May/June 2025

Brendan aims to become a successful entrepreneur. He plans to open a flower shop with government support. Brendan’s brother has offered to join him in a business partnership. Brendan recognises that a new business needs an appropriate pricing method. He has already worked out ways the business can add value. Brendan wants to know how an economic boom could influence his business.

Types of business organisation

NSL operates in country X. Its output includes food products such as bread and breakfast cereals. In its factory, NSL relies on lean production. Quality control matters to NSL. The business brings in $15\%$ of its raw materials from abroad. Movements in country X’s exchange rate may influence firms that import raw materials. NSL’s Marketing Manager understands that the business ought to adapt to shifts in consumer spending patterns. She also knows that market research can support business decision-making.

Business and the international economy

LFK runs a coal-mining business. It employs 135 workers, and all of them receive training. After one of LFK’s employees has been dismissed, there is a vacancy for a new supervisor. External recruitment will be used. The Managing Director is drawing up a cash flow forecast for LFK. An extract is shown in Table 3.1.

Cash-flow forecasting and working capital

PKN produces glass. Supporting sustainable development matters to the business. PKN runs 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 finance source that a business may use to pay for expansion. Some of PKN’s directors are worried that diseconomies of scale may emerge as the business becomes larger.

Enterprise, business growth and size

NFC makes shoes through batch production. Quality assurance is used to keep standards high. NFC applies market segmentation. The Marketing Director is examining NFC’s product range. He understands that developing new products brings both benefits and drawbacks. He also knows that promoting products matters.

Marketing mix

FLD operates as a furniture retailer. It runs 460 shops and employs 20 000 people. When new shop managers are hired, internal recruitment is used. The Managing Director wants to find out whether job rotation is the most effective motivation method for use in a large business. The Finance Director is checking FLD’s income statement. An extract appears in Table 2.1. She is worried that FLD’s gross profit is falling.

Income statements

Hal aims to become a successful entrepreneur. He is planning to resign from his job and open a bakery. The bakery will be run in the private sector. The business will involve several stakeholder groups. Hal has been advised that a new business must choose a suitable source of start-up capital. He also understands that new businesses face a higher chance of failure.

Enterprise, business growth and size

MHL makes tyres for large vehicles. It operates factories in 6 countries. While producing its products, the business generates external costs. Clear communication with MHL’s suppliers is important. The Managing Director recognises that globalisation creates many opportunities for MHL. She is examining data for one of MHL’s factories because she wants to lower the average cost of the tyres. An extract from these figures is shown in Table 4.1. Table 4.1 Data for one of MHL’s factories Output per month (units): 200000 Fixed costs per month: $50000 Variable cost per unit: $25

Costs, scale of production and break-even analysis

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 benefit and one drawback of PF marketing its products in a mass market.

Location decisions

Explain two benefits and two drawbacks to a business of using 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:

Analysis of accounts

Explain one effect each of the following issues could have on TSE when it enters a new 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 may assist a business.

Market research

Explain two likely effects on TSE if the business cycle in country P enters the recession stage.

Economic issues