GCSE Business Studies

Unit 1: Business Activity

Revision Guide

Name: Target grade:

Table of contents
1|Page
Page 3: Unit overview
Page 4 : Personalised learning checklist
Page 6: Glossary/Key terms
Page 9: Exam top tips
Page 10: Exam structures
Page 11: 1.1 Business Activity
Page 13: 1.2 Business Planning
Page 15: 1.3 Business Ownership
Page 20: 1.4 Business Aims and Objectives
Page 22: 1.5 Stakeholders in Business
Page 26: 1.6 Business Growth
Page 30: Blank Revision clocks
Page 32: Possible/Practice exam questions
Page 35: Self-review of topic
Page 36: Additional support resources

Unit 1: Business Activity - An overview

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 Paper 1: Business Activity, Marketing and People
Content overview Assessment overview

Business Activity Business 1

Marketing 80 marks 50% of total GCSE
People 1 hour 30 minute paper

Topic Content

1.1 The role of business  The purpose of business activity and enterprise
enterprise and  Characteristics of an entrepreneur
entrepreneurship  The concept of risk and reward

 The purpose of planning business activity

1.2 Business planning
 The role, importance and usefulness of a business plan

 The features of different types of business ownership

 The concept of limited liability
1.3 Business ownership
 The suitability of differing types of ownership in different
business contexts

 The aims and objectives of business

1.4 Business aims and
 How and why objectives might change as businesses evolve
objectives
 Why different businesses may have different objectives

 The roles and objectives of internal and external stakeholder

groups
1.5 Stakeholders in business
 The effect business activity has on stakeholders
 The effect stakeholders have on business

 Organic growth
1.6 Business growth
 External growth

Personalised Learning Checklist

Complete the checklist below to rate your understanding of each of the topics in
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 Unit 1: Business Activity

Tick the relevant column to identify your learning and understanding of each of the areas studied.

Unit 1: Business Activity

1.1 The Role of Business Enterprise and Entrepreneurship

The purpose of business activity
o Spotting an opportunity
o Developing an idea for a business
o Satisfying the needs of customers
Characteristics of an entrepreneur
o Creativity
o Risk taking
o Determination
o Confidence
The concept of risk and reward

1.2 Business Planning

The purpose of planning business activity
o Reducing risk
o Helping a business to succeed
The role, importance and usefulness of a business plan
o Identifying markets
o Help with obtaining finance
o Identifying resources a business needs to operate
o Achieving business aims and objectives

1.3 Business Ownership

The features of different types of business ownership
o Sole-traders
o Partnerships
o Private and public limited companies
The concept of limited liability
The suitability of differing types of ownership in different business
contexts
o Start-ups and established businesses
1.4 Business Aims and Objectives
The aims and objectives of businesses
o Profit
o Survival
o Growth

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 o Providing a service
o Market share
How and why objectives might change as businesses evolve
Why different businesses may have different objectives

1.5 Stakeholders in Business

The roles and objectives of internal and external stakeholder groups
o Owners
o Employees
o Customers
o Suppliers
o Government
o Local community
The effect business activity has on stakeholders
The effect stakeholders have on business

1.6 Business Growth

Organic growth
o Increasing output
o Gaining new customers
o Developing new products
o Increasing market share
External growth
o Mergers
o Takeovers - including horizontal, vertical, diversification

Glossary/Key Terms
In your exam you will be required to explain the meaning of a range of key terms.

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In most cases 2 marks are available for demonstrating full understanding of the key term and 1 mark
for providing a relevant example.

Complete the glossary below so that you have a full set of key term definitions with examples.

Key Term Explanation Example

Backwards
vertical growth

Business
objectives

Business plan

Capital

Deed of
partnership

Diversification

Dividend

Enterprising
characteristics

Entrepreneur

External growth

External
stakeholders

Finance

Forwards vertical
growth

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 Growth

Horizontal
growth

Internal
stakeholders

Limited liability

Market share

Markets

Merger

Organic growth

Partnership

Private limited
company

Profit

Providing a
service

Public limited
company

Satisfaction

Shareholders

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Sleeping Partner

Sole trader

Spotting an
opportunity

Stakeholder
group

Survival

Takeover

Unlimited
liability

Exam ‘Top Tips’

Read the question carefully and decide

on the answer.
Check the possible options and
8 | Pcross
a g eout
the ones that are definitely wrong!
 “Be specific about what the product or service actually
is. Use actual competitor names too”

ead the question and the information “Follow the correct structures, you
ry carefully. Some of your answers will have been given them for a reason”
come directly from the text!
Highlight/underline key information in
the text

“Where the question asks for TWO

reasons/example/benefits, make sure you include TWO”

“If the question doesn’t tell you how many to include,

look at the number of marks available”

If you finish your paper before the 90

minutes are up:
Check, check and check again!
Ask yourself: So? Why? How? If?

Exam Structures

Follow each of the structures below when answering your exam questions

Explain [2 marks] Explain

Point 2 strands of information
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 using a connective Explain
2 strands of information
using a connective
Explain [4 marks]
Impact
Point
However
Explain
2 strands of information
using a connective Evaluate/Discuss [7/9 marks]
Point Point 1
Explain Explain positive
2 strands of information 2 strands of information using a
using a connective connective
Impact
Analyse [3 marks] However
Point Explain negative
2 strands of information using a
Explain
connective
2 strands of information
using a connective Impact
Impact Point 2
Explain positive
2 strands of information using a
Analyse [6 marks] connective
Point Impact
Explain However
2 strands of information Explain negative
using a connective 2 strands of information using a
Impact connective
Point Impact
Explain In conclusion the business should.....
2 strands of information The most important reason for this
using a connective is.......because.....
Impact While they do need to consider.....
I would still recommend.....for the
Recommend [3 marks] business because.....
Point
1.1 The role of business, enterprise and entrepreneurs

Specification
What you should know
content

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 The purpose of
 Spotting an opportunity, developing an idea for a business, satisfying the
business activity
needs of customers
and enterprise

Characteristics of
 Creativity, risk taking, determination, confidence, keen, persistent
the entrepreneur

 Potential risks to the entrepreneur such as financial, pressure, stress,

The concept of health issues
risk and reward  Potential rewards to the entrepreneur such as making a profit, being your
own boss, satisfaction of developing you own ideas for others to use

Why do businesses exist?

Businesses exist to satisfy the needs and wants of customers. They provide goods and services that
people want and at a price they are willing to pay. In return for this the business should make a
profit.

The diagram below shows the main purposes of business, enterprise and entrepreneurs.
An entrepreneur may see an existing product and spot an opportunity to develop and improve it.

Three purposes of business enterprise and entrepreenurship

Spotting an opportunity Satisfying customer needs

Developing an idea
- improving a product or - producing the product or
- designing the product or
servcice already provided providing the service
service
- producing a product or - marketing the product or
- planning production
service more cheaply service

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 Characteristics of an entrepreneur
Characteristics refers to the qualities, skills or abilities that a person must have to be a successful
entrepreneur. There are four main characteristics that you should know.

Can you match the explanation up with

the correct characteristic?

Creativity Risk-taking Being prepared to put their own or other

people’s money at risk.

Being positive, believing in their own

ability to make things happen.
Confidence Determination

Thinking up ideas and solving problems

i.e. thinking of new products to meet
consumer needs.

Think of successful entrepreneurs such as Richard Not being put off when difficulties or
Branson or Mark Zuckerberg, what characteristics problems arise, but working hard to solve
do they possess and how did they help them to them.
become so successful?

Risks and rewards in business

When an entrepreneur starts a business they hope for rewards however, they have to take risks in
order to receive these rewards.

Complete the table to explain the risks and rewards of being an entrepreneur

Risks Rewards

Health
Independence Self-satisfaction
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 Strained relationships
1.2 Business planning
Financial loss Making a profit

Specification
What you should know
content

The purpose of
planning business  Reducing risk, helping a business to succeed
activity

The role,
importance and  Identifying markets, help with obtaining finance, identifying resources a
usefulness of a business needs to operate, achieving business aims and objectives
business plan

The purpose of planning business activity

A business must plan its activities in order to:
 Reduce the risk of failure
 To be as successful as possible

The diagram below shoes the steps involved in developing a business idea

Identifying what the business will produce and sell and what resources it will need
Identifying the aims and objectives of the business and how these will be met
The idea

Identifying who will be invovled

Identifying the human resource requirements the business will need to operate,
The people including the number of people needed and the skills and experience they should have

Identifying the markets that the business will target

Identifying marketing activities to make the business successful
Market reserch Identifying the marketing resources needed

Identifying how much finance is needed, for what and how it will be raised
A good business plan is necessary to present to investors if a business hopes to obtain
Finance external finance

Identifying the competitors

Identifying how the product or service will be different to those of competitors -
Competitors better, cheaper?
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 Complete the spider diagram to identify the contents of a business plan

Contents of a
business plan

The Role, importance and usefulness of a business plan

A business plan explains how a business intends to achieve its objectives. It may be written before
the business starts, or when planning a major change to the way an existing business operates.

A good business plan will include

Identifying the resources
the following: Identifying the market
The resources that are needed to
The age, gender and income of operate, i.e. worker, equipment,
target customers for example machinery
Planning is a vital part in the
successful start-up and
development of a business. Business Plan

A business plan is useful when Identifying the finance needed Achieve the business' aims and
someone is simply trying to see if a objectives
How much is needed, when it is
business idea will really work, needed and how it will be Making a profit, expanding the
obtained i.e. selling shares, business, increasing market share
before actually starting in the or just surviving
obtaining a loan or an overdraft
business.

Should the following be included in a business plan? Tick the correct box, true or false.

Statement True False Statement True False

Information about the owners What finance is needed
Information about the hobbies A list of favourite school subjects
of the owners of the business owners
What marketing is planned Analysis of the competitors

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 A description of the target
Titles of business textbooks
market
1.3 Business Ownership

Specification
What you should know
content
The features of
 Sole traders, partnerships, private limited companies, public limited
different types of
companies
business
ownership

The concept of  The difference between limited and unlimited liability

limited liability  Which forms of business ownership has which type of liability

The suitability of
different types of
 Which form of business structure should a new start up use as opposed to
ownership in
a well-established business
different business
contexts

There are four types of business ownership that you need to know about;sole traders, partnerships,
private limited companies and public limited companies. The table below shows the main features
of each type along with their advantages () and their disadvantages ()

Private limited Public limited

Feature Sole trader Partnership
company company
 Few forms to  Only needs a The Registrar of The registrar of
complete deed of Companies Companies
partnership requires legal requires legal
Easy to set up  Cheap to set up documents, which documents, which
take time to take time to
produce and cost produce and cost
money money
 The business The partnership  The business  The business
stops when the ends when one continues even if continues even if
Continuity
owner dies or partner dies or shareholders sell shareholders sell
retires retires their shares or die their shares or die
 No information  No information The public can The public can
Business about profits must about profits see information see information
information be published must be published about the amount the
can be kept business - business -
private accounts must be accounts must be
published published
Level of  The owner has  The owners  The  The
liability unlimited liability have unlimited shareholders have shareholders have
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 liability and benefit from and benefit from
limited liability limited liability
The owner  The  Shareholders Anyone can buy
makes all the partnersusually can restrict who shares meaning
decisions make the can buy shares there is a risk of a
decisions takeover
The owner gets between
to keep all of the themselves
profits
It is possible
Easy for the
that the partners
owner(s) to
may disagree
control
which would lead
to problems
making decisions

 The profits will

have to be shared
between all
owners
 This is limited Usually there  New  New
because there is are only a few shareholders can shareholders can
only one person to partners to invest invest and banks invest and banks
invest savings and in the partnership are willing to lend. are willing to lend
banks think they and banks may
are risky to lend to think they are  Larger amounts Large amounts
risky to lend to. can be raised than of money can
The business sole traders and often be raised
Raising
cannot sell shares The partnership partnerships
finance
to raise finance cannot sell shares
to raise finance

 There are more

partners to invest
so more initial
start up capital is
available

Are the statements true or false? Tick the correct box.

Statement True False Statement True False

A partnership has at least four Sole traders often have difficulty
partners raising money for their business
A sleeping partner is always
A sole trader has one owner
sleeping
Adeed of partnership will state Ordinary partners in a partnership
how much capital partners and sole traders have unlimited

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 should contribute to the business liability
A partnershiphas shareholders A sole trader can employ people
Using the words below, fill in the gaps to complete the paragraph

Sole _________________ have one owner, are very easy to set up and can make ________________
quickly because there is ____________ owner. Like partnerships, sole traders have
________________________ liability, which means that they are responsible for all of the
_________________ of the business. This means that they may have to sell
___________________________ possessions. A partnership would normally have a
________________ of partnership, which sets out the ____________________ of the partners and the
amount of _____________________ they put into the business.

duties decisions traders

one deed debts

unlimited capital personal

For each of the features below, identify whether they are features of a private limited company, a
public limited company or both.

Feature LTD PLC Both

Financial information is available to the public
Shareholders have limited liability
Shares are sold on the stock market
Dividends are paid to shareholders
Shares are usually sold to family and friends
Can be taken over without the consent of original shareholders
Can have any number of shareholders
Share capital must be at least £50,000
Has LTD after its name
Can only be taken over with consent of existing shareholders

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 Often a family owned company
Concept of liability
When we talk about business liability, we are referring to the responsibility of the business’ owners
for debts incurred by the business. The owners of a sole trader or partnership have unlimited
liability. This means that they are responsible for all of the debts of the business.
Shareholders who own private limited or public limited companies benefit from limited liability.
The table below shows the differences between limited and unlimited liability.

Issue Unlimited liability Limited liability

 The owners must pay back all the debts
of the business they own
 If the business goes bankrupt, the
 The shareholders who own the
owners must sell any assets the
Effect on company do not have to use their own
business has
the savings or other personal possessions
 If this sale does not raise enough to
owner(s) to pay off the debts of the company if
pay off the debts, the owner(s) can be
the business fails
ordered to use their savings or sell
personal possessions to raise the
money needed to pay off the debts

 People may be discouraged from

setting up a business because of the  It helps businesses to start up and raise
risk to their savings and other personal extra finance to expand because
Effect on
possessions people are prepared to invest, knowing
business
 This can limit the creation and that they are not risking their personal
expansion of sole trader and possessions
partnership businesses

 Forming a business as a limited

 It is easier to start up as a sole trader
company can be complicated because
Other or partnership because legal
various legal documents need to be
impacts documents do not have to be sent to
prepared and sent to the Registrar of
the Registrar of Companies
Companies

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Suitability of different types of ownership
The most appropriate type of ownership for a business will depend on the needs of that particular
business. A start-up business and an established business will have very different finance
requirements and their type of ownership will reflect that.
The figure below summarises the main points to consider when deciding on a type of ownership

Partnerships
Suitable for start ups or established
Sole traders
businesses wanting to grow that:
Suitable for start-ups that:
- only need a small amount of - need larger amounts of finance
finance - have a fairly low financial risk
- require limited or non-specialist - need a wider range of skills
skills
- have owners who want to keep
control of the business

Suitability
of different
types of
business
Private limited company
Suitable for start ups and established Public limited company
businesses wanting to grow that: Suitable for an established business
that:
- need larger amounts of finance
- wishes to grow
- have an increased or high financial
risk - needs very large amounts of finance
- have owners who wish to keep - has a very high financial risk
control of the business

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 1.4 Business aims and objectives

Specification
What you should know
content

The aims and

objectives of  Profit, growth, survival, providing a service, market share
business

How and why

objectives might  As a business grows, as new competition emerges, if the business starts to
change as fail
businesses evolve
Why different
businesses may  New businesses v well-established businesses, reason for starting the
have different business i.e. some people start a business to provide a good service
objectives

All businesses have one or more objectives and they will vary according to the size and situation of
the business. A large well-established public limited company will have very different objectives to a
sole trader just starting out.
The figure below summarises the different business objectives.

Survival Profit
Concerned with a business' ability to continue The reward to owners for taking a risk by
to trade in the long term investing their money in the business
Businesses may survive for a short period Many businesses seek to maximise profits for
without making a profit the benefit of the owners

Business objectives

Providing a service
Growth Some owners want the satisfaction of giving
customers a good service
Increasing sales or market share
Can be seen as a way of making a profit as
A way of increasing profits customers will return and new customers will
use the business

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For each of the businesses in the table below, match them with their objective.

Objective Business Description

E.ON, the energy company, has raised its prices even

Survival
though costs have not risen
Abdul has just opened a coffee shop in a small town
where there are already four other coffee shops. He
Profit needs to establish the business in this competitive
market by gaining sufficient customers to help it to
stay in business in the longer term
The Co-Operative supermarket chain aims to act
Growth
responsibility and respectfully to its customers

American business, Post Holdings, has bought the

Providing a service
Weetabix brand from owners, China Bright Food

How and why objectives might change as businesses evolve

As businesses evolve they will have different objectives because:
 They are at different stages of their development
 Their owners have different motivations
 They are influenced by different market conditions
 They are experiencing different economic conditions

The figure below shows some of the reasons why businesses have different business objectives

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 Survival Profit
This may be an objective for a new business so that it New businesses may seek a minimum level of
can become established and secure by gaining
profits to help them survive
customers and then aim to make profit in the longer
term Established businesses may want to earn profits to
It may be an objective for a business during a reinvest and to expand the business
downturn in economic activity or when a market is Good profits encourage new investors to put money
very competitive in the business, helping in grow

Providing a service
Growth
This will help the business to get a good reputation
New businesses may set objectives for the growth enabling it to attract new customers as well as retain its
of sales or market share to help them survive existing customers
Established businesses may want to grow to gain Sometimes providing a good service can help a business
more power in the market, reduce competition and survive or increase its profits
increase profits Some owners get satisfaction from running a business
that is useful to its customers

1.5 Stakeholders in business

Specification
What you should know
content
The roles and
objectives of
internal and
 Owners, employees, customers, suppliers, government, local community
external
stakeholder
groups
The effect
business activity  How does business activity affect the above stakeholders - this will
has on depend on the context
stakeholders

The effect
 Protests, boycotts, taxation from the government, laws from the
stakeholders
government i.e. National Living Wage
have on business

A stakeholder can be an individual or group of people who have an interest in a business. They
would be affected, either positively or negatively, by what the business does.

On the spider diagram below, make a list of stakeholders

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 Stakeholders

Colour code them - one colour for internal, one colour for external

The table below gives the role and objectives of stakeholders. When we say ‘role’, we refer to what
the stakeholder might do in connection with the business, while objective refers to what the
stakeholder wants to achieve.

Stakeholder Role Objective

 Provide finance to start up and
expand the business
 They may manage or run the
Owners  Make profits
business or they may employ
managers to run it on their
behalf
 Satisfaction of having a job and
earning an income
Employees  Produce goods and services  Be treated fairly by employers
 Enjoyment of social aspects of
working with colleagues
 Enjoy the benefits provided by
Customers  Buy goods and services goods and service
 Pay affordable prices
 Sell goods for resale or
components and materials  Make sales
Suppliers
needed to manufacture goods or  Earn profits
provide a service
 Encourage businesses as this
leads to high employment and
prosperous communities
 Help businesses, workers and
Government  Government wants to encourage
communities
businesses because this
increases the taxes paid to
government
Local community  Provide workers  Have a local area which is
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  Monitor and influence business
prosperous, healthy and safe
activity

For each of the statements below identify whether it is true or false.

Statement True False Statement True False

All stakeholders are owners of a Stakeholders can influence
business business activity
Stakeholders are only interested
All businesses have stakeholders
in the profits of a business
All stakeholders have the same Stakeholders generally want a
interests business to succeed
All the employees of a business All stakeholders work within the
are stakeholders business

A business can affect stakeholders both positively and negatively. The figure below gives examples of
the benefits and problems caused by business activity.

Local
Owners Employees Customers Suppliers Government
community

People in the
community
Employed in a Sell their can earn
Obtain Receive tax
job role goods and money from
products and revenue from
within the services to jobs with the
Earn profits if services at the owners,
business and another business or
the business good prices workers and
able to earn business and because
is successful. that satisfy suppliers and
an income earn profits workers in the
their needs customers of
from the from doing area have
and wants. the business.
business. this. money to
spend in their
business.

Very large The

May be made May be sold companies community
redundant if poor quality can become can be
the business goods and May lose 'too big to affected by
May lose negative
does not do services. money if the fail'. The
money governemnt externalities
well or if their business does
invested in job is may be such as
not pay for
the business replaced by May be over- goods criticised if pollution and
if it fails. automation charged for supplied. the business road
such as a goods or fails and the congestion
robot. services. governemnt caused by the
does not help. business.

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Stakeholders can influence business success. The table below summarises ways in which each
stakeholder can help a business to succeed or cause business failure.

How the stakeholder can influence How the stakeholder can influence
Stakeholder
success failure
 Investing enough money  Not investing enough to make the
 Using the investment in ways that business efficient
Owners
will help the business to grow and  Failing to change the business when
succeed the market changes
 Producing poor quality goods or
services
 Working hard to produce good
 Demanding higher wages will lead
Employees quality goods or services at
to higher costs
competitive prices
 Disrupting production by industrial
action
 Purchasing goods and services  Deciding to buy from competitors
 Creating a good reputation for the  Publicising instances of poor quality
Customers
business by recommending it to goods or bad service, leading to a
others poor reputation for the business
 Supplying poor goods or services
 Providing supplies promptly and at
which lead to quality problems
competitive prices to help the
Suppliers  Not supplying components or
business produce its goods and
materials on time which can cause
services cheaply and reliably
production delays
 Giving the business a grant to enable  Reducing the business’ profits by
it to pay for investment or by giving increasing taxes or by raising the
it planning permission to develop or National Minimum Wage so that
Government expand its facilities wage costs increase
 Government may also be a customer  Preventing the expansion of the
of the business, buying goods and business by refusing planning
services from it permission
 Opposing the business’ plans for
expansion or preventing production
 Providing the business with by not supporting its application for
Local
customers and supporting its plans planning permissions
community
for development  This may lead to increased legal
costs for the business as it fights for
planning permission

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 1.6 Business growth

Specification
What you should know
content

 Increasing output, gaining new customers, developing new products,

Organic growth
increasing market share

External growth  Mergers, takeovers - including horizontal, vertical and diversification

The suitability of
different  Should the business use internal or external growth - this will depend on
methods of the context
growth

Organic growth
Organic growth is concerned with increasing sales of products and services. It is internal as it grows by
increasing its own size, using its own resources, rather than using someone else’s and taking over
another business.

The diagram below shows the common ways that a business can grow organically.

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 Increasing output
A business can increase the amount it Increasing market share
produces by: A business can increase market share
- using resources more efficiently by:
- using up spare storage/factory space - increasing its own sales
- increasing the capacity of the - taking business from other firms
business
Organic
Growth
Gaining new customers
Developing new products
A business can gain new customers
A business can develop new products
by:
by:
- reducing its prices
- researching and developing
- opening new shops in different
- copying or buying the ideas of other
locations
businesses
- better marketing

For each of the statements below identify whether it is true or false.

Statement True False Statement True False

It is important for technology
Organic growth in a business is
based businesses to constantly
about growing vegetables
bring out new products if they are
organically
to grow
More effective marketing will Reducing prices will help attract
help a business to grow new customers to a business
With a 30% increase in the total
Market share is the share that a market, a business that increases
worker has in the business its sales by 20% will have
increased its market share

External growth
External growth is using other business’ resources to expand. This can occur in one of two ways;
takeovers or mergers. The diagram below shows the difference between takeovers and mergers.

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 One business buys control of another business. If it
Takeovers is a PLC this could invovle buying more than 50% of
the shares

Two businesses agree to join together to form one

Mergers
larger business

Takeovers and mergers themselves can be divided into four different categories depending on the
type of businesses involved. The diagram below illustrates these.

Horizontal growth
Diversification
The two busineses are at the same stage
of production The two businesses have no real
connection in the chain of production
i.e. two secondary manufacturers

Forward vertical growth

Backwards vertical growth
One business takes over or merges with
One business merges with or takes over
another business in which it supplies
a business which supplies it with goods
goods or services to
or services.
(In front of them in the chain of
(Behind them in the chain of production)
production)

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The following diagram illustrates the benefits of each type of external growth to a furniture
manufacturer.

Horizontal growth - another furniture

manufacturer Diversification - A perfume
- Each factory can specialise in a manufacturer
particular type of furniture - Risk is spread, success does not rely
- One factory could be closed if not only on furniture sales
needed, reducing costs

Backwards vertical growth - A timber

merchant Forward vertical growth - Furniture
retailer
- It guarantees a supply of wood to
make the furniture - The manufacturer is guaranteed
somwehere that will sell what it
- The manufacturer can benefit from produces to consumers
the timber merchant

Match each of the statements with the types of external growth in the table below.

An example of a horizontal A maker of pottery takes over a

merger or takeover pottery shop
An example of a backwards A business buys control of another
vertical merger business
A business making radios joins
A definition of a merger
with a business making televisions
An example of a forwards vertical A business assembling computers
merger merges with a microchip supplier
Two businesses agree to come
A definition of a takeover
together

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 Revision Clocks

Business Growth

n
The role of business and entrepreneurship

Unit 1
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 The role of business and entrepreneurship
Business Growth

Unit 1
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 Possible Practice Exam Questions

Answer each of the following exam style questions. Use the structures on p10 to help you.

TD Tom Davis Ltd (TD)

Tom Davis left university in 1996 with £200 in his pocket and boarded a plane to Hong Kong. After
working in bars and restaurants he got a job in a Chinese factory designing glasses frames. Not
knowing what he was doing, he started by drawing glasses on the models in Vogue magazine.
Tom left that job in 2000 and returned to the UK where he eventually set up TD Tom Davis in 2002,
designing glasses in London but having them manufactured in Japan by another firm. Tom’s frames
are bespoke, handmade and sell for £5000 each, so a chance meeting in 2004 with a chief executive
who ordered 30 pairs, gave Tom the £175,000 he needed to build a factory in China and 4 years
later he opened a factory in the UK. With celebrity clients such asEd Sheeran, Chef Heston
Blumenthal and Hollywood actress Angelina Jolie, Tom has now been able to move all production
tothe UK with the money earnt through these sales.
Tom’s cautious approach to growth and his desire to provide each customer with a great level of
service means he can charge between £335 and £600 for standard frames and his unique designs
can cost up to £10,000 each, which has led to him having an estimated turnover of £10m last year.

1. State two characteristics of an entrepreneur. [2]

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____________________________________________________________________________________
____________________________________________________________________________________

2. Analyse one risk Tom Davis took when starting TD. [3]
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

3. Explain one reason why Tom may have started TD as a private limited company. [2]
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

4. Explain one objective Tom may have had when he started TD and one objective he has now the
business is successful. [4]
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____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

5. Identify two ways in which a firm may grow organically. [2]

____________________________________________________________________________________
____________________________________________________________________________________

6. Discuss whether Tom’s decisions to grow organically was better than using external growth [7]

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____________________________________________________________________________________
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____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
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 ____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

Self-Review of Unit 1: Business Activity

I have completed the following tasks ():

.. The topics I need to improve on are.....

 Personalised Learning Checklist

 Glossary of key terms
 Read the exam ‘top tips’
 Learnt the exam structures
 Read the topic information and completed all tasks
 Completed at least two revision clocks
 Answered all of the possible exam questions using the exam structures
mprove in this unit are.....

Additional Support
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 If you need any further support please speak to your teacher!

Course textbook: OCR GCSE (9-1) Business

https://www.amazon.co.uk/OCR-GCSE-9-1-Business-Third/dp/1471899365/ref=sr_1_2?
crid=3CWFI3AR0SAZ9&keywords=ocr+gcse+business+studies+9-
1&qid=1556985885&s=gateway&sprefix=ocr+gcse+business%2Caps%2C185&sr=8-2

Revision guide: My Revision Notes OCR GCSE (9-1)

https://www.amazon.co.uk/My-Revision-Notes-GCSE-Business/dp/1510423699/ref=sr_1_1?
crid=3CWFI3AR0SAZ9&keywords=ocr+gcse+business+studies+9-
1&qid=1556986123&s=gateway&sprefix=ocr+gcse+business%2Caps%2C185&sr=8-1

You could also try the following websites:

http://www.bbc.co.uk/education/subjects/zpsvr82

http://www.businessed.co.uk/index.php/home/activities/gcse-activities/gcse-
activities-topic

https://www.tutor2u.net/

https://www.gcsepod.com

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