Enterprise, business growth and size

TXE is a major food retailer. Last year, profit dropped by 10%, so the Finance Director is concerned. ‘I blame competition and increased taxes. We have spent more on sales promotions, but these have not been successful. We have to find ways to increase profits.’ TXE operates 200 shops and intends to shut 50 of them in order to cut costs. TXE might choose to offer a broader product range, including clothes, to help raise its profits.

Feb/March 2017

Explain four reasons why someone may start their own business.

Feb/March 2020

RJJ makes women’s shoes. It markets the shoes to a niche market through e-commerce. RJJ is a public limited company, so its shareholders enjoy limited liability. The Managing Director is intending to grow the business. RJJ could acquire a competitor. Profit fell by $50 000 last year. The Finance Director must choose a source of finance to pay for the expansion.

Feb/March 2021

Explain four reasons why governments back the start-up of new businesses.

Feb/March 2024

Camille is an entrepreneur who runs a popular and thriving hairdressing business. She plans to expand her small business. At the moment, Camille employs 5 part-time workers, but she will need to hire 3 more workers who must be trained on the job. She believes that her laissez-faire leadership style will need to change as the business expands.

May/June 2015

PCB is a public limited company. It manufactures a well-known brand of mobile (cell) phones. Because it operates in a competitive market, pricing matters. PCB wants to expand its product range. It plans to produce luxury headphones since demand for them is rising quickly. The Operations Director must choose whether PCB should create its own headphones brand or acquire an existing producer. In both cases, the finance would come from a share issue.

May/June 2017

Five years ago, Adele set up a dance school. Each year, Adele pays herself a salary and earns $1000 profit. The school provides children with a selection of dance and exercise classes. It operates as a sole trader business. Adele thinks choosing the correct pricing method is very important. She plans to grow the business by launching a second dance school. Her business plan predicts that this expansion will require $8000. Adele is unsure whether a bank loan is the most suitable source of finance for this growth.

May/June 2018

Rosa is a prosperous entrepreneur. Her company produces beauty products that she makes, including hand and face creams. She employs 5 production workers, and Rosa likes to stay in charge of everything else, including design and marketing. Rosa advertises the business through social networks. She said: ‘Raising added value matters. I expect revenue to rise by 300% in 2018. At this pace of growth, I will need a larger factory. I would like to have customers in other countries, so I hope there are no import quotas!’ Rosa has to choose whether to keep expanding the business or leave it small.

May/June 2018

Identify and explain four entrepreneurial characteristics that contributed to the success of the two partners.

May/June 2018

Kate is an entrepreneur. 2 years ago, she gave up her role as a fashion designer with a multinational company. She set up BBB, a women’s sportswear clothing business. BBB aims at a market segment of high income consumers. BBB’s products are sold in 3 retail shops as well as via its website. Kate said: ‘I spotted a gap in the market and accepted the risk. Securing the finance I needed from the bank was not easy. I enjoy making decisions such as using leaflets to advertise the clothes.’ BBB’s revenue target for next year is $500 000.

May/June 2019

BKH is a major public limited company. It has 2,000 employees working at 18 locations. BKH sells a variety of insurance products, including house and car insurance. BKH’s shareholders want the business to raise profit. The Managing Director understands that higher profit can conflict with the aims of other stakeholder groups. She stated: ‘Private sector businesses have different objectives to public sector organisations.’ BKH is also planning to grow by taking over another insurance company.

May/June 2021

Nadia launched her successful hairdressing business 4 years ago. Keeping quality high has always been important to Nadia. She said: ‘I began with no experience of business plans, recruitment, cash flow or profit. I did not understand how economic issues such as inflation could influence a business. Now I have 5 hairdressing shops and 20 employees. Last year I earned a profit of $100 000.’ Nadia is intending to expand her business. One way she could do this is by selling franchises.

May/June 2021

Explain four reasons why governments might back business start-ups.

May/June 2022

Explain two methods by which TT could expand.

May/June 2022

Explain four methods used to measure the size of a business.

May/June 2022

Gloria runs a sole trader business that offers house-cleaning services. She communicates with her 4 employees by telephone. She intends to grow the business by adding a repair service. Gloria is planning to conduct some market research. She has been advised that drawing up a business plan may reduce risk. She also wants to cut her own workload, so she is thinking about bringing in a business partner.

May/June 2023

Meena is planning to give up her teaching post and set up as a successful entrepreneur. Her enterprise will make handmade jewellery. Meena is aware that the government offers support for business start-ups. She intends to use market research to help her pinpoint a market segment for her jewellery. Her brother has said he will be her business partner, but she is unsure whether trading as a sole trader would be the better option.

May/June 2023

Explain two possible reasons why VP wants to expand.

May/June 2023

Nicky aims to become a successful entrepreneur. She intends to launch a travel business that specialises in walking holidays. Nicky will operate in a niche market. To support her decision-making, she is drawing up a business plan. She has been informed that government support is available for business start-ups. She also understands that developing customer relationships will be important.

May/June 2024

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.

May/June 2025

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.

May/June 2025

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.

May/June 2025

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.

May/June 2025

Ramford is a private limited company. The business runs four factories that produce a broad mix of food items, including breakfast cereal and ice cream. Its Finance Director is concerned about the company’s financial performance. She has read that many businesses failed during the last year. ‘I think we are suffering from diseconomies of scale’ she said. Ramford’s directors have decided to reduce the number of different products it makes from 80 to 10.

Oct/Nov 2015

Xiolom is a mining company in the private sector. It is a very large firm employing over 100 000 workers. It operates in 10 countries. The Operations Director has announced plans to open a new mine in country G. He is furious. ‘First there are new legal controls over employment and now I must also handle pressure groups. The mine will generate 8000 jobs. Xiolom creates external benefits so it ought to be permitted to expand!’

Oct/Nov 2015

Identify and explain one benefit and one drawback to CC of employing skilled workers in its factories.

Oct/Nov 2015

Identify and explain two reasons that show why added value is important to P & P.

Oct/Nov 2016

Ella has only just finished college and is planning to launch her own business. She has created a new bicycle light with a safety feature that is not included in any competitor products. Ella knows that raising finance will be difficult. She intends to have the lights manufactured in another country. Each light will cost $8 to produce. Ella cannot decide whether to use price skimming. She said: ‘I have received orders for 300 lights and I have not even begun promoting them’. Ella wants to become a successful entrepreneur.

Oct/Nov 2017

Filltum is the brand name of a chain of vegetarian restaurants. It runs 28 restaurants, and 16 of these are run by franchisees. The Managing Director is happy with how quickly it is growing, especially at a time when many businesses are failing. She stated that having a well-motivated workforce matters to their success. Every new employee is provided with on-the-job training. Filltum intends to open 10 more restaurants in the next year. The Managing Director now must choose whether to sell more franchises or open its own restaurants.

Oct/Nov 2018

Bill has spent 30 years working for a large IT company. He enjoys using computers, but he is struggling to stay motivated. Bill is considering setting up his own business to repair computers in customers’ homes. He believes there is demand for this service, although he recognises that starting a business involves risk. His secondary market research indicates that existing computer repair businesses charge high prices and do not provide home repairs. If Bill launches the business, he will need a vehicle. It would cost $6000, which Bill intends to pay for from his own savings. Bill would trade as a sole trader.

Oct/Nov 2018

Harry and Fred have prepared a business plan for the expansion of HH. Identify and explain two contents of a business plan that Harry and Fred could find useful as HH expands.

Oct/Nov 2018

KTF manufactures building materials, such as cement and bricks. In the last year, KTF achieved sales of $25bn. Since it was established 60 years ago, KTF’s objectives have frequently altered. The Managing Director wants KTF to grow. KTF plans to acquire one of its major rivals. The larger business will record combined sales of $40bn. The Managing Director remarked: ‘Many stakeholder groups will be affected by this decision.’ She is aware that a number of external influences shape business activity, including the business cycle, interest rates and laws that protect the environment.

Oct/Nov 2020

DSY is a private limited company. It manufactures washing machines and cleaning equipment. The Managing Director wants DSY to move into a different market. He intends to spend $2bn on developing electric cars. Competition in the electric car market is intense. This market is expanding very quickly. A leading pressure group has pointed out the environmental issues caused by non-electric cars. The Managing Director is aware that key choices about the production method and the new car’s brand image still need to be decided.

Oct/Nov 2020

Explain one economy of scale and one diseconomy of scale as AD expands.

Oct/Nov 2020

Explain two ways that could be used to gauge the size of MA’s airport business. Method 1: Explanation: Method 2: Explanation:

Oct/Nov 2021

EQR operates 150 cafes. Its range of drinks includes coffee. Ethics matters to EQR. The Managing Director has been examining EQR’s statement of financial position. The business aims to grow its market share. The Managing Director intends to expand the business by selling franchises for $85,000. She is also looking at methods to raise added value.

Oct/Nov 2022

Explain one advantage and one disadvantage for Tokumbo in operating as a sole trader.

Oct/Nov 2022

Explain two reasons why the owners of CC might want the business to expand.

Oct/Nov 2022

Desmond is aiming to become a successful entrepreneur. He has chosen to leave his office job and set up a gardening business that will cut grass and plant flowers. The business will be unincorporated. Desmond knows that a new business faces a higher chance of failure than an established one. He has set his business objectives for the first year. Desmond has worked out that $750 will be needed as start-up capital.

Oct/Nov 2023

DBR is a mining company. It is a large public limited company operating in the primary sector. DBR runs 8 diamond mines and employs 3000 workers. Specialisation matters. Over the last 5 years DBR has expanded rapidly. The Managing Director is concerned that diseconomies of scale may appear as the business keeps growing. In 2022 DBR made a profit of $600 million.

Oct/Nov 2023

Explain two advantages of PH’s employees joining a trade union.

Oct/Nov 2023

Avtar runs a private-sector car repair business. It is a small firm with 2 full-time employees. He wants to discover the most effective way for a business to raise added value. Avtar’s business needs finance for many different reasons. He also wants to find out how an economic recession could affect his business.

Oct/Nov 2024

Ramon is an entrepreneur. He intends to launch a home tutoring service that would give students extra support in maths. He is thinking about buying a franchise. Although he has drawn up a business plan, he is worried that a rise in the inflation rate may affect his business. Ramon also wants to know whether crowdfunding is the most suitable source of finance for a start-up business to use.

Oct/Nov 2024

Explain four reasons that might cause a business to remain small.

Oct/Nov 2024

DJU makes clothing such as jeans and trousers, and its factory employs 90 people. Specialisation is used in production. The Managing Director is examining DJU’s cost and output figures, and an extract appears in Table 4.1. She also wants to find out how lower interest rates could influence the business. DJU’s directors are looking at several methods of business growth, including buying a competitor.

Oct/Nov 2025