Practice Paper 2 (Edexcel IGCSE Business)

[case-study] Vento is a bicycle manufacturer based in Milan, Italy. It employs 85 workers and exports 70% of its bicycles to countries outside the European Union (EU), including the USA, Japan and Australia. Vento imports lightweight aluminium from China to keep productin costs low. In the past year, the euro has appreciated significantly against the US dollar, Japanese yen and Australian dollar, but has depreciated against the Chinese yuan.

Vento's owner, Marco, is concerned about the impact of these exchange rate changes on the business. He is considering whether to start manufacturing in one of Vento's export markets to reduce the business's exposure to exchange rate fluctuations.

Evaluate the impact of the exchange rate changes on Vento. You should use the information provided as well as your own knowledge of business.

[case-study] TUI is a holiday business that has over 100 years of experience. It offers customers a variety of holidays including staying in hotels, and river and ocean-going cruises. There are many extras that it offers to holiday makers including: car hire, extensions to the holiday and arranging day trips at all its holiday destinations.

The business is well known and flies its customers to over 180 destinations around the world, including Greece, Turkey and Spain. It has 1,600 travel agencies and 27 million customers. Holidays can be booked by visiting a travel agency or online.

*TUI *has holidays to meet the needs of all its customers: families, children, couples and those with disabilities.

Which one of the following is a non-financial objective?

Select one answer

[case-study] SteelCraft Ltd is a manufacturing company based in Birmingham that produces steel components for the construction industry. The company employs over 5,000 workers across its three factories in the UK. SteelCraft Ltd sources its raw materials, including iron ore and coal, from mining companies in Australia and Brazil.

In recent years, SteelCraft Ltd has invested heavily in automated machinery to improve the efficiency of its production processes. The company sells its finished steel components to construction firms and other businesses.

Which one of the following sectors does SteelCraft Ltd operate in?

Select one answer.

[case-study] Gweneud is a small engineering business in rural Wales. The owner, Rhys, set up the business on a small industrial estate where rent is significantly cheaper than in nearby cities. Most of Gweneud's customers are farmers who need machinery repaired.

State one reason why Rhys chose to locate Gweneud on a rural industrial estate

Explain one way a social factor could affect a business

[case-study] Artify Studio was set up in 2015 by Tay Hui Jae in the busy Kampong Glam area of Singapore. Artify Studio’s aim is to have ‘a communal art space where people can come together and paint, where people would be given as much creative freedom as they would have if they were in their own spaces.’

Artify Studio provides many services including its popular Liberty Art Jam where customers can paint as well as listen to music. The studio offers a Corporate Art Jam and Regular Kids Classes. Customers can purchase art materials after attending the studio.

Artify Studio is a profit-making organisation with a social element. It employs seven part-time people, all of whom are art enthusiasts.

Analyse the effect of a decrease in interest rates on Artify Studio.

Define the term franchise.

[case-study] The first *Premier Inn *hotel was opened in 1987. *Premier Inn *now has over 820 hotels in the UK, United Arab Emirates (UAE) and India with over 83,000 rooms. It has recently expanded by opening the first *Premier Inn *in Germany and has plans to open more in other countries. The majority of the hotels have restaurants with facilities for guests to buy meals and drinks.

In 2022 the current assets for* Premier Inn* were £9 566 million and current liabilities were £5 447 million.

Evaluate whether a business such as Premier Inn should only consider profit to measure its success. You should use the information provided as well as your own knowledge of business.

[case-study] IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad. He wanted to produce furniture at a price that people could afford to buy. He developed flat packs to avoid damage during transport. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All IKEA stores are run as franchises.

Analyse the problems IKEA may face from ineffective communication with its franchisees.

[case-study] *NEXT *is a well-known clothing retailer that operates in 70 countries and employs over 43,000 employees. Since *NEXT *commenced trading it has introduced many other products to its range such as home interiors, flowers and a wedding list service.

In 1999 NEXT launched its own online shopping platform, enabling customers to purchase its products where ever they live. It continues to improve its customer service by introducing new initiatives such as next day delivery.

*NEXT *mainly uses its own factories for production. However, it does purchase some clothes such as ladies dresses from Turkish factories.

*NEXT *works hard to remain competitive with other retailers of similar products.

*NEXT *understands that some employees are motivated by non-financial methods and these may help with employee retention. To do this *NEXT *is considering the following two options:

• Option 1: job rotation
• Option 2: job enrichment

Justify which one of these two options *NEXT *should choose.

Define the term delegation.

[case-study] Posh Pets Spain (PPS) is a pet hotel in the village of Alhaurin el Grande, Spain. It is run by Rachel Goutorbe, an animal enthusiast, and her team of four pet specialists. PPS offers overnight accommodation with room for seven dogs or cats, a pet grooming service and a shop selling pet products, such as dog coats and dog leads. Pet grooming involves washing, cutting and combing a pet’s coat.

*PPS *is planning to take on additional employees. The hourly minimum wage in Spain is €7.45. The government is increasing this hourly minimum by 3.5%.

Calculate the new hourly minimum wage after the increase of 3.5%. You are advised to show your working.

[case-study] *IKEA *is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a price that people could afford to buy.

He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All *IKEA *stores are run as franchises.

State one reason why *IKEA *provides induction training for new employees.

[case-study] IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a price that people could afford to buy.

He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All *IKEA *stores are run as franchises.

IKEA continually reviews the products it makes to meet the demands of its customers. Changing the design of bedroom furniture to meet the needs of a couple setting up home or of parents refurnishing their children’s bedroom.

Analyse why *IKEA *uses statements of comprehensive income to assess its business performance.

[case-study] The Alternative Drum School (TADS) was set up in the wealthy area of Cricklade, England in 2008 by Ollie Tanner who had a passion for and enjoyed drumming. Ollie invested all of his savings into the drumming school. He saw the potential of being located away from other drumming schools.

Ollie promotes his business by writing columns in local papers, performing at local music festivals and by word of mouth recommendations. He has invested heavily in computer technology to allow students to produce the music they enjoy playing.

Ollie finds it difficult to maintain a good work-life balance. Ollie currently works 60 hours a week in a business that does not have reliable profits.

One of TADS' objectives is to expand by giving lessons for different musical instruments. To do this it will need to analyse its financial position.

Figure 1 shows an extract from the cash flow forecast for TADS.

Figure 1

Calculate the closing balance for February. You are advised to show your working.

Which one of the following is a variable cost?

Select one answer.

Figure 1 shows an extract from a statement of comprehensive income in 2023.

Which one of the following is the operating profit in 2023?

Select one answer.

[case-study] *Saha *is a small business in Türkiye (formerly known as Turkey) that opened in 2020 with 15 employees. It designs and manufactures robots which are used in hospitals, hotels and restaurants. In hospitals its robots are used to move medical supplies between departments. In hotels and restaurants, the robots are used to welcome customers as they arrive and deliver food and drinks to hotel rooms and restaurant tables. *Saha *provides a seven day a week customer service for all businesses buying its robots.

Many new businesses are entering the global robot market and are competing for market share. Competitors in Türkiye include NIO, Zoox and Vention.

*Saha *has ambitious growth plans and has started to design robots that will be used in the home to help people with cleaning, shopping, security and entertainment. It aims to become a multinational business within five years to manufacture robots in all continents of the world.

When *Saha *expands its business it will require additional finance. It is considering two options:

• Option 1: crowdfunding
• Option 2: loan capital.

Justify which one of these two options *Saha *should choose.

[case-study] Nantgwynfaen Organic Farm (NOF) is a farm growing a range of fruit and vegetables. It has a farm shop and offers accommodation with breakfast. It was set up by Amanda and Ken Edwards in West Wales, UK.

*NOF *supports farmers by selling local organic produce in its farm shop. The produce from the farm shop is served to the visitors staying overnight at the farm.

*NOF *is committed to being environmentally friendly by recycling, avoiding the use of packaging and reducing the use of electricity.

*NOF *is looking to increase the number of visitors to the farm. It will need to carry out some research as to what potential visitors will want.

To do this *NOF *is considering two options:

• Option 1: handing out questionnaires at local retailers
• Option 2: using the internet to research other farms.

Justify which one of these two options *NOF *should choose.