Practise Edexcel Business questions on planning, business aims and raising finance, applying start-up decisions and funding choices to case evidence.
Extract B Traditional restaurant with a difference George's Tavern is located in an old house, in the pretty and traditional village of Yeroskipou in Cyprus. The village is only 5 km away from the coastal city of Paphos, which is popular with tourists. The restaurant serves Mediterranean and Greek food. It is unique because there is no menu, instead it serves a set selection of food prepared with locally grown and seasonal ingredients. The small portions of different food only include what is in season, so you might get hand-picked asparagus, wild mushrooms with fresh herbs, aubergines and potatoes in tomato, or tender kleftiko (oven-baked lamb) from local farmers. Even the drinks are home-made, using ingredients from the family's vegetable garden. Evening diners must reserve a table, due to high demand. At lunchtime it is often much quieter. For example, in September George's Tavern could have catered for 1,500 lunchtime customers but only served 1,110. Once seated, diners can then stay for the whole afternoon (noon until three o'clock) or evening (seven until eleven o'clock), as dishes are served until diners can eat no more. The restaurant is open Tuesdays to Saturdays and charges a fixed price of €25 per person for all food served during the sitting. Damien and Benedict are the sons of the founder, George. They now run the restaurant and are eager to make sure George's Tavern continues to follow the original business plan and be successful.
Extract C
Cyprus rate of inflation August 2017 to July 2018
Extract B Traditional restaurant with a difference George's Tavern is located in an old house, in the pretty and traditional village of Yeroskipou in Cyprus. The village is only 5 km away from the coastal city of Paphos, which is popular with tourists. The restaurant serves Mediterranean and Greek food. It is unique because there is no menu, instead it serves a set selection of food prepared with locally grown and seasonal ingredients. The small portions of different food only include what is in season, so you might get hand-picked asparagus, wild mushrooms with fresh herbs, aubergines and potatoes in tomato, or tender kleftiko (oven-baked lamb) from local farmers. Even the drinks are home-made, using ingredients from the family's vegetable garden. Evening diners must reserve a table, due to high demand. At lunchtime it is often much quieter. For example, in September George's Tavern could have catered for 1,500 lunchtime customers but only served 1,110. Once seated, diners can then stay for the whole afternoon (noon until three o'clock) or evening (seven until eleven o'clock), as dishes are served until diners can eat no more. The restaurant is open Tuesdays to Saturdays and charges a fixed price of €25 per person for all food served during the sitting. Damien and Benedict are the sons of the founder, George. They now run the restaurant and are eager to make sure George's Tavern continues to follow the original business plan and be successful.
Define the term 'business plan'. (Extract B, line 19)
Sources for use with Section A
Extract A
What is Zwift?
Millions of people around the world enjoy cycling. However, the weather or road
conditions can sometimes make it difficult or even impossible to take part in this activity.
Zwift created a solution to this by introducing a virtual reality computer program, which
combines cycling with computer gaming. The cyclist rides their bicycle indoors while it is
attached to a fixed frame, so the bicycle does not actually move. This allows the cyclist to
watch their progress on a virtual road on a computer screen. People of all cycling abilities
can improve their fitness at the same time as enjoying social interaction with fellow
cyclists from around the world.
By paying Zwift a $10 fee every month to use the game, the cyclist’s efforts can be
displayed in a virtual world on the computer screen, complete with maps, roads,
landscapes and other riders to interact with.
Jon Mayfield and Eric Min, both keen cyclists, launched Zwift as a private limited
company in 2014, with an initial investment of $3m, followed by venture capital of $27m
in 2016. The statistics are certainly impressive. In October 2017, Zwift had more than
300,000 riders from over 150 countries. Between them they had collectively logged
218,128,291km. There are currently no direct competitors to Zwift and with several
additions to the game being planned its success looks set to continue.
Extract B
Selected financial information for Zwift for year ending 31 December 2017
| $ | |
|---|---|
| Revenue | 36\,000\,000 |
| Cost of sales | (21\,000\,000) |
| Gross profit | 15\,000\,000 |
Sources for use with Section A
Extract A
What is Zwift?
Millions of people around the world enjoy cycling. However, the weather or road
conditions can sometimes make it difficult or even impossible to take part in this activity.
Zwift created a solution to this by introducing a virtual reality computer program, which
combines cycling with computer gaming. The cyclist rides their bicycle indoors while it is
attached to a fixed frame, so the bicycle does not actually move. This allows the cyclist to
watch their progress on a virtual road on a computer screen. People of all cycling abilities
can improve their fitness at the same time as enjoying social interaction with fellow
cyclists from around the world.
By paying Zwift a $10 fee every month to use the game, the cyclist’s efforts can be
displayed in a virtual world on the computer screen, complete with maps, roads,
landscapes and other riders to interact with.
Jon Mayfield and Eric Min, both keen cyclists, launched Zwift as a private limited
company in 2014, with an initial investment of $3m, followed by venture capital of $27m
in 2016. The statistics are certainly impressive. In October 2017, Zwift had more than
300,000 riders from over 150 countries. Between them they had collectively logged
218,128,291km. There are currently no direct competitors to Zwift and with several
additions to the game being planned its success looks set to continue.
Define the term ‘venture capital’. (Extract A, line 14)
Analyse two possible advantages for Zwift of using a business plan when setting up the business.
Discuss the likely advantages for Zwift of having limited liability.
Sources for use with Extract A Bee Hive Candles US-based business, Bee Hive Candles (BHC) produces candles made from 100% pure beeswax. All candles are handmade using beeswax from US bees. Jennifer Wesolowski started the business in 2000, using personal savings. She decided to change from making candles as a hobby to setting it up as a business. A wide range of candles are offered but by using 100% beeswax, all candles are environmentally friendly. Unlike typical paraffin candles, they are biodegradable and produce no harmful toxins. They burn for longer, meaning better value for money. Although still a small business, BHC is growing. This is due to increasing consumer awareness of environmental issues and positive feedback on social media platforms. Jennifer remains dedicated to making quality candles and offering outstanding customer service. Newsletters are emailed to existing customers to advise of new products and offers. BHC charges $9.95 to send its candles to customers all over the US but at the moment does not accept orders from outside the US. Prices of the candles range from $6.95 to over $100 for a large pack of candles. The best-selling product is the pillar candle, priced at $17.95. It is popular because of its relatively low price and burns for approximately 50 hours. Extract B Candle sales in the US – some figures • The US has the largest share of customers buying candles in the world. • In the US 35% of all candles are sold online and this is increasing. • Beeswax candles account for only 2% of all candle sales in the US market; this figure is increasing. • Paraffin candles are currently the most popular type of candle, with nearly 40% of the market. This is followed by soy wax, palm wax and beeswax.
Extract A Bee Hive Candles US-based business, Bee Hive Candles (BHC) produces candles made from 100% pure beeswax. All candles are handmade using beeswax from US bees. Jennifer Wesolowski started the business in 2000, using personal savings. She decided to change from making candles as a hobby to setting it up as a business. A wide range of candles are offered but by using 100% beeswax, all candles are environmentally friendly. Unlike typical paraffin candles, they are biodegradable and produce no harmful toxins. They burn for longer, meaning better value for money. Although still a small business, BHC is growing. This is due to increasing consumer awareness of environmental issues and positive feedback on social media platforms. Jennifer remains dedicated to making quality candles and offering outstanding customer service. Newsletters are emailed to existing customers to advise of new products and offers. BHC charges $9.95 to send its candles to customers all over the US but at the moment does not accept orders from outside the US. Prices of the candles range from $6.95 to over $100 for a large pack of candles. The best-selling product is the pillar candle, priced at $17.95. It is popular because of its relatively low price and burns for approximately 50 hours.
Define the term 'personal savings'. (Extract A, line 4)