Tag: Business Studies

The Staffordshire Beer Company produces its beer using a closely guarded secret recipe.

This is likely to give The Staffordshire Beer Company a….

Select ONE answer:

1. competitive advantage
2. market orientation
3. market map
4. test market

Show your workings to arrive at your answer, and explain and justify your reasons:

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

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Competitive advantage is any positive feature that distinguishes a company from its competitors. In this case, the competitive advantage comes from Staffordshire’s secret recipe that no other drinks company can use. Customers who like the taste of the Beer because of its secret recipe can only buy from Staffordshire Beer which then generates consumer loyalty, which is a source of competitive advantage.
2. Not correct – the secret recipe is an aspect of product orientation not market orientation.
3. Not correct – market mapping places the Beer in relation to its competitors and is nothing to do with the secret recipe.
4. Not correct – test marketing would involve trialing different recipes and there is only one for Staffordshire Beer Company’s Beer.

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Lucy started and owns “Big Time Art Student”, a small business that sells 100% woollen clothes spun from wool from local Dorset sheep.

Which ONE of the following is MOST LIKELY to be the structure of Lucy’s business?

Select ONE answer:

1. Partnership
2. Co-operative
3. Sole trader
4. Public limited company

Show your workings to arrive at your answer, and explain and justify your reasons:

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

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct – a partnership is owned by two or more people and “Big Time Art Student”, was set up and owned by Lucy.
2. Not correct – with any co-operative the ownership is shared between many people. Lucy does not share ownership with any other person.
3. Correct – A sole trader is a business set up, owned and run by one person with unlimited liability. Most small businesses start as sole traders because of the simplicity of the structure/it is easy to set up. As Lucy has set up and owns this business herself, meaning she has no partners or shareholders, she can make all of the business decisions and keep the profits herself.
4. Not correct – Public Limited Companies have shares that are traded on the stock exchange and multiple owners are called shareholders which own the business. As a sole trader, this option is not open to Lucy.

This work is licensed under a Creative Commons Attribution 4.0 International License.

In Electromac’s third year of trading it experienced cash flow problems despite making a high profit.

To improve its cash flow position Electromac should?

Select ONE answer:

1. give longer credit terms to customers
2. pay its suppliers immediately
3. use a factoring service
4. increase its inventory levels

Show your workings to arrive at your answer, and explain and justify your reasons:

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

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct – payments will be delayed which will reduce the amount of cash flowing into the business and worsen the cash flow position.
2. Not correct – this will result in more cash leaving the business before it needs to which will put more pressure on cash flow.
3. Correct – Cash flow is the movement of money in and out of a business. Electromac needs cash immediately to meet its day to day operations. Factoring will give immediate payment and therefore should ease cash-flow.
4. Not correct – more cash will be tied up in inventory which will worsen the cash flow situation.

This work is licensed under a Creative Commons Attribution 4.0 International License.

Increasing incomes in the UK economy result in a greater demand for clothing at all price levels.

Clothing is therefore best described as?

Select ONE answer:

1. a normal good
2. an inferior good
3. a substitute good
4. a complementary good

Show your workings to arrive at your answer, and explain and justify your reasons:

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

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – A normal good has a positive income elasticity of demand. As incomes rise consumers have more disposable income. Consumers are likely to choose to spend the increased.
2. Not correct – inferior goods would see a decrease in demand as consumers switch to more normal goods/it has a negative YED.
3. Not correct – clothing is not being used as an alternative to another product.
4. Not correct – clothing is not directly linked to any other product and clothing can be purchased independently from other goods.

This work is licensed under a Creative Commons Attribution 4.0 International License.