Oxford Cambridge and RSA

Thursday 9 January 2020 – Morning

Level 1/2 Cambridge National in Enterprise and
Marketing
R064/01 Enterprise and marketing concepts
Time allowed: 1 hour 30 minutes
* 8 2 9 0 9 5 7 4 9 2 *

You can use:

• a calculator

* R 0 6 4 0 1 *

Please write clearly in black ink. Do not write in the barcodes.

Centre number Candidate number

First name(s) �

Last name �

INSTRUCTIONS
• Use black ink.
• Write your answer to each question in the space provided. You can use extra paper if
you need to, but you must clearly show your candidate number, the centre number and
the question number.
• Answer all the questions.

INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• This document has 16 pages.

ADVICE
• Read each question carefully before you start your answer.

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Section A

Answer all the questions.

Put a tick (3) in the box next to the one correct answer for each question.

1 Which of the following is a disadvantage of running a business as a partnership?

(a) Can share ideas to expand the business

(b) Limited legal requirements

(c) Must share profit amongst the shareholders

(d) Unlimited liability

[1]

2 Which of the following is a purpose of market research?

(a) It is a legal requirement to start a new business

(b) To advertise a new product

(c) To aid decision making

(d) To increase risk

[1]

3 Which of the following is a stage of the product lifecycle?

(a) Development

(b) Downturn

(c) Profit

(d) Recession
[1]

4 Which of the following is a feature of a small business grant?

(a) A limited amount of funds are generally available

(b) Only sole traders can apply for a grant

(c) The grant provider will ask for a royalty fee

(d) The need to make monthly repayments to repay the grant

[1]

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5 What is the name given to individuals who donate money to a crowdfunded project?

(a) Lenders

(b) Owners

(c) Shareholders

(d) Sponsors
[1]

6 Which of the following is not an activity of the Operations functional area?

(a) Health and safety in the workplace

(b) Production planning

(c) Quality control

(d) Stock control

[1]

7 Which of the following can be used by a business owner to outline the business goals and
objectives for the coming year?

(a) Business plan

(b) Mintel report

(c) The product lifecycle

(d) Trade magazine

[1]

8 Maisey runs a business that sells fruit smoothies. The selling price of each smoothie is £1.50 and
the variable cost to make each one is 80p. Maisey’s fixed costs are £7000 per year.

The formula to calculate the break-even point is

Fixed costs
Selling price per unit – Variable cost per unit

How many smoothies does Maisey need to sell each year to break-even?

(a) 100

(b) 1000

(c) 10 000

(d) 100 000

[1]

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9 Advertising and changing the packaging of a product are both examples of which of the following?

(a) Competitive pricing

(b) Extension strategies

(c) Market research

(d) Market segmentation

[1]

10 The graph shows the sales revenue generated by a business. The figures for 2020 and 2021 are
forecasts.

2000
1800
1600
Sales revenue (£)

1400
1200
1000
800
600
400
200
0
2015 2016 2017 2018 2019 2020 2021
Year

Which stage of the product lifecycle is the business at by the end of 2019?

(a) Decline

(b) Growth

(c) Introduction

(d) Maturity
[1]

11 Sophie runs a small shop selling pet food. During the month of April she sold 55 packets of dog
food at a price of £1.55 and her total costs were £350. How much revenue did Sophie generate in
April?

(a) −£264.75

(b) £6.36

(c) £85.25

(d) £542.50
[1]

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12 Which source of capital for a business start-up is most likely to be offered by a group of investors?

(a) Bank loan

(b) Business angel

(c) Crowdfunding

(d) Small business grant

[1]

13 Which of the following is used to stop a competitor copying a new product idea?

(a) Competitive pricing

(b) Limited liability

(c) Patent

(d) Registering with HMRC

[1]

14 Break-even information may help with decisions about:

(a) Customer feedback

(b) Market research

(c) Pricing

(d) Product safety standards

[1]

15 Which of the following is not an example of a functional area within a business?

(a) Advertising

(b) Finance

(c) Human Resources

(d) Operations
[1]

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16 Which of the following groups always receives a share of any profit earned by a business?

(a) Customers

(b) Employees

(c) Lenders

(d) Owners
[1]

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Section B

Answer all questions in this Section.

Last year you completed a two-week work experience placement at a household waste and recycling
centre. You were shocked that some people throw away furniture which could be reused. You decided
to use the knowledge gained from your Enterprise and Marketing course to set up a business called
‘Second Chance’.

Your business will repair and restore furniture that the original owner no longer needs and sell it onto
a new owner for a profit. You intend to employ an administrator for one afternoon per week to help you
run your business.

Before you set up your business you decide to carry out some market research to help you segment
your market.

17 (a) State and explain one advantage and one disadvantage of using government publications
and statistics as part of your market research.
They are free
Advantage ................................................................................................................................

...................................................................................................................................................
The advantage of the publications being free is that it will help reduce
Explanation ...............................................................................................................................
the costs of a business which will allow the business to use this capital on other
things such as advertising.
...................................................................................................................................................
They could be outdated
Disadvantage ............................................................................................................................

...................................................................................................................................................
If the information of these publications are even a year old they could
Explanation ...............................................................................................................................

drastically alter the chances of the business making a profit

...................................................................................................................................................
[4]

(b) Identify two other secondary market research sources which you could use.
Competitors data
1 ................................................................................................................................................
Books/ Magazines
2 ................................................................................................................................................
[2]

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18 (a) Explain the need for customer segmentation.

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.............................................................................................................................................. [2]

(b) Identify three benefits of using market segmentation for your business.
More market share
1 ................................................................................................................................................
Lowered Break Even
2 ................................................................................................................................................

More customers
3 ................................................................................................................................................
[3]

19 State and explain two variables from the design mix model that will contribute to the successful
design of the furniture that you sell.
The aesthetics.
Variable 1 .........................................................................................................................................

..........................................................................................................................................................
If a product is visibly appealing it will be more likely sell, this is
Explanation ......................................................................................................................................
because it may create the impression that the product itself is more
..........................................................................................................................................................
premium and could be perceived as a status item such as Gucci

Variable 2 .........................................................................................................................................
Differentiation
..........................................................................................................................................................
If a product has a function that is unique it will allow it to differentiate
Explanation ......................................................................................................................................
it self from competitors and make it more attractive to customers. This can help
a business standout in a competitive market and increase its chances of
..........................................................................................................................................................
success. [4]

20 To help meet your revenue and profit targets for your first year of business you decide to advertise.

Identify two advertising methods which you could use to attract customers to your new business.
Magazines
Method 1 ..........................................................................................................................................
Social Media
Method 2 ..........................................................................................................................................
[2]

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21 Analyse one advantage and one disadvantage of using ‘Buy One Get One Free’ (BOGOF) to
attract customers.

Buy one get one free will benefit a business by

Advantage ........................................................................................................................................
creating customer loyalty. If a competitor to your business
..........................................................................................................................................................
does not have a sales promotion method currently active
..........................................................................................................................................................
it would instantly attract the consumer to your business
..........................................................................................................................................................
this is amazing because if you have left over stock which
..........................................................................................................................................................
you are unable to sell the customer may be more
attracted to buy the product then they usually are.
..........................................................................................................................................................

..........................................................................................................................................................

..........................................................................................................................................................

..........................................................................................................................................................

Even though buy one get one free would

Disadvantage ...................................................................................................................................

attract more customers you are still losing the revenue of

..........................................................................................................................................................
one your units. This is bad because in the long term
..........................................................................................................................................................
your break even output would increase as well as the
..........................................................................................................................................................
margin of safety causing you to earn profit even later than
..........................................................................................................................................................
usual.
..........................................................................................................................................................

..........................................................................................................................................................

..........................................................................................................................................................

..........................................................................................................................................................
[6]

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22 You have identified that you need to pay the following fixed and variable costs each month to run
your business:

• Insurance £150
• Raw materials £300
• Advertising £100
• Utilities £100
• Components £50

(a) Explain, using an example, what is meant by fixed costs.

Fixed costs are the operating costs that stay the
...................................................................................................................................................
same such as the rental costs the advertising the
...................................................................................................................................................
insurance and the salaries
...................................................................................................................................................

.............................................................................................................................................. [2]

(b) Calculate the total variable costs that you need to pay each year.

Show your workings

£300 + £100 = £400

£400
Answer ......................................
[2]

(c) Name the level of output where total revenue is equal to total costs.
The Break even point
.............................................................................................................................................. [1]

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(d) You forecast that you will make a profit of £10 200 during your first year of business. Assuming
that sales are the same each month, calculate the average revenue per month.

Show your workings

Answer ......................................
[3]

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23 To help set up your business you have applied for a bank loan. The bank manager has asked for
a business plan to support this application.

(a) Identify three items that are typically included in a business plan.

Item 1 ........................................................................................................................................

Item 2 ........................................................................................................................................

Item 3 ........................................................................................................................................
[3]

(b) Analyse two disadvantages of financing your business using a bank loan.

Disadvantage 1 .........................................................................................................................

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Disadvantage 2 .........................................................................................................................

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[6]

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24 A news report states that the economy is about to enter a boom later this year.

(a) Analyse why an economic boom may have a negative impact on the development of your
product.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

.............................................................................................................................................. [3]

(b) Apart from economic issues, identify two other external factors which may affect the
development of your product.

1 ................................................................................................................................................

2 ................................................................................................................................................
[2]

25 Your friend, Tan, offers to help you run your business. Tan used to work in the Human Resources
department of a large company.

(a) State and explain two Human Resource activities which Tan may help you with.

Activity 1 ...................................................................................................................................

...................................................................................................................................................

Explanation ...............................................................................................................................

...................................................................................................................................................

Activity 2 ...................................................................................................................................

...................................................................................................................................................

Explanation ...............................................................................................................................

...................................................................................................................................................
[4]

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(b) From the list below, link each functional activity to its correct purpose with a line.

Identifying the needs and wants of

Finance
customers

Managing the money in a small

Marketing
business

Organising the process that turns

Operations
inputs into outputs

[3]

26 Three months after opening Second Chance you decide to obtain feedback from your customers.

State and explain two appropriate methods of obtaining customer feedback for your business.

Method 1 ..........................................................................................................................................

..........................................................................................................................................................

Explanation ......................................................................................................................................

..........................................................................................................................................................

Method 2 ..........................................................................................................................................

..........................................................................................................................................................

Explanation ......................................................................................................................................

..........................................................................................................................................................
[4]

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27 Good customer service is important to attract and retain customers within your business.

You think that product knowledge is the most important way of delivering good customer service
to Second Chance’s customers. However, Tan is of the opinion that after sales service is more
important.

Recommend which of these two customer service techniques is the most important for Second
Chance. Justify your answer. [8]

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END OF QUESTION PAPER

Oxford Cambridge and RSA

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