EDEXCEL GCSE BUSINESS · PAPER 1
Exam Practice: The Role of Business Enterprise
The role of business enterprise · Enterprise and entrepreneurship · Lesson 3 of 3 · 19 marks · 30 minutes
Name Date
Answer all questions. Show your working in calculations.
Question 1 DEFINE [1 mark]
Define the term 'unique selling point'.
Question 2 DEFINE [1 mark]
Define the term 'added value'.
Question 3 CALCULATE [2 marks]
A café sells a sandwich for £4.50. The bread, filling and packaging cost £1.20. Calculate the added value of the sandwich. You are advised to show your working.
Question 4 EXPLAIN [3 marks]
Explain one way an entrepreneur could add value to a product.
Question 5 EXPLAIN [3 marks]
Explain one benefit to a business of having a strong brand.
Question 6 JUSTIFY [9 marks]
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SOURCE Priya runs a small bakery in a market town. She sells bread and cakes at similar prices to the supermarket nearby, and her sales have fallen for two years. She has enough money for one improvement. Option 1: Improve convenience by offering online ordering and home delivery. Option 2: Improve quality by switching to organic, locally produced ingredients. |
Justify which one of these two options Priya should choose to add value to her products.
Answers
Check your answer only once you have written one.
Question 1 [1 mark]
A feature of a product or service that makes it different from those of its competitors.
▸ A feature that differentiates a product / makes it stand out from competitors 1 mark
Question 2 [1 mark]
The difference between the selling price of a product and the cost of the bought-in materials and components used to make it.
▸ Selling price minus cost of bought-in materials / inputs 1 mark
Question 3 [2 marks]
Added value = £4.50 - £1.20 = £3.30
▸ Correct method: selling price - cost of bought-in materials 1 mark
▸ Correct answer: £3.30 1 mark (award 2 marks for the correct answer with no working)
Question 4 [3 marks]
By giving the product a unique selling point (1). This will differentiate it from competitors' products, so customers cannot buy the same thing elsewhere (1). As a result customers may be willing to pay a higher price, which increases the value added and the business's profit (1).
▸ A way identified: convenience / branding / quality / design / USP 1 mark
▸ First linked point: how it makes the product more attractive to customers 1 mark
▸ Second linked point: customers pay more, so value added / profit increases 1 mark
▸ Answers listing several ways with no explanation maximum 1 mark
Question 5 [3 marks]
Customer loyalty (1). Customers who recognise and trust the brand are more likely to buy from the business again rather than from a competitor (1). This means the business can charge a higher price than an unbranded rival, increasing its added value (1).
▸ A benefit identified, e.g. loyalty / can charge higher prices / stands out from competitors 1 mark
▸ First linked point of explanation 1 mark
▸ Second linked point of explanation 1 mark
Question 6 [9 marks]
Option 1, convenience, would let customers order from home, so Priya could reach busy customers who do not visit the town centre. This could increase sales without her needing to cut prices. However, delivery adds costs such as a driver and fuel, which would reduce her added value per order. Option 2, quality, would give Priya a clear difference from the supermarket, which cannot match fresh local organic baking. This gives her a unique selling point, so customers may be willing to pay a higher price, directly increasing added value. On balance Priya should choose Option 2, because her problem is that she sells at supermarket prices with nothing to make her stand out; the supermarket already offers convenience, but it cannot offer locally baked organic quality. This depends, though, on whether her customers can afford to pay more.
▸ AO2 (Application, 3 marks): uses Priya's context - small bakery, falling sales, supermarket competitor Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning about how each option adds value Level 1-3
▸ AO3b (Evaluation, 3 marks): a justified choice with a supported judgement, e.g. "it depends on" Level 1-3