OCR GCSE Business Studies Operations, finance and influences on business June 2023 question paper J204/02

A company makes wooden jigsaw puzzles.

By law, the company must:

A buy its wood from local suppliers

B deliver the jigsaw puzzles in electric vans

C replace any pieces that customers lose

D use paint that is non-toxic and safe

Which of the following is least likely to be a reason for a business to need finance?

A To decrease the size of the workforce

B To extend a marketing campaign

C To increase the size of its factory

D To reduce the amount of stock it purchases

Which of the following would be fixed costs of a fruit farm?

A Farm workers’ wages

B Plant food and fertiliser

C Rent and rates

D Seeds and seedlings

Four years ago an entrepreneur invested £200 000 to start up their own business. The business is making an average profit of £53 000 per year.

The entrepreneur’s average rate of return is:

A 6.6%

B 26.5%

C 73.5%

D 106%

Emma and Henry are in a partnership that runs a small building firm. Despite being profitable, the business is having difficulty paying all its expenses.

Which of the following would help Emma and Henry deal with this problem?

A Holding larger stocks of raw materials

B Increasing the labourers’ wages

C Issuing shares

D Taking on a new partner

Financial data for Pilti plc in 2022 is shown below.

• Revenue £44 million

• Expenses £12 million

• Net profit £14 million

Pilti plc’s gross profit in 2022 was:

A £18 million

B £26 million

C £32 million

D £58 million

An extract from Yoshi’s Sweet Shop’s cash flow forecast for November is shown below.

Yoshi’s Sweet Shop’s opening balance for December is expected to be:

A £4700

B £4800

C £14 200

D £14 300

Which of the following is an advantage of receiving trade credit?

A It can be used to pay wages and salaries

B It encourages production operatives to work harder

C It is often interest free

D It may bring new skills into the business

A manufacturer of diamond rings employs sales staff to visit jewellery stores across the UK to encourage them to purchase its products.

Which of the following is an advantage to the manufacturer of selling face to face to jewellery stores?

A The cut and colour of the diamonds can be clearly demonstrated

B The jewellery stores have the opportunity to negotiate very low prices

C The risk of the rings being stolen is kept as low as possible

D The sales staff can give out lots of free samples

Globalisation refers to:

A the financial data used to measure the success of a multinational company

B the interconnected nature of business activities across the world

C the interdependencies that underpin decision-making in a large organisation

D the relationships that exist between the functional areas of a business

Riley runs his own cleaning business. He wishes to keep supply costs as low as possible. The table below shows the price of cleaning fluid at four possible suppliers.

The lowest cost that Riley can obtain 1200 litres of cleaning fluid from one supplier is:

A £480

B £600

C £700

D £800

The net profit margin of a business has increased from 6% in 2021 to 9% in 2022.

Which of the following must be true for this business?

A Expenses have fallen by 50%

B Net profit has increased by 3%

C Profitability has increased by 50%

D Revenue has increased by 3%

A health centre wishes to improve its environmental sustainability.

Which of the following would help achieve this?

A Asking doctors to wash their hands more frequently

B Encouraging nurses to go out walking during their lunch break

C Giving out free fruit to health centre staff and patients

D Installing sensors to switch off lights when not needed

A cash flow forecast can help a business:

A calculate net profit

B identify changes in the market

C predict liquidity problems

D understand the concept of break-even

Amir runs a market stall that sells bread. His most popular product, the Farmhouse Loaf, is currently priced at £2.00.

Amir is considering changing the price he charges for the Farmhouse Loaf.

The table below shows Amir’s expected weekly sales of the Farmhouse Loaf at various prices.

This data is useful to Amir when making this pricing decision because it shows that:

A changing the price charged for each loaf will have little effect on total revenue

B charging a relatively high price for each loaf is likely to increase total revenue

C reducing the price charged for each loaf is likely to increase total revenue

D the current price should not be changed because it maximises total revenue

Text 1 Zara

Zara is a global fashion brand based in Spain. Zara is best known for the speed and frequency it can get its new clothing ranges into its online shop and 2270 stores. Approximately 50% of Zara’s clothes are manufactured in Spain; the rest come from other European countries, or from Asia and Africa. Like most firms in 2020, Zara experienced a fall in sales. Zara’s global sales revenues in 2019 were €19 954 million, but in 2020 these fell to €14 129 million. However, during this period Zara’s online sales increased by approximately 75%, as consumer buying habits changed in favour of e-commerce.

Zara can get new clothing designed, manufactured and delivered to its stores within 15 days. It does this by buying fabric in large quantities from suppliers in Europe, which helps keep its variable costs low. This means that it is delivered quickly to its factory in Spain, where it can then be made up into the new designs.

Zara’s highly responsive supply chain is central to its business success. This means it can change its clothing designs on average every two weeks, while competitors change their designs every two or three months.

Explain one production process a business may use when making its products.

Explain one method that a business could use to ensure the quality of its products.

Analyse one reason why keeping variable costs low may reward Zara’s owners.

Calculate the percentage decrease in Zara’s sales revenue between 2019 and 2020.

Show your workings

Answer........

Explain one possible advantage to a business of selling its products via e-commerce.

Identify two roles of the procurement function in a business.

Evaluate the importance to Zara of having reliable suppliers in the supply chain for its clothing.

Text 2

AstraZeneca plc

AstraZeneca plc (AZ) is a multinational pharmaceutical company that operates in over 100 countries around the world. AZ develops treatments for a range of diseases. It sells its medicines and vaccines worldwide. Its headquarters are in Cambridge, England. In 2021 AZ’s sales revenue was £37 417m, from which it made £24 980m gross profit.

AZ has a code of ethics, which is at the centre of everything that it does. The company has approximately 75 000 employees worldwide; 10 000 of these work in its three research and development centres.

AZ uses technology throughout its operations to provide high quality products for its customers. These customers include doctors, hospitals and governments from around the globe.

In the UK, AZ has changed the way it sells its products. Previously, sales staff would visit medical professionals; now it uses a call centre and website where medical professionals can order products and samples. AZ says this means it can now provide a high quality service that meets the needs of its customers at a lower cost.

Identify two ethical considerations a business may have.

State two reasons why quality in the production of goods is important to a business.

Analyse one reason why it is important to AZ that its call centre employees have good product knowledge.

Calculate AZ’s gross profit margin for 2021.

Show your workings

Answer........

Explain one way technology might affect production at AZ.

Analyse one advantage and one disadvantage to AZ of operating as a multinational company.

Recommend whether AZ should continue to operate as a multinational company.

Text 3

Glorious Kitchens Ltd

Glorious Kitchens (GK) is a private limited company based in Brighton. The company makes and fits high-quality, luxury wooden kitchens throughout the south-east of England. Its most popular range is the Deluxe.

The average price of a Deluxe kitchen is £15 000 including fitting. GK calculates its fixed costs for the year to be £250 000 and its variable costs for the Deluxe to be £6380, which means they need to sell 29 kitchens to break even.

GK is concerned about the future economic climate and its possible impact on the company’s sales. It is predicted that there will be a fall in consumer incomes in the south-east of England until 2025. Unemployment in the south-east of England is forecast to follow the trend shown in Table 1.

Financial data for GK at the end of 2022 is shown in Table 2.

State one reason why cash is important to a business.

Analyse how GK can use the break-even level of output for its Deluxe range.

Analyse one limitation to GK of using break-even when making decisions about its Deluxe range.

Analyse one impact on GK of the predicted fall in consumer incomes.

Analyse one impact on GK of the forecast change in the unemployment rate shown in Table 1.

Recommend whether the predicted fall in consumer incomes or the forecast change in the unemployment rate will have the greatest impact on GK.

* Evaluate how useful the financial data in Table 2 is to GK’s stakeholders.