polly was not convinced that this was a worthwhile activity, or see the overall value in conducting break-even analysis at all, and was more concerned about getting the business up and running as quickly as possible.

Exam-style questions:

3. Analyse one reason why Polly chose to conduct market research before setting up her café    (6 marks)

4. Recommend to Polly whether conducting more detailed break-even analysis would be of value to her business start-up (9 marks) 

 

Specification topic: Analysing financial performance of a business

Case Study: Item A – Smart Accessories Ltd

Smart Accessories Ltd has been trading for a number of years and produces a number of popular accessories for a wide range of smart phones. These include items such as covers and chargers, as well as the more expensive extension products including speakers, headphones and keyboards. Smart Accessories Ltd is an online business that is currently experiencing rising sales, as it has built a loyal customer base through both its website and other internet sales sites, such as eBay.

The most recent financial statements for the company have just been received. The income statement is summarised in Table 1.

Smart Accessories Ltd

Income statement for year ending 31 December this year 

                                      £                                              

Revenue

640,000

Cost of sales

332,800

Gross profit

307,200

Distribution costs

116,800

Administration expenses

49,600

Net profit

?

Table 1

Exam-style questions:

  1. Explain, using one business example, the meaning of a current asset (2 marks)
  2. Calculate the gross profit margin for this year. State the formula used and show all your workings (3 marks)
  3. Calculate the net profit margin for this year. State the formula used and show all your workings (5 marks)

 

Years 12 and 13

Please note that bespoke work will be set by the subject teachers and emailed to students.