Edexcel GCSE Business Paper 1 2024 (1BS0/01) | Past Paper Quiz

According to the mark scheme, Income is a correct way of segmenting a market (demographic segmentation). By segmenting a market by income, a business can target specific socioeconomic groups. Cost, Media, and Profit are business metrics or channels, not methods used to divide a target market into distinct groups of buyers.

Insolvency is correctly defined as a business failure due to unpaid debts (the inability to pay debts when they fall due), which directly leads to business closure. The other options describe trade credit, interest, and a merger, respectively.

As per the mark scheme, a key disadvantage of a partnership is that disagreements between partners can occur. This makes it difficult to make decisions, meaning the business will take longer to respond to customer needs. Additionally, decisions made by one partner affect all partners; due to unlimited liability, financial loss can lead to partners losing the personal money they invested.

The mark scheme highlights that increased competition often leads to businesses reducing prices to remain competitive, allowing customers to pay less and potentially buy more products. Furthermore, competition encourages businesses to innovate, meaning more products are available in the market, giving customers more choice to find items that fully meet their needs.

Market reports (along with the Internet) are forms of secondary research because the data has already been collected and compiled by third parties. Focus groups, observation, and surveys are all methods of primary (field) research where a business collects new, original data specifically for its own purposes.

Discrimination is covered under employment law (e.g., ensuring fair treatment regarding race, gender, or age in the workplace). Health and safety is another key employment law principle. Consumer rights and product quality are governed by consumer law, while taxation operates under financial and economic regulations.

Total Costs (TC) are calculated by adding Fixed Costs (FC) and Total Variable Costs (TVC). First, calculate TVC: Variable cost per unit × Output = £2 × 5,000 = £10,000. Then, add the Fixed Costs: £7,500 £10,000 = £17,500. Correct numerical working is crucial for achieving full marks in quantitative business questions.

Retained profit may not be sufficient because small businesses often do not generate high profit margins, leaving inadequate funds for significant expansion. The mark scheme also notes that once retained profit is used, it is unavailable for other purposes (opportunity cost), potentially forcing the business to rely on more expensive external sources of finance in the future.

Opening a franchise allows the entrepreneur to operate under an already established brand. According to the mark scheme, this brand recognition makes it much easier to attract customers, greatly reducing the chance of business failure. Additionally, franchisees receive essential help, training, and advice from the franchisor, supporting them in making key business decisions.

Survival is a primary financial aim, especially for a new business in its first year, ensuring revenues cover costs so the business avoids insolvency. Challenge, independence, and personal satisfaction are classified as non-financial aims for an entrepreneur.

Margin of Safety is calculated as Actual Sales Output minus Break-even Output. Substituting the given figures: 6,800 – 5,000 = 1,800 units. This metric is vital as it shows how much sales can fall before the business begins to incur a loss.

When unemployment increases, consumers lose their jobs and consequently have less disposable income. The mark scheme states this leads to a decrease in consumer spending, causing a fall in revenue for small businesses. Furthermore, existing employees may become worried about losing their own jobs, which can lower motivation and result in a fall in productivity.

E-commerce enables a business to operate 24/7 without geographical boundaries. The mark scheme points out that customers can buy products anytime they have internet access, directly leading to an increase in revenue. E-commerce also reduces the need for a physical retail space, leading to a reduction in fixed costs such as rent, ultimately increasing profit.

Branding helps consumers identify with a product and associate it with desirable characteristics. This builds strong customer loyalty, leading to repeat purchases. The mark scheme emphasizes that because consumers identify closely with the brand, there is an increased willingness to pay a higher price, allowing the business to maintain higher prices despite competition.

Starting any business involves inherent risks such as a lack of security. Keilan risked a significant financial loss; any money he invested in the business to buy cleaning equipment or stock of new trainers could have been completely lost if consumer demand for customised trainers did not materialize.

Identifying customer needs is essential for determining the maximum price customers are willing to pay (e.g., £20 for a clean) while remaining profitable. The mark scheme highlights that by selecting popular football teams and music bands for customisations, Adikoggz offers relevant choices that represent value for money, giving the business a better chance of attracting customers and meeting their distinct needs.

To find the average, sum all the monthly values and divide by the number of months. Sum = 52 61 47 34 52 72 = 318. Average = 318 / 6 months = 53 pairs per month. Demonstrating correct mathematical working is essential in business analytics.

Percentage Change is calculated using the formula: ((New Value – Old Value) / Old Value) × 100. The change is 72 – 52 = 20. The calculation is (20 / 52) × 100 = 38.4615… which accurately rounds to 38.46%. This shows strong positive growth leading into the end of the year.

Social media platforms provide a highly cost-effective (low cost) way to showcase visual images of customised products. The mark scheme notes that because trainers feature popular themes (like football colours), fans are highly likely to share the images at no extra cost to Adikoggz. It also facilitates direct engagement for answering pricing queries, improving customer service and fostering a positive brand image.

Cash inflows represent money entering the business. For Adikoggz, this includes sales revenue from customised trainers, receipts from the deep cleaning service (£20 per pair), or initial capital injected by Keilan. Paying wages, buying stock, and paying interest are all examples of cash outflows.

A business plan forces the entrepreneur to think through each step before taking action, allowing Keilan to make contingency plans if customer demand drops. Crucially, the mark scheme notes that a business plan provides vital structured information for external parties, making it significantly easier to secure trade credit from suppliers or secure bank loans.

An overdraft helps manage cash-flow (e.g., paying wages during months of low demand) but is an expensive source of finance due to interest charges. Trade credit improves cash flow by allowing Adikoggz to buy trainers (stock) now and pay the supplier later, reducing immediate financial risk. However, large suppliers (like Adidas) may refuse to offer trade credit to a small business placing minimal orders.

Fixed costs are business expenses that do not change with the level of output or number of customers. For a gym like PFC, rent for the premises, general advertising costs, and contracted salaries for gym instructors are fixed costs. Commissions and cost of goods sold are variable costs.

Based strictly on the data table provided in the examination text (Table 3), the South west region recorded the lowest gym membership penetration at 10%. By contrast, London had the highest at 18%.

Location decisions for a service business like a gym rely heavily on proximity to customers; PFC needed to be situated in a populated area where it could easily attract members. Additionally, the mark scheme suggests the owner would have considered the level of competition, likely choosing an area that initially had few or no other gyms.

A small independent gym like PFC will struggle to compete on price against a large national chain benefiting from economies of scale. Providing individual fitness plans adds tangible value, justifies the £39 premium, and specifically caters to demographics that might feel out of place (like the over 50s). This differentiation strategy allows PFC to retain loyalty by competing on superior quality and service.

Gym memberships are often treated as luxury or non-essential spending. When consumer incomes are high, disposable income increases, making customers willing to pay £39 for PFC’s premium equipment and classes. Conversely, during economic downturns when incomes fall, consumers cut non-essential spending. They may substitute PFC with the cheaper £19 competitor or free alternatives like walking, making PFC highly vulnerable to income fluctuations unless members perceive the service as irreplaceable value.