CAIE A-Level Business 1.3 Size of business Question Bank

CAIE A-Level Business 1.3 Size of business Question Bank
Cambridge International AS & A Level Business 9609 syllabus for exams in 2026, 2027 and 20282026–2028

Practise measuring business size, judging small-business significance and evaluating growth routes from case-study evidence.

Exam points

  • analyse benefits or drawbacks of small size, including family-business strengths or weaknesses
  • evaluate internal growth, mergers, takeovers or joint ventures against business objectives

Covered syllabus points

1.3.1—Measurements of business size1.3.2—Significance of small businesses1.3.3—Business growth

Question 2(a)(i)

[Maximum number: 1]

Premium Homes (PH)

PH owns student rental accommodation in all the major cities in country Y. PH used demographic segmentation in its market research. This research identified that university students would pay a premium for high specification rental accommodation.

PH has specialist teams focused on sales, maintenance, customer service and finance. There is little opportunity for internal promotion. PH pays low salaries, however, it offers profit sharing to motivate its 150 employees. This has been effective as PH has had low labour turnover.

In the last two years, profit levels have fallen by 75%. In 2024, 45 employees left PH. Complaints about maintenance and customer service have increased due to the lack of experienced employees in PH.

The Finance Director is reviewing PH's existing sources of finance, shown in Fig 2.1.

Fig 2.1 PH's sources of finance

Fig 2.1 PH's sources of finance

Frank, the Operations Director, wants to improve the sustainability of PH's operations. He plans to:
- stop renting out accommodation in some lower-income cities, and sell these buildings 15
- upgrade accommodation in high-income cities
- reduce the size of the workforce.

Identify one way in which business size can be measured.

Question 2(c)

[Maximum number: 8]

Natalia's Naturals (NN)

NN is a small business owned by Natalia. NN produces and sells a range of natural skincare products.

In 2020, Natalia started making her own skincare products at home using natural ingredients. She realised that there was a demand for her products among her friends and family. Natalia then decided to turn her hobby into a business and launched NN in 2021.

Natalia operates her business from a rented workshop with limited space, where she makes her products by hand. She buys her ingredients from local suppliers who share her values of environmentally friendly production.

NN has been growing steadily and has gained a loyal customer base. NN has received positive reviews from beauty magazines. Natalia's skincare products are sold through her own website, social media platforms and local retailers who specialise in selling natural products.

Natalia is developing a new face cream. Table 2.1 shows price and cost estimates for the new face cream.

Table 2.1 Price and cost estimates

Table 2.1 Price and cost estimates

The skincare market is very competitive. There are many established brands that offer similar products to NN, but with wider distribution channels.

Natalia needs to balance her time between production, managing orders, delivery, marketing and other administrative tasks. She works long hours and is stressed and exhausted.

Natalia is considering outsourcing to increase NN's production capacity.

Analyse one advantage and one disadvantage to NN of being a small business.

Question 5(a)

[Maximum number: 8]

Analyse two benefits to a business of using a vertical merger for growth.