ASAL Business Worksheet Answers

CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS
Language worksheet 1.1 answers

Enterprise terminology
Structured glossary
1 Key term Definition

Entrepreneur An individual who has the idea for a new business, starts it up and carries most of
the risks but benefits from the rewards.
Adding value Increasing the difference between the cost of bought-in inputs (materials) and the
selling price of the finished goods.
Consumer services The non-tangible products sold to consumers that are not intended for resale.
These include hotel accommodation, insurance services and train journeys.
Factors of production The resources needed by business to produce goods or services.
Opportunity cost The next most desired option that is given up.
Customer An individual consumer or organisation that purchases goods or services
from a business.
Added value The difference between the cost of purchasing bought-in inputs (materials) and the
selling price of the finished goods.
Intrapreneur A business employee who takes direct responsibility for turning an idea into a
profitable new product or business venture.
Consumer An individual who purchases goods and services for personal use.
Capital goods The physical goods used by industry to aid in the production of other goods and
services, such as machines and commercial vehicles.
Multinational business A business organisation that has its headquarters in one country, but with
operating branches, factories and assembly plants in other countries.
Consumer goods The physical and tangible goods sold to consumers – that are not intended for
resale. These include durable consumer goods, such as cars and washing machines,
and non-durable consumer goods, such as food, drinks and sweets that can be
used only once.
Business plan A written document that describes a business, its objectives, its strategies, the
market it is in and its financial forecasts.
Enterprise The action of showing initiative to take the risk to set up a business.
Cambridge International AS & A Level Business – Chalk & Malpas © Cambridge University Press 2021
1

Business structure
Spot the error
1 a A sole trader is a form of business structure that is owned by one person. They can employ others to work
for them. All sole traders have limited liability [1]. This means that the owners’ personal possessions can
be used to pay off the debts of the business. Sole traders also have limited forms of capital available to
them including loans, share capital [2] and their own investment. Sole traders are a very common form of
business ownership. Sole traders have no legal formalities to set up. The owners [3] can keep all the profits
and can choose when they work.
b Errors explained with suggested corrections:
[1] Sole traders have unlimited liability (change limited to unlimited).
[2] Share capital is not available to sole traders (remove share capital).
[3] There is only one owner, so this should be singular (owner).
Public or private?
2 a Public limited companies have the right to sell shares on the stock exchange. A private limited company
cannot sell shares to the general public.
b A private limited company has the letters Pte or Ltd in its company name. A public limited company can
be identified by the letters Plc or Inc after its company name.
c A public limited company (Plc/Inc) can be found in the private sector of industry.
d Public corporations are type of business organisation that is owned by the state. They can be found in
the public sector of industry.
1

Business size crossword
Across
4 market share
5 conglomerate
6 vertical
7 takeover
8 micro-enterprise
9 strategic alliance
10 horizontal
11 merger
14 capital employed
15 revenue
16 organic
Down
1 small
2 backward vertical
3 forward vertical
12 external
13 medium
1
Topic worksheet 4.1 answers

Business objectives
1 Muddled words
Objectives:
a Providing services
b Profit satisficing
c Increasing shareholder value
d Survival
e Triple bottom line
Objectives matched to statements:

a iv
b i
c v
d ii
e iii
2 Odd one out
a Growth.
b The firm is new, so should be focusing on survival and gaining some market share before growth. Growth
will come at a later stage in the businesses development.
c To increase brand awareness.
d Although this will be important, direct objectives relate to economic, social and environmental aims (these
are also known as people, profit and planet: the triple bottom line). Brand awareness is a tool that can be
used to help them meet these objectives.
e Learners’ own answers.
f Learners’ own answers.
g Learners’ own answers.
1

Stakeholder wordsearch
1 Wordsearch
Groups in the wordsearch:
CUSTOMERS SUPPLIERS EMPLOYEES

MANAGERS LOCAL COMMUNITY PRESSURE GROUPS
LENDERS OWNERS GOVERNMENT
2 Internal or external?
Internal stakeholder External stakeholder

Owners Customers
Managers Lenders
Employees Suppliers
Local community
Pressure groups
Government
1

External influences on business behaviour
1 What am I?
a Monopoly
b Consumer Protection Act
c Privatisation
d Demographic
e Collusion
f Nationalisation
g Social audit
h Greenwashing
2 Match the feature to the influence
Political and legal Social and demographic Technological International

Privatisation Corporate social New processes Free-trade blocs
Nationalisation responsibility Innovation Protectionism
Health and safety Reporting misleading Capital costs Tariffs
Minimum wage accounts Management information Quotas
Employment contract Bribes systems Exchange rates
Termination of Social audit Mobile pay Exports
employment Age Artificial intelligence
Consumer protection Literacy rate
Collusion Patterns of work
Monopoly Pressure groups
1

The business cycle
1 Draw a business cycle
2 What does it mean for business?

Learners’ answers might include:
Positive impacts Negative impacts

Downturn or • Budget retailers may gain • Firms selling holidays may see demand fall
recession more demand. as people have less money to spend.
• For producers of basic goods and • Any non-essential services will find demand
services, demand is likely to remain. falls (often hospitality and services).
• Essential services such as water, • Most firms will have a fall in revenues, made
electricity are still required. worse as they may have to reduce prices to
• Demand for inferior goods increases. maintain demand levels.
Recovery and • Luxury car producers may find demand • Inferior goods may find demand falls;
growth starts to increase. people could purchase a car instead of using
• Depending on customer loyalty, some public transport as they can afford it.
may start to move from their budget • Depending on the reason for growth, if
brands to more luxury brands. more people are working this could lead to
• Houses and mortgages: people may less leisure time, so these industries may
start to purchase houses. find demand falls.
• Gyms, health insurance, confectionary
and all items that find reduced
spending during a recession will see
demand start to increase.
1

Decision trees
1
• It can help a manager visualise options available in decision-making.
• The manager can minimise risk involved by assessing the options.
• Decisions made are based on probabilities, considering costs and expected returns.
2 a This represents a decision that needs to be made. The lines from this represent the possible options.
b This represents an outcome (following a choice).
c These need to add up to 1.0, so if you are told success will be 0.4, you know failure will be 0.6.
d This is the economic gain expected to be generated by this option.
3 a
b The firm should choose to launch a new product.
c It has the highest estimated net gain.
4 Learners’ answers might include: Risk, access to capital, actions of competitors and market changes, length of
time for investment (long-term vs short-term), who created the figures? Are the figures accurate or do they
contain bias favouring one option? The firm's objectives, availability of resources such as labour required
for options.
1
5 a
b The firm should choose to open one extra day a week.

c It has the highest estimated net gain.
2

Corporate planning and implementation crossword
Across
6 transformational
7 corporate plan
8 continuity planning
10 project champion
11 task
12 entrepreneurial
Down
1 person
2 contingency plan
3 crisis management
4 role
5 corporate culture
9 power
1

Recruitment and selection
Activity 1: Spot a vacancy in the firm
a Workforce planning, labour turnover

b If a vacancy is found, the manager needs to decide if they need to recruit someone or if they have enough
workers to cover the role internally.
Activity 2: Write the job description
a Job role, payment systems, hierarchy structure

b This is a description of the job vacancy that needs to be filled. The job description outlines the job title, tasks
to be performed, place in the company hierarchy and working conditions.
Activity 3: Write the person specification
a Qualifications, training
b This is a list of the qualities, skills and qualifications that the successful applicant for the job role will need
to have.
Activity 4: Create the job advert
a Job description, person specification

b At this stage, the firm should take the details of the person specification and job description and create an
advert to display to encourage applications.
Activity 5: Advertise the vacancy
a Job centre, recruitment agency

b Once the advert has been designed, the firm needs to place the advert somewhere so that relevant people will
see it. This could be on a noticeboard (if it is an internal vacancy), in a shop window, on the internet or social
media sites, newspapers, etc.
Activity 6: Receive applications
a Application form, curriculum vitae (CV), résumé

b Interested applicants will need to apply for this role using the method(s) outlined by the firm in the job advert.
Common methods include using application forms, CVs and covering letters.
1
Activity 7: Selection process
a Interview, references, selection tests, assessment centres

b The firm will read through the applications they have received. They may then shortlist a selection of people to
interview or do selection tests with to find out more about them. For practical jobs such as teaching or
hairdressing, part of the selection process may involve doing the job for a short period of time so the firm can
observe the applicant working. The firm may also gather references from a trusted person to comment on a
worker’s character and their ability to work.
Activity 8: Provide the employee with a contract
a Verbal agreement, legal document, termination

b When a worker is employed, they will be given a contract of employment. This is a legally binding document
that covers areas such as: the rights and responsibilities of the employee and employer, working hours, holiday,
sickness entitlement and how to terminate (end) the contract.
2

Focus on evaluation
1a–b Learners’ own answers.
Step 1: What am I being asked?
Underline the key words in the question to identify what you are being asked to do.
Evaluate whether SD should replace the existing payment system with a salary-based payment system for
all employees.
• The underlined sections are the important aspects and need to be addressed in answering the question.
Step 2: Identify what you already know
The concept: payment systems
• Learners’ answers might include:

• Salary, piece rate, bonuses, commission, wages
The focus: impact of change

• Change needs to be managed and controlled, it can cause disagreements between workers and managers, it
should be discussed with staff
Step 3: Creating the answer

• Workers want certainty over their pay levels. This could make them work harder.
• It can be demotivating if reward and effort are not correctly rewarded.
• Everyone on the team would feel equal as they all receive a salary.
1
Step 4: Evaluating
Learners’ own answers. A sample paragraph has been provided below:
I think that Shivani should not replace the existing payment system with a salary-based payment system for all.
This is because the current system does seem to be working and the designers are motivated to work hard. If
Shivani replaced the pay system and put everyone on a salary, this may only have a short-term positive impact. In
the longer term, there is no reason for the designers to focus on quality as they are getting paid anyway, so the
quality of the dresses may fall. If there is an issue with the production workers, Shivani could provide them with a
fixed payment rate, with a performance-related pay payment on top of this, based on quality. This would make the
production workers happy and keep them producing good quality dresses.
2

Management crossword
Across
2 autocratic
3 democratic
5 Mintzberg
6 Fayol
8 manager
9 laissez-faire
10 Theory Y
Down
1 paternalistic
4 CEO
7 Theory X
1

Building organisational structures
Suggested examples for structures that learners could create using the roles in the table.
1 Functional
2 A divisional organisational structure (based on geographical area)
1
3 Hierarchical (Flat)
4 Hierarchical (Narrow)
5 Matrix by function
Marketing Finance Sales Operations

Product A Marketing director Finance director Sales director Head of operations
(Product A) (Product A) (Product A) (Product A)
Product B Marketing director Finance director Sales director Head of operations
(Product B) (Product B) (Product B) (Product B)
Product C Marketing director Finance director Sales director Head of operations
(Product C) (Product C) (Product C) (Product C)
2

Communication is the word
1 Find the word, fill the gap
a Stakeholders
b i Spoken, sender, telephone
ii Written, reports
iii Electronic, email
iv Visual, information
v Receiver, presentation
c vertical, horizontal, formal
d barriers, language, distance, noise, overload
1
2 Vowels challenge
1 d 2 a 3 e 4 c 5 b
For the sentences, learners’ answers might include:
Key term a: effective communication

Effective communication is essential for a firm as they need to communicate with their stakeholders and if
communication is not effective, such as a marketing message is not correctly received by potential customers,
then there are likely to be negative financial implications for the firm.
Key term b: two-way communication

Two-way communication can be an important aspect of motivating workers as they may feel like they are
being listened to and may work harder as a result.
Key term c: information overload

When too much information is being shared, this can lead to information overload meaning the message may
get lost or distorted so the receiver may become confused.
Key term d: informal communication

Lots of information can be passed between workers using informal communication, which can be how rumours
are spread or it can be used to encourage workers to talk to each other and share ideas.
Key term e: communication methods

Getting the communication methods right is essential when reducing barriers to communication because if the
correct methods are chosen any receivers will get the correct message, maintaining the efficiency of the
communication.
2

Leadership theories – matching
The first bullet point in each section provides the link between the points.
• Goleman
• Emotional quotient (EQ)
• Leaders have self-awareness
• Leaders have self-management
• Leaders have social awareness
• Leaders have social skills
• Emotional intelligence (EI)
• Great person (Great man) theory

• Leaders are born with the ability to lead
• Leadership cannot be taught
• Leaders are viewed as heroic
• Now called great person theory
• Behavioural theory
• Leaders use technical skills
• Leaders use human skills
• Leaders use conceptual skills
• Leaders change their behaviour
• Leadership skills can be taught
• Trait theory
• Leaders have initiative
• Leaders are determined
• Leaders have flexibility
• Leaders have charisma
• Leaders are motivated to succeed
• Leadership position
• Directors
• Managers
• Supervisors
• Workers’ representatives
• Informal leaders
• Contingency theory
• Leaders can adapt their leadership
• Power and influence theories

• Sources of personal power
• Expert knowledge of the leader
• Charm of the leader
1

Measuring employee performance
1 Labour productivity calculations
Total output in a given time period

a
Total workers employed
320
b i Shop 1: = 16
20
430
Shop 2: = 23.89
18
ii Shop 2
iii Learners’ answers might include:
• Improve training related to customer service.
• Improve motivation so workers are happier.
• Purchase better equipment such as tills so workers can serve customers quicker.
• Introduce self-scan machines so fewer workers are needed, but the same number of customers
can be served.
• Better management.
3.2 million
c i Factory 1 – Country A: = 8 000
400
4.3 million
Factory 2 – Country B: = 8 600
500
2.3 million
Factory 3 – Country C: = 11 500
200
ii Factory 3 – Country C
iii Learners’ answers might include:
• Improve training so workers can do their job better.
• Improve motivation so workers are happier.
• Purchase better equipment such as robots so fewer workers are needed and output should increase.
• Better management.
1
2 Absenteeism calculations
Number of days of employee absence

a ×100
Total number of workdays
b Total number of workdays: 5 × 40 = 200

12
Absenteeism rate: × 100 = 6%
200
c Learners’ answers might include:
• The college would have to bring in someone to cover the teacher’s classes, which would come
at a cost.
• Potentially, learners may not get taught if the teacher is not in.
• The college may have to pay the teacher sick pay if that is the reason for the absence.
d Total number of workdays per worker: 6 × 48 = 288
Total number of workdays for the production team: 12 × 288 =3 456
46
Absenteeism rate: × 100 = 1.33%
3 456
e Learners’ answers might include:
• The Operations Director may need to bring in temporary workers to cover an absence. These workers
may not have very good skills to do the job.
• The Operations Director may be asked to explain why there are absences in their department.
• Production may need to be stopped, or cannot run as long as usual, especially if there are many
absences on the same day.
• The Operations Director may need to change their workforce planning and move workers between
different tasks.
3 Other methods of measuring performance
a Wastage rates (the proportion of materials that are wasted and the proportion of total output that
is damaged).
Benefit of the method of measurement Drawback of the method of measurement
Can be easily measured Difficult to know which employee

(or sometimes department) is responsible for
the wastage caused
What impact would a high wastage rate have on a firm?
Can be very expensive if lots of materials need to be thrown away.
Can look bad for a firm’s reputation (lack of sustainability).
2
b Consumer complaints as a proportion of total customers served
It is a useful tool for service industries where there It is a subjective measure, as not all unhappy
is no physical product to assess. customers will make a complaint.
What impact would a large proportion of customer complaints have on a firm?
The firm can gain a bad reputation, or customers who had bad service may not return. This could mean
that firms miss out on potential revenues that may go to their competitors instead.
c Comparing an individual’s performance against pre-set targets
It provides a way of assessing the performance of a Poorly set targets can mean performance cannot be
worker who is not be involved in production or accurately measured.
other roles with measurable outputs.
What impact would using targets as a measure of performance have on a firm?
If workers are measured against targets, this could be motivational and so they work harder. The targets a
worker is given can also be related to the company targets, which may lead to greater movement towards
the company targets.
3

What is marketing?
Find the example
Learners’ own answers will be used for this activity. Examples could include:
• B2B (industrial products)

Local: a local office cleaning company
National: paper for office printers from a national supplier
Global: computer software for offices.
• B2C (consumer products)
Local: handmade food sold at a food market
National: specialist national bakery products from companies such as Gourmet (Pakistan), Lavender Bakery &
Patisserie (Malaysia) and Monginis (India)
Global: food sold through multinationals such as McDonald’s.
Note: the examples provided by the learners do not need to be in the same industry.
Topic development questions
1 Learners’ own answers might include:
B2B often provide specialist equipment:
• May be small orders

• Lack of economies of scale
• Time consuming
• Huge market potential.
Limited number of firms may operate in really specialist markets:
• Opportunity to charge high prices (but costs are likely to be high)

• Need to stand out in the market.
Lower potential advertising spend:
• Don’t need to do large mass media advertising. Promotion is usually more focused and personalised.
Financial security:
• B2B often involve contracts between firms; i.e. a firm would sign a contract to pay for a machine to be
built before the firm starts to buy materials to build it, so there is less concern over the items being bought
compared to consumer markets.
1
2 Learners’ own answers could include:
Competition:
• Depending on what is being sold, there may be a lot or little competition which can impact on
demand levels
• There may be non-price competition within the market if there are many sellers
• Barriers to entry may be low.
Advertising:
• If products are mass market B2C, large advertising and promotional campaigns will need to be done which
can be very expensive.
3 Learners’ own answers could include:
Benefits of mass market:
• Can lead to low average costs of production if producing a vast quantity

• Can lead to increased brand identity if your product is sold to many consumers.
Drawbacks of mass market:
• Products may be too standardised, so do not appeal to all consumers

• Low prices may be encouraged due to levels of competition which can impact on brand image.
Benefits of niche market:
• Good for small businesses and provides them with a market

• Can sell at high prices if there are no/limited competitors.
Drawbacks of niche market:
• Limited scope for growth

• Economies of scale may not be achieved.
Learners should make a judgement about which is the better market and why.
2

Market research
1 Crossword
Across Down
3 market research 1 sampling
5 questionnaire 2 secondary research
8 quantitative 4 interview
10 primary research 6 test marketing
11 mintel 7 observation
9 qualitative
2 Mean, median and mode
a The median is the value of the middle item when data have been ordered or ranked. It divides the data into
two equal parts.
23 25 27 30 32 34 34 38 46 57
32 + 34
2
Answer: 33
b The mode is the value that occurs most frequently in a set of data.
23 25 27 30 32 34 34 38 46 57
Answer: 34
c The range is the difference between the highest and lowest value.
23 25 27 30 32 34 34 38 46 57
Answer: 57 – 23 = 34
d Learners’ own answer could include:
• They know there is a large range of ages. This can cause difficulties to co-ordination of
marketing activities.
• The majority of cutomers seem to be in their 30s, so this could allow us to focus marketing and
product decisions.
• They need to do more market research to find out if the outlying ages were purchasing for themselves
or for others.
1

Product and price
1
2 Using your own words, explain each term and outline its significance to the 4Ps (marketing mix)
Term Definition Significance to the 4Ps (marketing mix)

Introduction This is when the product has just Product: potentially new product
been launched after development Price: can be high or low depending on competition in
and testing. Sales are often quite the market
low to begin with and may increase Promotion: high levels, inform customers of product
only quite slowly. Place: restricted availability initially
Growth If the product is effectively promoted Product: product development may take place based on
and well received by customers, then initial feedback
sales should grow. Price: prices may be increased or lowered depending on
market response
Promotion: focus on repeat purchases
Place: increased availability through more outlets
Maturity At this stage, sales fail to grow, but they Product: potentially new models, colours, functions
do not decline significantly either. This Price: more competitors are likely to be in the market
stage can last for years. and prices may need to change to reflect this
Promotion: focus on brand image
Place: widest possible; move to international markets?
Decline During this phase, sales will Product: slowly withdraw product from some markets
decline steadily Price: low prices may be required to sell off
remaining stock
Promotion: very limited
Place: remove product from unprofitable outlets
Extension This is a marketing plan to extend the Product: potentially new design, repackaging, finding
strategy maturity stage of the product before a new uses for the product
brand new one is launched. Price: depending on what changes are made to the
product, price may increase or decrease. Promotional
pricing could be used as a strategy
Promotion: link to changes made, could be aimed at
new markets
Place: move to a new global market, new channels of
distribution depending product changes
1
3 a Cost-plus pricing
b Contribution pricing
c Loss leader
d Discrimination pricing
e Dynamic pricing
f Skimming pricing
g Psychological pricing
h Competitor pricing
2

Promotion and place
1 Methods of promotion
a i DIRECT
ii SALES PROMOTION
iii INFORMATIVE; PERSUASIVE
iv PRINT; NEWSPAPERS; MAGAZINES
v TELEVISION; BROADCAST
vi BILLBOARDS
vii PRODUCT PLACEMENT
viii GUERRILLA
Note: learners’ own answers should be used for examples.
1
b Other terms that can be found in the wordsearch include:
bogof digital email loyalty mail

viral price social media sponsorship telemarketing
2 Place
a Direct selling is a direct route from manufacturer to consumer. There are no intermediaries, so this is also
referred to as the zero-intermediary channel.
b Learners’ own answers.
c Single intermediary channels are where retailers are able to arrange their own storage and distribution
systems so cut out the need for any intermediaries as they control all elements.
d Learners’ own answers.
e Two-intermediary channels are where there are two intermediaries between producer and consumer, most
commonly wholesalers and retailers.
f Learners’ own answers.
g Digital distribution is the delivery or distribution of digital media content such as audio, video, TV
programmes, films, software and video games.
h Learners’ own answers.
i Physical distribution is the activities which combine to achieve the efficient movement of finished products
from the end of the production operation to the consumer.
j Learners’ own answers.
2

Time series analysis and moving averages
1 Time series is a method of forecasting based entirely on past sales data. When these records are presented in
date order, they are referred to as a time series.
Moving averages is a calculation used to analyse data through a series of averages.
2 Answers include:
• The operations department would know how many units to produce, how many materials to order and
would hold just the correct level of inventories.
• The marketing department would be aware of how many products they will need to sell and distribute.
• The human resources workforce plan would be more accurate, leading to the appropriate number of
employees with the right skills.
• Cash flow forecasting would be much more accurate.
3 a Trend: the underlying movement in a series of data over time.

b Seasonal fluctuations: the regular and repeated variations that occur in sales data within a period of
12 months.
c Cyclical fluctuations: variations in sales over periods of time of much more than a year and due to the
business cycle.
d Random fluctuations: variations that occur at any time and cause unusual and unpredictable sales figures,
due to events such as exceptionally poor weather or negative public image.
1
4 1 2 3 4 5 6 7 8
Quarterly
Eight- Seasonal Average
Sales Four-quarter moving
Year Quarter quarter moving seasonal
revenue moving total average
moving total variation variation
(trend)
2019 1 120
2 110
3 115 117.75 –2.75 –4.19
4 130 475 118.13 +11.87 +24.69
2020 1 112 467 942 121.75 –9.75 –14.63
2 121 478 945 130.38 –9.38 –2.76
3 133 496 974 138.63 –5.63 –4.19
4 181 547 1043 143.50 +37.50 +24.69
2021 1 127 562 1109 146.50 –19.50 –14.63
2 145 586 1148 141.13 +3.87 –2.76
3 133 586 1172
4 138 543 1129
5
ASV quarter 1: ASV quarter 2: ASV quarter 3: ASV quarter 4:
(–9.75) + (–19.50) (–9.38) + 3.87 (–2.75) + (–5.63) 11.87 + 37.50
2 2 2 2
= –14.63 = –2.76 = –4.19 = 24.69
6 • Useful for identifying seasonal variations. Most firms will go through elements of seasonality
in their sales.
• Can be very accurate for short-term planning.
• Data should be easy to gather if using internal data such as sales figures.
7 • Forecasts are only as valid as the information used to produce them.
• Only really useful for short-term. Forecasts become less reliable over time.
• No qualitative factors are considered in this method.
2

Marketing strategy
1 Odd one out
a Decrease the number of defective products by 10%.
b This is an operational objective and linked to production and quality.
2 a Increase the motivation of sales staff through increased bonuses.

b This is a human resource management objective and linked to motivational methods.
3 Key term match
• Situational analysis: where the business is now, which includes market research.
• Marketing objectives: what the strategy is focused on achieving.
• Marketing strategy: the overall plan of action to be taken to achieve the objectives.
• Marketing mix: the combination of the 4Ps that is to be used.
• Marketing budget: the financial resources available.
4 Language development
Learners’ answers should cover the main points in the coursebook (Section 22.1). Answers might include:
a Situational analysis: This shows where the business is now. This needs to be included to see where they
are starting from.
b Marketing objectives: These are objectives that the firm want to achieve. They are in there to give
direction for future development.
c Marketing strategy: This section is how they plan to meet their marketing objectives. This needs to be
included to give the business an idea of what they need to do.
d Marketing mix: These are the 4Ps. These need to be included as they are the specific tactics that will be
used to meet the marketing strategy.
e Marketing budget: This is the financial resource available for the marketing team. This needs to be in the
plan to monitor spending and make sure that all plans come in on budget.
1

The nature of operations
1
Batch production offers some flexibility in product design True
Job production has a low unit production cost False
Flow production requires specialised capital equipment True
Mass customisation has high unit costs and limited flexibility in design False
Capital-intensive production is only an option for large firms False
Flow production requires a highly skilled workforce False
The factor inputs are land, capital and enterprise False
2 a A business employs 670 workers who produced 500 000 units over the last year. Calculate the labour
productivity per worker.
500 000
=
670
= 746.27 (746 units)
b i �
670
� × 30 = 201
100
30% reduction is 201

670 – 201 = 469
469 workers now working at the business
500 000
ii � � × 15 = 75 000 increase in units
100
500 000 + 75 000 = 575 000
1

iii
575 000
=
469
= 1 226.01 (1 226 units)
iv It has increased from approximately 746 units to 1 226 units
c
Capital- or labour-intensive?
High fixed costs Capital
Impacted by the quick pace of technological change Capital
Costs are mainly variable in nature Labour
Quality of the products produced can vary Labour
Customised products are easier to make Labour
2

Analysing inventory control charts
1 a 200 units
b They would have no inventory available whilst they were waiting for new inventory to arrive, so would be
unable to produce.
c Uncertainty about delivery times; the greater the cost of stopping the production if there was no inventory;
the costs of holding large volumes of inventories.
d 800 units
e Space available to hold the inventory; cost of holding inventory; how perishable is the inventory.
f 400 units
g The re-order level is the inventory level when you need to place a new order with the supplier. The re-order
quantity is the amount that is ordered. This needs to take into account any inventory that is used during the
lead time, so will usually be more units than the difference between the re-order level and the maximum
inventory level.
h How long it takes suppliers to deliver; where inventories are coming from; level of production taking
place; seasonality.
i Approximately two weeks.
j Reliability of suppliers; distance travelled of inventory; number of channels of distribution the inventory
needs to go through; transport issues can impact on lead time causing delays.
2 a The maximum inventory level
b The re-order level
c The minimum inventory level
d 10 units
e 30 units
f 80 units divided by 7 weeks = 11.43 units (11 units)
g Approximately two weeks
1

Capacity utilisation and outsourcing
1 Unscramble the sentence
a Outsourcing: using another business to undertake a part of the production process.
b Capacity utilisation: the proportion of maximum output capacity currently being achieved.
c Maximum (full) capacity: the highest level of sustained output that can be achieved.
d Excess capacity: when the current levels of demand are less than the full capacity output of a business.
e Rationalisation: reducing capacity by closing factories/production units.

f Capacity shortage: when demand for a business’s products exceeds production capacity.
2 Revenues, profits, and costs
Answers and additional guidance include:
a If capacity utilisation is at 100%, the revenue for one performance is $40 000.
1 000 tickets × $40 = $40 000
b If capacity utilisation is at 50%, the revenue for one performance is $20 000.
500 tickets × $40 = $20 000
c If capacity utilisation is at 100% for every performance and the theatre holds twenty performances that
month, the fixed cost is $50 000.
Fixed costs do not change with production levels, in this case ticket sales.
d If capacity utilisation is only 50% for every performance, and the theatre holds twenty performances that
month the fixed cost is $50 000.
Fixed costs do not change with production levels, in this case, ticket sales.
e If capacity utilisation is at 100% for every performance and the theatre holds twenty performances that
month, the average fixed cost per ticket is $2.50.
Tickets sold: 1 000 × 20 = 20 000. Fixed costs for the month are $50 000.
$50 000/20 000 = $2.50
f If capacity utilisation is only 50% for every performance and the theatre holds twenty performances that
month, the average fixed cost per ticket is $5.00.
Tickets sold: 500 × 20 = 10 000. Fixed costs for the month are $50 000.
$50 000/10 000 = $5.00
g If capacity utilisation is at 100% for every performance, and the theatre holds twenty performances that
month, the variable cost is $60 000.
20 × $3 000 = $60 000
1
h If capacity utilisation is only 50% for every performance and the theatre holds twelve performances that
month, the variable cost is $36 000.
12 × $3 000 = $36 000
i If capacity utilisation is at 100% for every performance and the theatre holds twenty performances that
month, the profit is $690 000.
Ticket sales: 20 × 1 000 = 20 000
Revenue: $40 × 20 000 = $800 000
Costs: FC = $50 000, VC = $60 000, total costs = $110 000
Profit: $800 000 − $110 000 = $690 000
j If capacity utilisation is only 50% for every performance, and the theatre holds twenty performances that
month, the profit is $290 000.
Ticket sales: 20 × 500 = 10 000
Revenue: $40 × 10 000 = $400 000
Costs: FC = $50 000, VC = $60 000, total costs = $110 000
Profit: $400 000 − $110 000 = $290 000
k Learners’ answers might include:

• reduce the number of performances
• reduce the price of tickets for some performances that have low sales
• provide shows that are more in demand
• offer additional packages (such as to meet the actors after the performance).
2

Location
Where should it locate?
1 Learners’ answers might include any of the following:
• Country A has a bigger population than Country B. Will this mean more potential customers?
(Country A’s population is 39.8% larger than Country B (130 – 93m / 93m × 100% = 39.8%))
• There is a lower growth in average hourly wage in Country A (Country A is 2.4%, Country B is 8.33%).
• Figures would indicate higher costs in Country A, which could mean they have a wealthy economy with a
high cost of living, so those living there may have more disposable income to spend.
• There are already a lot of coffee shops in Country A and, although this provides competition, this also
suggests that there is an existing market for coffee shops in Country A.
2
2 • Country B has a lower average hourly wage than Country A (by $0.40 per hour) so it would cost less to
employ workers.
• There is higher annual GDP growth in Country B (6% v 3%) suggesting the country is going through a
period of growth which could lead to increased demand for luxury products such as coffee.
• Cost to grow is $50 000 lower in Country B.
• There are less existing coffee shops in Country B, suggesting there is limited competition.
3 Learners’ own answers. They can choose Country A or B, depending on their arguments.
4 • running costs, overheads

• longer term economic outlook for the country
• demographics of each country
• disposable income levels
• drinking preferences: do they drink much coffee in each country, or will Café Aleena need to develop
new products?
1

Quality management
1 Structured glossary
Key term Definition

Quality product A good or service that meets customers’ When a consumer buys a product, they
expectations and therefore fulfils its expect it to be a quality product. This
intended purpose. means that it should do what it is
supposed to and not break when
being used.
Quality assurance A system of agreeing and meeting quality By having quality assurance, a firm’s
standards at each stage of production to ensure costs should be kept low as they
consumer satisfaction. should find wastage levels are kept
to a minimum.
Internal customers People within the organisation who depend upon Everyone in the organisations needs to
the quality of work being done by others. take care of quality to make sure the
internal customers are able to do
their job.
Benchmark The areas of business performance that are By having BPIs a business can make sure
performance measured and compared with other businesses. it is working to the same quality
indicators (BPI) standard as other firms in the market,
allowing them to compete at the
same level.
Total quality An approach to quality that aims to involve all TQM can be expensive to implement as
management employees in quality improvement. all workers may need to be trained in
(TQM) how to look for areas where quality can
be improved.
Quality control Checking based on inspection of the product or a Quality control may not pick up all faulty
sample of products. products, so some may make it into the
market. This could negatively affect the
firm’s reputation.
Zero defects A way of thinking to ensure that products meet Zero defects works alongside TQM. All
customer expectations every time. workers are encouraged to get it right
first time.
Benchmarking Comparing a business against the performance By benchmarking, firms can assess their
standards of the best businesses in the own performance against an industry
same industry. measure and identify areas they
can improve.
Quality standards The expectations of customers expressed in Quality standards will differ for every
terms of the minimum acceptable production or customer. Factors that will influence this
service standards. include price, brand name and how long
the product will be used for.
1
2 Is it quality assurance or quality control?

a quality control
b quality assurance
c quality control
d quality control
e quality assurance
f quality control
2

Critical path and network diagrams
1 Critical path analysis: a planning technique that identifies all tasks in a project, puts them in the correct
sequence and allows for the identification of the critical path. This is usually done using a network diagram.
2 Network diagram: the diagram used in critical path analysis that shows the logical sequence of activities and
the logical dependencies between them, so the critical path can be identified.
3
4 The critical path for this activity is A, D, E, F.
5 A = 0, B = 2, C = 1, D = 0, E = 0, F = 0
6 The project would still be able to finish on time.
7 The project would not finish on time and would be delayed by 3 days as Activity D is a critical activity.
8 CPA is a useful visual aid. Helps to plan most efficient use of resources.
Can support JIT systems.
9 It’s only as useful as the information used to construct it.
It can involve a lot of guesswork if it’s a new project.
The diagrams can become very large and unmanageable
1

Business finance
1 Classifying sources of finance
a Short-term and long-term finance
Short-term source Long-term source
Bank overdraft Retained earnings (often used for expansion)
Working capital reduction Sale of assets (unless close to liquidation)
Trade credit Debentures
Debt factoring Rights issue
Five-year bank loan
Venture capital
Hire purchase
Crowd funding
b Internal and external finance
Internal source External source
Retained earnings Bank overdraft
Sale of assets Trade credit
Working capital reduction Debt factoring
Debentures
Rights issue (a form of share capital)
Five-year bank loan
Venture capital
Hire purchase
Crowd funding
1
2 Match the source to the circumstances
Business context
New start-up Growing Ltd Established Plc
Venture capital  
Debentures  
Overdraft   
Sale and leaseback  
Crowd funding 
Owner’s savings 
Micro-finance 
Retained profit  
Sell shares to existing   (rights issue)

shareholders
Sell shares via 
public issue
2

Cash flow forecasting
1
Cash flow forecast for Tanvi’s Trinkets September to February (all figures in $)
Sep Oct Nov Dec Jan Feb
Cash sales 3 400 6 600 9 800 12 000 7 000 6 000
Loan receipt 20 000
Total cash in 23 400 6 600 9 800 12 000 7 000 6 000
Rent 2 000 2 000 2 000 2 000 2 000 2 000
Wages 3 000 3 000 3 000 3 000 3 000 3 000
Trade 1 000 1 400 2 300 2 800 1 200 1 000

payables
Other 700 700

expenses (2 800/4)
Equipment 21 500
Loan 800 800 800 800 800

repayment
Total cash 28 200 7 200 8 100 9 300 7 000 6 800

out
NET CASH (4 800) (600) 1 700 2 700 0 (800)

FLOW
Opening 4 000 (800) (1 400) 300 3 000 3 000

balance
Closing (800) (1 400) 300 3 000 3 000 2 200

balance
1
2 There will be an additional $800 cash outflow in November and $800 cash inflow in January.
The bank balance will reduce by $800 from November until January.
The overall effect on cash flow and bank balance is shown below in italics:
Sep Oct Nov Dec Jan Feb
NET CASH (4 800) (600) 900 2 700 800 (800)

FLOW
Opening 4 000 (800) (1 400) (500) 2 200 3 000
balance
Closing (800) (1 400) (500) 2 200 3 000 2 200
balance
2

Budgeting and variances
1 Complete the table
Actual > budget Actual < budget
Revenue favourable adverse
Variable costs adverse favourable
Fixed costs adverse favourable
Profit favourable adverse
2 Match the definition
a iv
b iii
c vii
d vi
e ii
f v
g i
1

Accounting key terms wordsearch
Clues:
1 gross
2 non-current assets
3 reserves
4 cost of sales
5 liability
6 overdrawn
7 profit for the year
8 Net realisable value
9 Assets
10 inventory
11 Net book value
12 working capital
13 credit
14 trade receivable
1

Financial statements
1 Complete the statement of profit or loss
Statement of profit or loss for Sahana Soap Ltd for the year ending 31 March 2021 (all figures in $)
Revenue A = 59 200
Cost of sales (40 700)
B Gross profit 18 500
Expenses (3 600)
C Profit from operations D = 14 900
Interest (160)
Profit before tax E = 14 740
Tax @ 20% F = 2 948
Profit for the year G = 11 792
H Dividends to shareholders 5 292
Retained earnings I = 6 500
1
2 Complete the statement of financial position
Sahana Soap Ltd, statement of financial position as at 31 March 2021 (all figures in $)
ASSETS
Non-current assets:
Property 100 000
Equipment 5 000
J = 105 000
Current assets:
Inventories K = 4 500
Trade receivables
6 200
10 700
TOTAL ASSETS L = 115 700
EQUITY and LIABILITIES
Current liabilities:
Trade payables 2 300
Overdraft 300
M = 2 600
Non-current liabilities:
Long-term loans 35 000
35 000
TOTAL LIABILITIES N = 37 600
Shareholders’ equity:
Share capital 60 000
Retained earnings O = 18 100
Equity P = 78 100
TOTAL EQUITY and LIABILITIES Q = 115 700
3 a The figure in the statement of profit or loss is just for the year ending 31 March 2021, while the figure in
the statement of financial position is accumulative, that is it is the total over the lifetime of the business.
b Non-current assets section of the statement of financial position would be $100 000 lower because the
property would not be an asset of the business. As a result, the total equity and liabilities would also be
$100 000 lower, perhaps no long-term loan and less retained earnings. Instead the annual rent would be in
the expenses section of the statement of profit or loss.
2

Using ratios game
1 Using ratios question cards
Questions Answers (working)
A business has trade receivables turnover of $73 000 �𝟖𝟖 𝟎𝟎𝟎𝟎𝟎𝟎 × �𝟖𝟖 𝟎𝟎𝟎𝟎𝟎𝟎 ×
365
��
40
40 days. If the trade receivables were $8 000,
what was the revenue (credit sales) figure?
A business uses a gross profit margin of 25%. If $960 000 �
𝟐𝟐𝟐𝟐𝟐𝟐 𝟎𝟎𝟎𝟎𝟎𝟎
× 100�
25
the gross profit was $240 000, what was the
revenue (sales) figure?
A business has trade payables of $9 000 and 30 days �𝟗𝟗 𝟎𝟎𝟎𝟎𝟎𝟎 ×
365
�
110 000
credit purchases of $110 000 what is the trade
payables turnover (to the nearest day)?
A business has inventory turnover of 20 and $40 000 �
800 000
�
20
cost of sales of $800 000. What is its
average inventory?
A business has current liabilities of $18 000 0.7:1 �
12 600
�
18 000
and current assets of $12 600. What is the
current ratio?
A business has current assets of $40 000 and a $16 000 �
40 000
�
2.5
current ratio of 2.5:1. What is the current
liabilities figure?
A business had revenue of $420 000 and 63
15% � × 100�
420
profit for the year of $63 000. What is the
profit margin?
A business had revenue of $300 000 and gross 40% �
120
× 100�
300
profit of $120 000. What was the gross profit
margin?
A business had operating profit of $20 000, $150 000 ��
20 000
� × 100) – 50 000�
10
non-current assets of $50 000 and return on
capital employed of 10%. What is the
shareholders’ equity?
A business had inventory of $10 000, liquid 1.5:1 �
30 000
�
20 000
assets of $30 000 and current liabilities of
$20 000. What is the acid test ratio?
1

Investment appraisal advantages and disadvantages
Payback ARR NPV
Emphasis is on speed of return Useful when profitability is more Considers the timing of all cash
of cash flows. important than cash flow. flows.
The rate of discount can be varied to

Does not measure profitability
It focuses on profitability. allow for different economic
of a project.
circumstances.
Useful for businesses where Does not need to estimate a The best discount rate to use may be
liquidity is important. discount rate. difficult to predict.
The result can be used to

Calculations might be challenging to
eliminate or identify projects
Ignores the timing of cash flows. understand for managers without
that give returns too far into
accounting knowledge.
the future.
Does not consider the timing of

The time value of money is ignored.
future cash flows.
1

Using command words
1
Knowledge and understanding Application Analysis Evaluation
Explain Explain
Define
Calculate Calculate
Analyse Analyse Analyse
Evaluate Evaluate Evaluate Evaluate
Advise Advise Advise Advise
Note: Learners may be tempted to put the command word only in the ‘highest’ skill box. Remind learners
that a question with a command word such as ‘evaluate’ requires learners to demonstrate all four skills.
This can be reinforced by showing learners a mark scheme.
2 a Analyse
b Evaluate
c Knowledge
d Application
1

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CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS

Language worksheet 1.1 answers

1 Key term Definition

Language worksheet 2.1 answers

Language worksheet 3.1 answers

Topic worksheet 4.1 answers

Objectives matched to statements:

c To increase brand awareness.

e Learners’ own answers.

f Learners’ own answers.

g Learners’ own answers.

Topic worksheet 5.1 answers

Groups in the wordsearch:

CUSTOMERS SUPPLIERS EMPLOYEES

Internal stakeholder External stakeholder

Topic worksheet 6.1 answers

2 Match the feature to the influence

Political and legal Social and demographic Technological International

Topic worksheet 7.1 answers

2 What does it mean for business?

Positive impacts Negative impacts

Topic worksheet 8.1 answers

b The firm should choose to launch a new product.

c It has the highest estimated net gain.

b The firm should choose to open one extra day a week.

Language worksheet 9.1 answers

Language worksheet 10.1 answers

a Workforce planning, labour turnover

Activity 2: Write the job description

a Job role, payment systems, hierarchy structure

Activity 3: Write the person specification

Activity 4: Create the job advert

a Job description, person specification

Activity 5: Advertise the vacancy

a Job centre, recruitment agency

Activity 6: Receive applications

a Application form, curriculum vitae (CV), résumé

Activity 7: Selection process

a Interview, references, selection tests, assessment centres

Activity 8: Provide the employee with a contract

a Verbal agreement, legal document, termination

Language worksheet 11.1 answers

Step 1: What am I being asked?

Step 2: Identify what you already know

The concept: payment systems

• Learners’ answers might include:

The focus: impact of change

• Learners’ answers might include:

Step 3: Creating the answer

• Learners’ answers might include:

Learners’ own answers. A sample paragraph has been provided below:

Language worksheet 12.1 answers

Topic worksheet 13.1 answers

2 A divisional organisational structure (based on geographical area)

Marketing Finance Sales Operations

Language worksheet 14.1 answers

For the sentences, learners’ answers might include:

Key term a: effective communication

Key term b: two-way communication

Key term c: information overload