Economies & diseconomies of scale

Which of the following is an advantage of job production?

Which of the following pairs of legal structures both benefit from limited liability?

Which of the following is an economic influence on businesses?

Which of the following is a method of digital communication?

Which of the following is the formula for average unit costs?

Which of the following describes the lean production technique of just-in-time (JIT)?

Identify two factors a business may consider when choosing a supplier.

Explain one reason why a person might want to become an entrepreneur.

Explain one reason why the training of current employees may be needed.

Explain one disadvantage to a business of decentralisation.

Explain what is meant by opportunity cost for a business.

State and describe two documents which may be produced during the recruitment and selection process of employees.

Item C: Solar Scene Ltd

Explain one negative impact a business may have on the environment.

Telesales staff at Solar Scene Ltd have excellent technical knowledge of the solar panels and can address concerns immediately.

Explain one reason why Solar Scene Ltd uses telesales to distribute solar panels.

The solar panel market is a growing market and in 2024 grew by 40%. The average sales revenue growth of competitors is 35%.

Analyse one way that the information in Solar Scene Ltd’s income statements would help potential investors decide whether to invest in the company.

Item D: Solar Scene Ltd

Explain one benefit for a business of using market segmentation.

Solar Scene Ltd has placed an order with its supplier for 8 solar panels. The total cost of the order is £12 000.

Using the information in Item D, calculate the cost of the order once the discount has been applied.

Show all workings.

Using the information in Table 2, calculate the gross profit margin for Solar Scene Ltd for 2024.

Show all workings.

Whilst the business grows, Karl will communicate with staff through monthly, instead of weekly, meetings.

Analyse one type of diseconomies of scale that may occur if Solar Scene Ltd expands quickly.

Item E: Solar Scene Ltd

Karl wants Solar Scene Ltd to expand into the business segment of the market. He is considering two options:

1. Apply for a government grant to build a factory in the UK

2. Merge with a manufacturer in China

Analyse the effect of each of these two options for Solar Scene Ltd.

Evaluate which of these two options will have the biggest impact on the ability of Solar Scene Ltd to be competitive in the business segment of the market.

Item C: Fone ltd

Using Item C, explain one advantage to Fone ltd of being a private limited company when expanding the business.

The business has decided to expand by introducing car phone holders to its product range.

Using Item C, explain the opportunity cost of this decision.

There have been 500 applications received for the team leader’s job and the business now needs to shortlist only the most suitable applicants.

Using Item C, analyse one way the person specification can be used to decide which applicants to invite for an interview.

Item D: Fone ltd

Identify one reason for diseconomies of scale occurring.

Using the information in Table 2, calculate the average number of phone cases per month produced from April to June.

Demand for the new ultra-thin phone cases is increasing.

Analyse one advantage to Fone ltd of introducing its new flow production process.

Item E: Fone ltd

Introduce a new lean production technique

Each department can have a group of up to three employees making suggestions on how to improve the process to lead to higher productivity.

It will be optional to join these groups.

Groups can be set up immediately and will have responsibility for reviewing roles and tasks within the department and suggesting changes.

There will be a bonus of £5000 for each department (to be shared within the department) if they improve productivity in the next three months.

Change the organisational structure and recruit internally for new assistant managers within each department

Internal recruitment for assistant managers can be completed within a month.

This will result in a pay rise of £5000 for successful applicants.

Assistant managers will have the authority to make some decisions and will oversee training.

Figure 1 Current organisational structure of Fone ltd

Table 3 Information about employees’ productivity in each department at Fone ltd

Anita wants to increase the productivity of all employees quickly and plans to use two options to achieve this.

1. Introduce a new lean production technique to each department.

2. Change the organisational structure and recruit internally for new assistant managers within each department.

Analyse the effect of each of these two options on all employees at Fone ltd.

Recommend which option Fone ltd should introduce first to improve productivity of all its employees in the short term.

Item C: Style the Chic (STC)

Using Item C, explain one benefit to Eve of being a sole trader.

Using the data in Table 1, explain one way in which competition affects STC.

Eve makes all the major decisions in the business.

Analyse one effect of Eve’s style of management on staff motivation.

Item D: Style the Chic

Identify one way a business’ production of goods and services could be sustainable.

Using data from Table 2, describe how the information indicates STC has experienced growth.

Using Table 2, explain one benefit to STC of its growth.

STC currently uses six suppliers. The amount paid to them is shown in Table 3.

Analyse one benefit to STC of effective supply chain management.

Item E: Style the Chic

STC wants to increase customer loyalty and is considering two options to achieve this.

1. Introduce live chat to the website to improve customer service.

2. Introduce a recycling scheme to improve the ethical behaviour of the business.

Analyse the effect of each of these two options on STC.

Evaluate which of these two options will have the biggest impact on customer loyalty for STC.

Item C: BEco Bottle

Explain one characteristic of the growth stage of the product life cycle.

Using Item C, explain one type of economy of scale that might benefit Jake’s

Jake used the Internet to collect secondary market research for his business plan.

Analyse one disadvantage of Jake using the information he gathered from his Internet

Item D: BEco Bottles

Jake is considering changing his pricing strategy from price skimming to competitive

Analyse one benefit for Jake’s business of using a competitive pricing strategy.

Figure 1 BEco Bottle break-even chart at current selling price

To remain competitive, Jake has reduced the price of the BEco Bottle. At this new price, the level of sales and his costs remain the same. If Jake sells 5000 bottles, total revenue falls from £90 000 to £75 000.

Using Figure 1, calculate the fall in profit as a percentage if Jake sells 5000 bottles at the new lower price.

State the formula for net profit and show your workings.

Item E: BEco Bottle

Jake wants to target a new BEco Bottle at sports people and needs to increase production. He is considering two options to achieve this:

• outsource production of the sports bottle to India

• use hire purchase to buy the new equipment to manufacture the sports bottle in his existing factory.

Analyse the effect of each of these two options for the business.

Evaluate which of these two options will have the bigger impact on the future success of the sports bottle.

Which element of the marketing mix involves selecting a channel of distribution?

Which source of finance is available to a limited company but not a sole trader?

Which pricing method involves calculating the costs of production and adding a percentage to make a profit?

What is the name for the category of products in the Boston Matrix labelled X below?

Which method of growth involves employing another business to produce products or provide services?

Which of the following would be on a statement of financial position?

Explain what is meant by the term ‘economies of scale’.

Identify two ways business activity can have an impact on the environment.

Way 1

Way 2

Explain one way a business can minimise risk.

Explain one way that promoting a good or service can increase sales.

Use the break-even chart below to calculate the margin of safety in units if the actual number of units sold was 700.

Show all workings.

State and explain two extension strategies that can extend the life cycle of a product.