EDEXCEL GCSE BUSINESS · PAPER 1
Exam Practice: Business Location
Business location · Making the business effective · Lesson 2 of 4 · 13 marks · 20 minutes
Name Date
Answer all questions. Use the context of the business in the question where one is given.
Question 1 DEFINE [1 mark]
Define the term 'e-commerce'.
Question 2 STATE [1 mark]
State one factor that might influence where a business locates.
Question 3 OUTLINE [2 marks]
Outline one reason why a café might choose to locate close to its market.
Question 4 EXPLAIN [3 marks]
Explain one reason why the internet has reduced the importance of location for some businesses.
Question 5 ANALYSE [6 marks]
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SOURCE Priti makes and sells scented candles. She currently sells them from a small rented shop on a busy high street, where the rent has just risen by 30%. About half her sales now come through her website. She is thinking of closing the shop and selling only online from a unit on an industrial estate. |
Analyse the impact on Priti's business of moving from the high street to selling only online.
Answers
Check your answer only once you have written one.
Question 1 [1 mark]
Buying and selling goods and services using the internet.
▸ Buying / selling online 1 mark
Question 2 [1 mark]
Proximity to the market.
▸ Any one of: proximity to the market / customers; labour; materials; competitors 1 mark
Question 3 [2 marks]
To attract passing customers (1), because a café relies on high footfall from people who are already nearby, such as shoppers and office workers (1).
▸ A reason identified, e.g. footfall / convenience for customers / more sales 1 mark
▸ Developed in the context of a café 1 mark
Question 4 [3 marks]
Businesses can sell to customers through e-commerce (1). Customers order online, so they do not need to visit the business in person (1). This means the business can run from a cheaper location, such as a small unit or the owner's home, without losing sales (1).
▸ A reason identified, e.g. e-commerce / customers do not need to visit / can reach customers anywhere 1 mark
▸ First linked point of explanation 1 mark
▸ Second linked point of explanation 1 mark
Question 5 [6 marks]
Moving online would cut Priti's costs. High-street rent is expensive and has just risen by 30%, while a unit on an industrial estate is much cheaper, so her fixed costs would fall and her profit on each candle could rise. Because half her sales already come from her website, she knows customers are willing to buy online, and she could reach customers across the country rather than only those who walk past. However, she would lose the footfall of the high street. Candles are a product customers like to smell before buying, so some shoppers who buy on impulse when passing would no longer buy from her. This means she could lose part of the half of her sales that come from the shop, unless she spends more on online promotion to replace them.
▸ AO2 (Application, 3 marks): uses the context - candles, the 30% rent rise, half of sales online, the industrial estate Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning about the impact on costs, sales and profit Level 1-3