Skills Exercises

Worksheet 1: Using business language

Explain the difference between the following business statements.

a)

Statement 1 Statement 2
The business has lots of cash. The business has lots of profit.
What is the difference between Statement 1 and Statement 2?

b)

Statement 1 Statement 2
Ahmid is a shareholder of a business. Ahmid is a stakeholder of a business.
What is the difference between Statement 1 and Statement 2?

c)

Statement 1 Statement 2
The business is located in City X. The business has relocated in City X.
What is the difference between Statement 1 and Statement 2?

d)

Statement 1 Statement 2
The business has used internal growth. The business has used external growth.
What is the difference between Statement 1 and Statement 2?

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 Skills Exercises

Worksheet 2: Key term meanings

Which of the following terms has a different meaning to the other terms and is the odd one out? Highlight the
word and explain why in the box below.

a)
• Business
• Enterprise
• Company
• Organisation

Why is it the odd one out?

b)
• Revenue
• Profit
• Sales
• Turnover

Why is it the odd one out?

c)
• Employees
• Workers
• Staff
• Managers

Why is it the odd one out?

d)
• Consumer
• Purchaser
• Buyer
• Customer

Why is it the odd one out?

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Skills Exercises

Worksheet 5: Matching theory to theorist

Match these theories to the correct theorist:

• Hierarchy of needs
• Two-factor theory
• The Hawthorne effect
• Expectancy theory
• Theory X and Theory Y
• Four competencies of emotional intelligence
• Five forces

Theorist Theory

Porter

Maslow

Vroom

McGregor

Goleman

Herzberg

Mayo

20
 Skills Exercises

Worksheet 6: Complete the tools / models

Complete each tool / model by inserting the missing words.

a) Ansoff’s matrix

________ products New products

Existing markets Market __________ ___________ development

_______ markets __________ development _____________

b) SWOT analysis

S___________________ W_________________

O___________________ T__________________

c) Porter’s five forces

Bargaining power of ________

Threat of new ________ Industry _________ __________ of substitutes

___________ power of buyers

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Skills Exercises

Worksheet 1: Business contexts

For each general context, decide if the statement is true or false.

a)

Context: A private limited company True? False?

The business has shareholders

The business has unlimited liability

The business can take a partner as a source of

finance
The business can sell shares on the stock
exchange

The business must publish accounts

b)

Context: A bank True? False?

The business sells a tangible product

The business is in the tertiary sector

The business must be in the public sector

The business can only operate online

The business can only sell shares to family and

friends

c)

Context: A large multinational manufacturing

True? False?
business

The business has capital in more than one country

The business is in the primary sector

The business can only sell industrial products

(B2B)

The business must be capital intensive

The business is likely to be a company

6
 Skills Exercises

Worksheet 2: Different business contexts

Identify and make a note of the differences between the two general business contexts.
a)

Differences

A small A
retailer of multinational
smartphones manufacturer
of
smartphones

b)

Differences

A farm A
growing fruit supermarket
and selling food
vegetables

c)

Differences

A successful A newspaper
social media publisher
business

9
 Skills Exercises

Worksheet 3: Making appropriate choices

1. Based on the outline of the business below, rank the options in terms of their appropriateness.

Quality Fencing

Quality Fencing is owned by Seojun.

Most of his customers own houses with gardens in city X.

Seojun is an entrepreneur who has an aim to be rich. He set up Quality Fencing recently using
all of his savings.

Seojun wants to gain more customers for Quality Fencing and needs to promote his business
in the local area.

a) Rank the following sources of finance, based on how appropriate they might be for Quality Fencing to
finance future promotion.
• Share capital
• Owners savings
• Bank loan
Choices Ranking Explanation

Most appropriate

Least appropriate

b) Rank the following above the line promotion methods, based on how appropriate they might be for Quality
Fencing to gain more customers.
• Television advertisement
• Social media promotion
• Direct mail

Choices Ranking Explanation

Most appropriate

Least appropriate

13
Skills Exercises

2. Based on the outline about the business below, rank the options in terms of their appropriateness.

Bob’s Furniture

Bob is a carpenter who is thinking of setting up his own business making furniture. In some
recent market research, he discovered the following:

- Potential customers want unique pieces of furniture

- Potential customers have high incomes.

a) Rank the following methods of production, based on how appropriate they might be for Bob’s Fencing to
produce furniture.
• Job production
• Batch production
• Flow production
Choices Ranking Explanation

Most appropriate

Least appropriate

b) Rank the following pricing methods, based on how appropriate they might be for Bob’s Fencing when
pricing furniture.
• Price skimming
• Cost-based pricing
• Price discrimination

Choices Ranking Explanation

Most appropriate

Least appropriate

14
Skills Exercises

Worksheet 4: Explain in context

(Extract from 9609 Business 2023 Specimen Paper 2, Question 2)

1a) Based on the following question, identify the best answer.
Explain one payment method, other than time-based, that DC could use to pay its employees. [3]

One payment method could be using piece-rates. Piece-rates means that the workers will
Answer A get paid for each dress that they make. This is likely to motivate the workers to produce
more and make the business more revenue.

DC could pay the workers a salary. Since each dress is made to each customers’ needs, a
salary would mean that the highly skilled employees can concentrate on maintaining DC’s
Answer B
reputation for quality by doing the best job possible, as opposed to making many dresses
just to get paid more.

If the employees were paid using profit sharing, then they would be motivated to produce
Answer C
high quality products so that DC makes more profit, and their pay would be higher.

b) Write your own contextual answer.

2a) Based on the following question, identify the best answer.

Explain one advantage to DC of using job production. [3]

Job production is making one-off products that can be specific to each customer’s needs
Answer A
This means that DC can charge a high price and make a high profit margin.

Each dress can be unique which means that it can be sold for a high price and make DC
Answer B
more profit.

Every dress will be made to the specifications gained when the designer meets the
Answer C
customer, meaning that customers will be more satisfied and pay a higher price to DC.

b) Write your own contextual answer.

18
 Skills Exercises

Worksheet 5: Understanding a case study

Read the 9609 Specimen Paper 3 Insert and complete the quiz by highlighting / circling the correct answer.

Quiz based on Devonice Ltd (DL)

Circle the appropriate answer.

Question A B C D

Private Public
What form of business ownership is
1 Sole trader Partnership limited limited
DL?
company company

What type of organisational structure

2 Decentralised Centralised Matrix Delayered
does DL use?

What is DL’s current capacity

3 70% 80% 90% 100%
utilisation?

Young Young
4 What market segment does DL target? Women Men
children adults

5 DL operates in which country? W X Y Z

Which of the following is not one of the Banning

Regulating
actions demanded by the pressure Restricting Introducing high
6 product
group to reduce sales of high sugar advertising a tax sugar ice
labelling
and fat foods? cream
It
It makes
It leads to the increases
Why is DL facing pressure to stop the ice It is too
7 loss of the sugar
using palm oil? cream too expensive
rainforests content of
smooth
ice cream

What is the total time estimated for the

8 16 17 18 19
production line project?

21
Skills Exercises

Worksheet 1: Analysis or not

For each of the following pairs of sentences, decide which one is analytical and which one is not. Remember
that analysis is about effects, consequences or reactions.

1.

Sentence 1 Sentence 2

The business has three shops, and each shop has The business has three shops, and the large
a large inventory. inventory has a high cost.

2.

Sentence 1 Sentence 2

This led to an increase in revenue. The revenue of the business was high.

3.

Sentence 1 Sentence 2

By changing the method of production, the The chosen method of production will affect how
business could produce more products. many products can be produced.

4.

Sentence 1 Sentence 2

Profit is the difference between sales revenue and By reducing total costs, the business is able to
total costs. make more profit.

5.

Sentence 1 Sentence 2

High income customers could lead to more sales The customers in country Z have a higher income
revenue by expanding into country Z. and this is why the business should expand there.

6.

Sentence 1 Sentence 2

The profit margin is calculated by profit / revenue x

This increased the profit margin.
100.

7.

Sentence 1 Sentence 2

In May, the business has a negative cash flow and By choosing an external source of finance, the
this could be solved by using an external source of business could keep the cash flow positive.
finance.

8.

Sentence 1 Sentence 2

The purpose of effective marketing is to increase By using effective marketing, the business can
the sales of a business. increase its sales.

6
 Skills Exercises

Worksheet 2: Identifying analysis in simple sentences

Complete the following sentences by choosing a suitable connecting word to develop each point in this
exercise. Note connecting words can be used more than once.

Because therefore as a result so lead to

a) A successful entrepreneur needs to be able to delegate ________ it allows them more time to focus on
more important tasks.

b) The advantage of a government grant is that it’s a free fund, which you don’t have to pay back. ________
we can save money on interest payments.

c) Setting a high price is a problem ________ fewer people would be able to afford our products.

d) Having ethically produced products is important to increase customer trust. This can ________ a more
loyal customer base.

e) The advantage of setting up the enterprise as a sole trader is that you are your own boss. ________ you
don’t have to waste time consulting anyone else so can take decisions straightaway.

f) A disadvantage of using a questionnaire is that if the questions are poorly worded, people might not
understand them properly. ________ we might get biased information leading to the wrong decisions being
made.

9
Skills Exercises

Worksheet 3: Identifying analysis in paragraphs

For each of the following paragraphs, identify the analysis by either highlighting or underlining the focus of
the analysis.

1.

If the business wants to recruit a new employee, then the owners should put a job advert in the local
newspaper. Hopefully, potential employees will see the advertisement, and this will increase the number of
people who apply for the job. However, putting an advertisement in a newspaper will increase the costs of
the business.

2.

The accounts of the business show that it has a profit margin of 12%. This means that 12% of the revenue
of the business is profit. If the business can decrease the total costs, then this could lead to an increase in
the profit margin and increase the profits of the business. However, if the quality of the products also
decreases, then this might mean that fewer customers purchase the products which might lead to less sales
revenue and less profit. It depends on whether the business can decrease the total costs without reducing
the quality.

3.

Tom could take out a bank loan so that he has enough cash to be able to purchase the new machine. If he
does purchase the new machine, then he can produce twice as many products and eventually pay back the
bank loan. By taking a bank loan Tom can also have plenty of time to repay the loan, because loans are
usually repaid over years. This is likely to give the other investors more confidence in the business and they
may not sell their shares.

4.

The government of country Z has increased the taxation on exports. This means that any business that sells
their products abroad will face higher costs and this might lead to an increase in price. If the prices increase,
then sales are likely to reduce depending on the price elasticity of demand.

5.

One of the biggest advantages of introducing flow production into the factory is that the business will be
more productive. This means that more products will be made in a shorter period of time. However, the
machinery needed to introduce flow production will have a high cost, increasing the total costs of the
business.
12
 Skills Exercises

Worksheet 4: Who is the focus?

For each of the following questions, identify and underline the focus of the analysis.

1. Analyse two advantages to the owners of TG of the introduction of batch production into the factory.

2. Analyse one internal source of finance and one external source of finance that ES could use to purchase a
fracking licence.

3. Analyse two factors which might affect the demand for the performances at GT’s theatre.

4. Analyse two likely effects on the other employees if Jack is dismissed.

5. Analyse two reasons why clear business objectives are important for EC.

6. Analyse two economies of scale that AP might lose if the business reduces the total number of pies
produced.

7. Analyse one advantage and one disadvantage for Lewis of operating as a small business.

8. Analyse two disadvantages for the owners of increasing the pay of the factory workers.

15
Skills Exercises

Worksheet 5: Who might be affected?

For each of the following business actions, identify which stakeholders might be affected by adding a spoke
to the mind-map. The first stakeholder has been added for you.

1.
The owners – may make the
business more efficient, leading

to lower costs and higher

profitability.

A business is planning to automate its factory.

The local community –

2.
more lorries delivering
supplies – more noise and

pollution.

A business starts to use Just in Time

production.

18
 Skills Exercises

Worksheet 5: Who might be affected? (continued)

3.
The workers – may expect
higher wages and regular pay
increases – may be

demotivated if their real

wage does not keep up with
A business is operating in a country with high
inflation. inflation.

4. The owners – will gain limited

liability meaning that their
personal possessions are no longer

at risk.

A business changes from being a partnership

to a public limited company.

19
Skills Exercises

Worksheet 6: Chains of analysis

For each of the following questions, identify the focus of the analysis.

1. A business increases its prices. Develop a chain of analysis of how this might affect the customer.

Prices Customer has a

increase worse standard
of living

2. A business changes its remuneration system from time-based to piece-rate. Develop a chain of analysis of
how this might affect an employee.

Pay is Increases their

changed from standard of
time-based to living
piece-rate

3. A company faces higher taxes. Develop a chain of analysis of how this might affect the shareholders.

Tax rate Lower

increases dividends paid
to the
shareholder

4. A business successfully uses above the line promotion. Develop a chain of analysis of how this might
affect the business.

Successful Increases
above the line profit
promotion

22
 Skills Exercises

Worksheet 7: Developing advantages and disadvantages

Complete the following tables for the given business scenario. Use the scenario to make sure the
development is in context.

1. A supermarket operates in a competitive business environment. The owners of the business know that the
majority of their products are price elastic. Analyse one possible advantage and one possible disadvantage
to the business of reducing their prices.

Advantage Disadvantage

2. A restaurant operates in a tourist destination. It is very busy in the peak holiday season but there are very
few customers for the rest of the year. Analyse one possible advantage and one possible disadvantage to
the business of increasing the size of the restaurant.

Advantage Disadvantage

3. A manufacturing business is labour intensive and produces clothing for many well-known brands. The
business has a contingency plan in case of a fire in the factory. Analyse one advantage and one
disadvantage to the business of having a contingency plan in case of a fire in the factory.

Advantage Disadvantage

4. Max is a sole trader who has recently set up a business that sells jewellery. All of his products are sold
over the internet. Analyse one advantage and disadvantage to Max of using the internet to sell his products.

Advantage Disadvantage

5. A large manufacturing business that produces and sells smartphones is planning to introduce Total
Quality Management (TQM) into its factory. Analyse one possible advantage and one possible disadvantage
to the workers from the introduction of Total Quality Management (TQM).

Advantage Disadvantage

25
 Skills Exercises

Worksheet 8: Marking analysis

Read the following data and then highlight / underline the analysis in each response. Award marks for each
response using the mark scheme below:

Knowledge and
Application Analysis
understanding
(max 1 mark) (max 2 marks)
(max 1 mark)

A developed chain of
analysis in context
2 marks
Knowledge of the key term Applied to the data Limited analysis
1 mark 1 mark 1 mark

29
Skills Exercises

Worksheet 8: Marking analysis (continued)

1. Analyse one method of primary market research that the Marketing Director could use to help develop a
new variety of vegetable chip. [4 marks]

Response 1: TT could use a questionnaire to research the market. This means that they would
ask random people some questions about the flavours that they would most like.
Questionnaires would be good because they can get all the data they want, and it is specific to
the vegetable chips.

Response 2: TT could use random sampling. The big advantage of this is that there will not be
any bias. This is an advantage because if there was bias then they might get the wrong data.
If that happened then the business could spend lots of money making a new variety and this
could lead to increased business costs. If the product does not sell then TT will have a lower
profit margin and less overall profit or even a loss for TT.

Response 3: TT could use a focus group by getting a group of people together and give them
the new product. The interviewer can then ask the group questions that they want an answer
to, such as ‘do you like this?’ This information can be used by the managers of TT to make
sure that a normal group of people like the product and try to estimate the demand. By
estimating the demand TT can forecast how many to make and set their prices so that they
can increase sales revenue and make more profit.

2. Analyse one concern that the factory manager might have about the joint venture between TT and the
supermarket group. [4 marks]

Response 1: TT will produce more crisps for the supermarket to sell. Which may mean that TT
has to open the factory for six days a week instead of five. This will increase TT’s costs and
with a lower profit margin, TT may make a loss from this joint venture.

Response 2: One concern the factory manager might have is that the profitability of the new
chips is lower than their normal chips. This means that the difference between the cost of the
new chips and the selling price is less than the difference between the cost and price of the
normal chips. Profitability is vital to a business because it is likely to be the businesses’ main
objective.

Response 3: The factory manager will be pleased that there would be a better cash flow
because it is likely to mean that his job is more secure. This means that he can relax and not
worry about his job and should motivate him. If he is more motivated then he will work
harder and this may mean that he motivates the other workers, produce more chips for the
business and end up giving the business more profit.

30
 Skills Exercises

Evaluation (AO4)
Exercise 4: Answering the question
Evaluation is usually considered to be the hardest assessment objective and the one that is essential for a
top grade. At its heart, evaluation is about answering the question.

Here are some command words that learners might come across to let them know that they need to
evaluate:

Command word What you need to do

Build chains of analysis, weigh up the arguments and then make a judgement
Evaluate over which arguments are most persuasive.
Does your judgement depend on anything, such as market research?

Build chains of analysis and weigh these up. Whilst this does not necessarily
Discuss require a judgement to be made, it is usually a good idea to come to a judgement
if you can.

Build chains of analysis, weigh up the arguments and then make a

Recommend … recommendation for the business or stakeholder.
justify your answer. Does your recommendation depend on anything or would it change in different
circumstances?

Build chains of analysis, weigh up the arguments and then advise the business or
stakeholder on what it should do.
Does your advice depend on anything or would it change in different
Advise
circumstances?

Advice is often linked closely with strategy and as such may require more than
just a judgement or recommendation.

Activity 1: How to answer the question

When a learner sees an evaluative question, it should be clear what the judgement will be about.

Knowing what the judgement is about helps learners structure their answer because all of the analytical
points will create arguments to back up that judgement.

Give learners a series of evaluative questions from either past or specimen papers. Learners will not need
the case study or data to work out what the judgement should be. The questions on Worksheet 9: How to
answer the question can be used or any other evaluative questions.

For each question, learners decide what the first sentence of the conclusion should be. This gives a target
for the analytical arguments to work towards.

33
Skills Exercises

Worksheet 9: How to answer the question

For each of the following questions, decide what your judgement will be.

1. Evaluate the factors which could influence the successful operation of Just-in-Time (JIT) inventory
management.

What are you making a judgement about?

What should the first sentence of your conclusion be?

……………………………………………………………
……………………………………………………………

2. Discuss how break-even analysis could be useful for a business decision on introducing a new product.

What are you making a judgement about?

What should the first sentence of your conclusion be?

……………………………………………………………
……………………………………………………………

3. Evaluate the factors that CC should consider in making a decision on whether or not to become a more
ethical business.

What are you making a judgement about?

What should the first sentence of your conclusion be?

……………………………………………………………
……………………………………………………………

4. Advise GG on the most appropriate sources of finance they might use to pay for the new swimming pool.

What are you making a judgement about?

What should the first sentence of your conclusion be?

……………………………………………………………
……………………………………………………………

34
 Skills Exercises

5. Recommend to PC’s Board of Directors which one of the two strategies should be adopted for entering
new markets in Asia and Africa. Justify your recommendation.

What are you making a judgement about?

What should the first sentence of your conclusion be?

……………………………………………………………
……………………………………………………………

6. Evaluate the advantages and disadvantages to GT of their marketing mix.

What are you making a judgement about?

What should the first sentence of your conclusion be?

……………………………………………………………
……………………………………………………………

7. Advise Sue on which approaches she should use to develop a new business strategy for RF2.

What are you making a judgement about?

What should the first sentence of your conclusion be?

……………………………………………………………
……………………………………………………………

35
Skills Exercises

Worksheet 10: Find the conclusion

Look at the start of each conclusion below, written to answer the questions. Based on only the first sentence
of the conclusion, identify which is better and why.

1. Evaluate the most appropriate below the line promotion methods that FD could use to promote their new
product.

Response 1 Response 2

The most appropriate below the line There are many different below the line
promotion methods are direct mail and promotion methods and FD will need to
public relations. choose the most appropriate.

2. Advise TY on the most suitable marketing mix for it to use to launch its new shop.

Response 1 Response 2

Promotion is the most important element of The most suitable marketing mix for TY to
the marketing mix that TY should focus on use to launch their new shop would to have

because they need to inform people about a wide range of products, a low price, TV
the new shop. advertising and to allow customers to
purchase on the internet as well as in store.

3. Recommend whether Ranjit should relocate to country F. Justify your recommendation.

Response 1 Response 2

Based on the arguments, Ranjit should Relocating to country F has many

relocate to country F. advantages and disadvantages and Ranjit
will need to decide whether she wants to
relocate or not.

4. Discuss the external factors that may affect the business over the next three years.

Response 1 Response 2

All of the external factors analysed will External factors are more likely to affect the
affect the business, but the most important business than internal ones.

will depend upon what objectives the

business uses.

38
 Skills Exercises

Worksheet 11: Making judgements

For each of the following evaluative questions, decide what your judgement would be and then think about
what that judgement might depend upon.

1. Evaluate the benefits to a business of having a business plan.

What are you making a judgement about?

What does your judgement depend upon?

2. Recommend whether Gill should reduce the price of her service. Justify your recommendation.

What are you making a judgement about?

What does your judgement depend upon?

3. Advise OP on how it can improve the quality of their production process.

What are you making a judgement about?

What does your judgement depend upon?

41
 Skills Exercises

Exercise 5: Early evaluation

Many learners assume evaluation only happens at the end of their answer, in a conclusion. However, the
best responses evaluate throughout the answer.

Many of the higher mark questions in the Cambridge International AS & A Level Business examinations have
a large proportion of evaluation marks. However, just evaluating in a conclusion, no matter how detailed, is
unlikely to gain all of these marks.

The table below shows the mark allocations for the higher mark questions on the examinations.

AO1 Knowledge
Total marks AO2 Application AO3 Analysis AO4 Evaluation
and understanding

12 2 2 2 6

20 3 2 8 7

Since the assessment objective for evaluation (AO4) is such a large proportion of the marks, it is essential
that you take as many opportunities as you can to evaluate when answering these questions.

Activity 1: Mini-conclusions
Learners can begin to include evaluation in an answer by developing a mini-conclusion after every analytical
point.

A mini-conclusion can occur after a chain of analysis and brings the point back to provide an answer to the
question.

Give each learner a copy of Worksheet 12: Mini-conclusions.

The first analytical point has been evaluated in the second paragraph. Discuss why it is evaluation and how it
is different from analysis.

Learners evaluate the second analytical point using the same style as the example.

43
 Skills Exercises

Worksheet 12: Mini-conclusions

Look at the following question and part-response. The first analytical point has a mini-conclusion for the
second paragraph.

Q. Evaluate the view that a mission statement is only important to a bank if it significantly influences
the strategy and tactics of that business. [12 marks]

A mission statement allows a business to have a focus for its strategy and tactics. For
example, there are some banks which have socially responsible mission statements. These
banks use their mission statement to help formulate their objectives, which then give it a focus
for both strategy and tactics. Without this mission statement the strategy and tactics will not
be socially responsible and the vision of the bank will be lost because other stakeholder
concerns, such as profitability, and it will no longer be able to e socially responsible.

Therefore, it is true that a mission statement is only important to a bank if it significantly

influences the strategy and tactics, especially where that mission statement involves corporate
social responsibility to make sure the bank keeps it vision. However, this depends on the

objectives of the business, if the objectives are purling profit driven, then the mission
statement might not matter.

Now write a mini-conclusion for the next analytical point by following the same structure as the mini-
conclusion above.

A mission statement is often simply a way of marketing a business and is sent to the
stakeholders so that it can make the business look good. Many banks do not want all of their
stakeholders to know their objectives. For example, most commercial banks, which are public
limited companies, are run with profit and return for the shareholders as the main objectives.
This objective must form the basis of the strategy and tactics, otherwise the shareholders will
sell their shares and the business might get taken over by a competitor and not survive.

……………………………………………………………………
……………………………………………………………………
……………………………………………………………………
……………………………………………………………………
……………………………………………………………………

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