IGCSE Business Studies 1.1. Business activity Topic Practice

After identifying a gap in the soft drinks market, Jerome developed a low sugar drink. He borrowed $ 5000 from family and friends to start-up a business and to provide working capital. Jerome operates as a sole trader. To promote his product, Jerome handed out free samples in the town centre. In the first year, Jerome's business sold 10000 units. This is 200 units more than his break-even output. Jerome is considering ways to increase added value.

Explain how each of the following can help Jerome increase added value:

Change the packaging:
Use cheaper materials:

EQR owns 150 cafes. It sells a range of drinks including coffee. Being ethical is important to EQR. The Managing Director has been analysing EQR's statement of financial position. The business has the objective to increase its 6% market share. The Managing Director plans to grow the business by selling franchises for $ 85000. She is also considering ways to increase added value.

Outline two ways EQR could increase added value.

Way 1 :
Way 2 :

Consider two ways DD can increase added value. Which is the best way for DD to choose? Justify your answer.

Way 1:
Way 2:
Recommendation:

TCH is a small bakery producing pastries and cakes. It operates in the secondary sector. The added value of TCH's products has increased since it opened 3 years ago. TCH uses non-financial methods to motivate its 6 employees. TCH's business objectives have changed since it started up. One of its new objectives is to expand. Many businesses use external recruitment when they expand.

Define 'added value'.

WFT is a primary sector business which harvests timber (wood) from trees. The Operations Manager knows there are many legal controls over business activity affecting the environment. WFT has 30 employees and uses a lot of technology to process the timber. The business is always considering ways to increase added value. WFT often needs finance. An extract from WFT's statement of financial position is shown in Table 1.1.

Explain two ways a business might increase added value. Which do you think is the best way? Justify your answer.

Consider the following two ways EP could use to increase added value. Which way should EP use? Justify your answer.
- Increasing prices
- Reducing raw material costs

Increasing prices:
Reducing raw material costs:
Recommendation:

Avtar owns a car repair business which operates in the private sector. It is a small business with 2 full-time employees. Avtar wants to find out the best way for a business to increase added value. Avtar's business needs finance for many reasons. Avtar wants to know how an economic recession might affect his business.

Explain two ways a business can increase added value. Which is likely to be the best way for a business to use? Justify your answer.

Brendan wants to be a successful entrepreneur．He plans to start up a flower shop using government support．Brendan＇s brother has offered to form a business partnership with him．Brendan knows it is important for a new business to use a suitable pricing method．He has already identified ways the business can increase added value．Brendan wants to know how an economic boom might affect his business．

Explain two ways Brendan could increase added value for his business.

Way 1:
Explanation:
Way 2:
Explanation:

Explain two ways Saanvi can increase the added value of ST products.

Way 1:
Explanation:
Way 2:
Explanation:

DNG provides electricity to 16 million customers. It is a limited company which means DNG's shareholders benefit from limited liability. DNG is planning to stop using coal to produce its electricity. Pressure groups had an influence on this decision. The Managing Director knows there will be an opportunity cost to making this change. She is considering the best way to communicate this important information to DNG's 6500 employees.

Define 'opportunity cost'.