May/June 2025

Brendan hopes to become a successful entrepreneur. He intends to launch a flower shop with government support. Brendan’s brother has offered to go into a business partnership with him. Brendan understands that a new business needs an appropriate pricing method. He has already identified ways the business could raise added value. Brendan wants to find out how an economic boom may influence his business.

Enterprise, business growth and size

NSL is a business located in country X. It makes food products such as bread and breakfast cereals. NSL applies lean production in its factory. Keeping quality high matters. NSL imports 15% of its raw materials. Movements in country X’s exchange rate may influence businesses that import raw materials. NSL’s Marketing Manager understands the business should react to shifts in consumer spending patterns. She also knows that market research can be used to support business decisions.

Market research

LFK is a coal-mining company. It employs 135 workers, and every employee receives training. Following the dismissal of one of LFK’s employees, a vacancy has arisen for a new supervisor. The firm will use external recruitment. The Managing Director is drawing up a cash flow forecast for LFK. An extract appears in Table 3.1.

Recruitment, selection and training of employees

PKN makes glass. Supporting sustainable development is significant for the business. PKN operates factories in 30 countries and employs 27 000 people. The Managing Director recognises that globalisation has helped PKN. She intends to enlarge the business through external growth. Retained profit is one possible source of finance a business could use to pay for expansion. Some of PKN’s directors worry that diseconomies of scale could arise as the business becomes larger.

Enterprise, business growth and size

NFC makes shoes by batch production. Quality assurance is used to keep quality high. NFC applies market segmentation. The Marketing Director is checking NFC’s product range. He understands that creating new products has both advantages and drawbacks. He also understands that product promotion matters.

Marketing, competition and the customer

FLD operates as a furniture retailer. It has 460 shops and 20 000 employees. Internal recruitment is used when new shop managers are recruited. The Managing Director wants to find out whether job rotation is the best motivation method for a large business to use. The Finance Director is examining FLD’s income statement. An extract appears in Table 2.1. She is worried that FLD’s gross profit is falling.

Income statements

Hal wants to become a successful entrepreneur. He intends to resign from his job and open a bakery. The bakery will operate in the private sector. The business will involve several stakeholder groups. Hal has been advised that a new business should choose the right source of start-up capital. He also understands that new businesses face a higher risk of failure.

Enterprise, business growth and size

MHL makes tyres for large vehicles and has factories in 6 countries. When it produces its goods, the business generates external costs. Strong communication with MHL’s suppliers is essential. The Managing Director knows that globalisation gives MHL many opportunities. He is examining data for one of MHL’s factories because he wants to cut the average cost of the tyres. An extract from this data is shown in Table 4.1.

Costs, scale of production and break-even analysis

MDZ produces a variety of chocolate bars. It employs 300 employees. MDZ buys its ingredients from suppliers in the local area. It is important for MDZ to behave ethically towards its stakeholder groups. MDZ has products that are at different stages of the product life cycle. The business is also creating a new product. The Marketing Director has to decide on the packaging and the price of the new product. She understands that a business should choose an appropriate sales-promotion method for a new product.

Marketing mix

Jonathon operates as a sole trader. He runs a shop that sells office equipment, such as printers. In order to boost sales, Jonathon gives customers 4 weeks to pay for the office equipment. Jonathon believes his business will probably stay small. He recognises that controlling cash flow matters for his business, and he has drawn up a cash flow forecast. A section is shown in Table 2.1.

Enterprise, business growth and size

GAE is a multinational business that makes steel. It employs 2400 workers and operates factories in 4 countries. The business often brings in new technology. Keeping inventory is important. GAE’s directors are considering constructing a new factory and want to find out how legal controls over location could influence this choice. The Managing Director remarked, "The new factory will create many external benefits."

Location decisions

HYT is a travel company that sells holidays. One of its aims is growth. Last year HYT carried out a takeover of one of its rivals. This growth was financed using external sources of finance. HYT now has 460 shops and 4000 employees. The Human Resources Director is aware that there are both advantages and disadvantages for a business in employing full-time staff. HYT’s managers apply Herzberg’s motivational theory to help keep employees motivated. Effective internal communication matters to HYT.

Motivating employees

Explain two advantages and two disadvantages for Philip of converting PF from a sole trader business into a private limited company.

Types of business organisation

Explain one advantage and one disadvantage of PF marketing its products to a mass market.

Location decisions

Explain two advantages and two disadvantages for a business of taking out a bank loan as a source of finance.

Marketing mix

Explain one effect on PF of the rise in each of the two taxes shown in Appendix 2. Tax on people’s income. Tax on profit made by businesses.

Cash-flow forecasting and working capital

Explain one effect of each problem below on TSE when it moves into a fresh market in another country. Cultural differences: Lack of knowledge:

Motivating employees

Explain one objective that each of the following TSE stakeholder groups could have. Shareholders: Suppliers: Employees: Customers:

Business objectives and stakeholder objectives

Explain four ways that market research information can support a business.

Market research

Explain two possible effects on TSE when the business cycle in country P enters the recession stage.

Economic issues

Explain two advantages and two disadvantages to Jemi of taking out a franchise.

Types of business organisation

Explain two advantages of market segmentation for VV.

Location decisions

Explain four external finance sources a business could use.

Business finance

Explain two ways the information in the government report shown in Appendix 3 could influence Jemi’s restaurant.

Motivating employees