Oxford Cambridge and RSA

Friday 24 May 2019 – Morning

GCSE (9–1) Business
J204/01 Business 1: business activity, marketing and people
Time allowed: 1 hour 30 minutes

You may use:

* 7 7 0 4 0 3 2 3 4 6 *

• a calculator

* J 2 0 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.
• Sections A and B: answer all the questions.
• Write your answer to each question in the space provided. Additional paper may be
used if required but you must clearly show your candidate number, centre number and
question number(s).

INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• Quality of extended response will be assessed in questions marked with an asterisk (*).
• This document consists of 20 pages.

© OCR 2019 [603/0295/1] OCR is an exempt Charity

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Section A

Answer all the questions.

1 Which one of the following is a role of human resources in business?

A Developing new products

B Increasing employee retention

C Maximising revenue

D Offering price reductions

Your answer  [1]

2 A fast food restaurant is currently charging a price of 60p for its new healthy snack. The fast
food restaurant intends to increase the price to £2.25 once the healthy snack has become more
popular with customers.

The current price is an example of:

A competitor pricing

B cost-plus pricing

C penetration pricing

D price skimming

Your answer  [1]

3 Which one of the following is unlikely to be a characteristic of a successful entrepreneur?

A Being able to create opportunities

B Being confident in new situations

C Being determined to work through problems

D Being uncomfortable with taking risks

Your answer  [1]

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4 Which of the following is a benefit to a business of advertising on local radio?

A Can target a specific geographical area

B Detailed financial information can be included

C Free samples can be given out with the advertisement

D The product can be seen and demonstrated

Your answer  [1]

5 Madame Co is a women’s clothing manufacturer. To identify trends in the market, the firm carries
out a lot of market research.

The cost of the market research for Madame Co in the last year is shown in the table below.

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Cost of
market £1.2 million £0.7 million £1.5 million £0.9 million
research

Madame Co’s average quarterly spend on market research is:

A £1.05 million

B £1.075 million

C £2.15 million

D £4.3 million

Your answer  [1]

6 Which of the following is a benefit to an entrepreneur of having limited liability?

A All profits are tax free

B Own possessions are not at risk

C Productivity will fall

D Suppliers are more willing to supply

Your answer  [1]

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7 The table below shows market data for three fizzy drinks. The recipes used to make the drinks
were changed to reduce the amount of sugar.

Quantity of drinks sold before Quantity of drinks sold after

the recipe was changed the recipe was changed

Drink A 9.4 million litres per month 10.3 million litres per month

Drink B 8.0 million litres per month 7.2 million litres per month

Drink C 6.5 million litres per month 4.0 million litres per month

According to the table, which one of the following statements is true?

A Demand for all three drinks decreased significantly

B Demand for Drink A increased by 1.1 million litres

C Demand for Drink B fell by 10%

D Demand for Drink C decreased by a smaller percentage than Drink B

Your answer  [1]

8 The ‘objectives of a business’ are:

A negative comments from the local community

B the buildings and equipment the business owns

C the items the business makes and sells

D what the business intends to achieve

Your answer  [1]

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9 Which of the following is an advantage to a fruit farm of employing temporary workers to pick the
fruit?

A Discrimination laws do not apply because the work is only for a few weeks

B Induction training will not be required because the work is not permanent

C The number of workers employed can be varied according to the season

D Workers are likely to be more committed to their jobs and pick more fruit

Your answer  [1]

10 A national retailer intends to trial a new product in some of its stores.

Which of the following is not a benefit of trialling the product?

A It avoids wasting money on an unsuccessful national launch

B It helps identify the target market

C It requires a lot of national advertising and promotion

D It shows whether there is sufficient demand for the product

Your answer  [1]

11 A market research agency needs to constantly improve its digital communications to keep up with
the competition. In 2017 it spent £250 000 on digital communication. In 2018 it spent £525 000.

The agency’s percentage increase in spending on digital communications from 2017 to 2018 was
approximately equal to:

A 48%

B 52%

C 110%

D 210%

Your answer  [1]

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12 A photography business is owned by three sisters. The sisters have unlimited liability. Which one
of the following types of business does the sisters own?

A A partnership

B A private limited company

C A public limited company

D Sole trader

Your answer  [1]

13 Which one of the following is required by law?

A All employees must be given a voucher for a free eyesight test each year

B Employees who work from home must work a maximum of 16 hours a week

C Everyone who is self-employed must have private medical insurance

D Full-time employees must be given at least 5.6 weeks paid holiday per year

Your answer  [1]

14 Radi owns Chimney Restore Ltd, a company he set up in 2018. The company has grown rapidly
and now employs 12 workers. However, Radi is becoming increasingly concerned about the level
of risk he faces as the owner of a rapidly growing business.

Which of the following would help Radi to reduce his level of risk?

A Becoming a sole trader

B Carefully planning all business activity

C Ignoring the needs of customers

D Making employees work long hours

Your answer  [1]

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15 Which of the following is a benefit to a business of using off-the-job training?

A Large numbers of employees can be trained at the same time

B Likely to be cheaper than on-the-job training

C The training can take place while the employee is working

D Workers need to be paid for time spent doing off-the-job training

Your answer  [1]

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Section B

Answer all the questions.

16

Text 1

The Ford Motor Company Ltd

The Ford Motor Company Limited (Ford Motors) is a global manufacturer of a range of vehicles
including cars, vans, trucks and buses. Ford Motors has been one of Britain’s best-selling car
brands for over 30 years, with a range of models including the KA, Fiesta, Focus, Mondeo and
Galaxy. The company’s large range of products includes models that differ in size to meet the
individual needs of different market segments, including eco-friendly small cars, family cars, sports
cars and 7-seater people carriers.

Ford Motors carries out a lot of market research when developing new car designs and uses both
primary and secondary research. This ensures that new car designs and models meet the needs
of potential customers.

Each model’s sales levels are regularly monitored against the product lifecycle.

(a) State two secondary market research sources which Ford Motors could use.

1.

2
[2]

(b) Explain the purpose of marketing within Ford Motors.

. [2]

(c) Explain one way that preparing a business plan may be useful to Ford Motors.

. [2]

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(d) Explain how Ford Motors could use market segmentation when deciding where to place an
advert for its new car models.

. [2]

(e) Analyse one disadvantage to Ford Motors of manufacturing and selling such a large range of
products.

. [3]

(f) Many businesses, such as Ford Motors, use the product lifecycle to plan the marketing of
their product range.

(i) State one advantage to a business of using the product lifecycle to plan the marketing of
its products.

. [1]

(ii) State one disadvantage to a business of using the product lifecycle to plan the marketing
of its products.

. [1]

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(iii) Evaluate whether or not Ford Motors should continue to use the product lifecycle when
planning the marketing of its products.

. [7]

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Text 2

Redrow Homes

Redrow Homes is one of the UK’s leading housebuilders. Housebuilders, such as Redrow Homes,
typically use self-employed construction professionals alongside their own employees.

Redrow Homes employs over 2 300 people in a range of jobs including trades such as carpentry,
plumbing and bricklaying. They also employ landscape designers, customer service administrators
and sales advisors to sell the houses. The company is committed to staff development, with 15%
of the workforce undergoing an apprenticeship or other formal training programme.

Redrow Homes has been named one of the ‘Top 100 Apprenticeship Employers’ for the last five
years and was recently named the ‘Construction Industry Training Board Apprentice Employer
of the Year’. At any one time the company employs at least 130 apprentices, as the company
feels that it is an excellent way to find and develop young motivated staff. The company offers
apprentices a clear career path whereby they gain qualifications alongside work experience and a
good wage.

(a) Explain one method Redrow Homes’ head office employees could use to communicate with
staff working on one of its building sites.

Method .

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

. [3]

(b) Identify two reasons why employee motivation is important to Redrow Homes.

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

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

2.

.
[2]

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(c) Businesses may use financial or non-financial methods to motivate employees.

State one example of a:

(i) financial method to motivate employees

. [1]

(ii) non-financial method to motivate employees

. [1]

(d) State one reason why a business may need to recruit new employees.

. [1]

(e) Redrow Homes could use interviews or group activities to help select new apprentices.

Analyse how each of these methods could be used.

(i) Interviews

. [3]

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(ii) Group activities

. [3]

(iii) Recommend whether Redrow Homes’ managers should use interviews or group
activities to select new apprentices. Give reasons for your answer.

. [3]

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(f) Analyse one benefit to Redrow Homes of using apprenticeships as a method of staff
development.

. [3]

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Text 3
Beautiful Buds plc

Beautiful Buds plc is a company which grows plants that are sold to garden centres throughout
the UK. Beautiful Buds plc has a new Managing Director who has proposed a merger with Green
Gardens plc, a chain of garden centres selling a wide range of plants and other garden products.

Green Gardens plc is currently one of the country’s largest plant and garden retailers, with a market
share of approximately 12%. The vertical merger will result in one company owning a chain of
garden centres as well as growing the plants which are sold in these retail outlets.

Beautiful Buds plc currently has 124 employees. Its Managing Director is looking to make the
business more efficient and is planning to change its organisational structure by removing two
layers of management (see below). This change is planned before the proposed merger. The
Managing Director believes that the tasks carried out by Middle Managers and Team Leaders can
be effectively completed by employees either below or above them in the structure. The estimated
redundancy costs due to the restructuring are £200 000.

Directors (3)

Senior Managers (9)

Directors (3)
Middle Managers (12)

Team Leaders (20) Senior Managers (9)

Supervisors (30) Supervisors (40)

Operatives (50) Operatives (50)

Beautiful Buds plc’s planned organisational structure change

Job role Average salary

Directors £110 000
Senior Managers £80 000
Middle Managers £50 000
Team Leaders £35 000
Supervisors £30 000
Operatives £22 000

Beautiful Buds plc’s current salary structure

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(a) Analyse two benefits for Beautiful Buds plc of growing externally.

Benefit 1 ....................................................................................................................................

Benefit 2 .

[6]

(b) Identify one way that Beautiful Buds plc could have grown organically.

. [1]

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(c) (i) Analyse the impact on two stakeholder groups of the proposed vertical merger between
Beautiful Buds plc and Green Gardens plc.

Stakeholder group 1 .

Impact .

Stakeholder group 2 .

Impact .

[6]

(ii) Recommend which stakeholder group will be most affected by the vertical merger
between Beautiful Buds plc and Green Gardens plc. Give reasons for your answer.

. [3]
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(d)* Discuss, with reference to the data in Text 3, whether Beautiful Buds plc should go ahead
with the plan to change its organisational structure.

. [9]

END OF QUESTION PAPER

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