AQA GCSE Business Paper 1 Section 2 Flashcards
Item A: Premium Motors
Janet owns and runs Premium Motors based in Manchester. Her business provides a luxury chauffeur service (a car and driver are hired). This has proved popular with customers who book the services for events such as weddings or parties.
Since the business started 10 years ago it has expanded slowly using organic growth. Janet would like to expand by offering the services in a new area. Her research has shown that chauffeur services are in the most demand in London. However, this is a highly competitive market.
There is an opportunity to take over an existing chauffeur company called London Luxury Cars (LLC). This takeover would cost £400 000. Premium Motors would instantly gain LLC’s large customer base. This includes repeat bookings from
TV celebrities and well-known hotels that book chauffeur services for their guests. Existing LLC agreements (contracts) with hotels will last for another year and Janet will then have to agree new contracts.
If Janet were to take over LLC, she would manage the company from her headquarters in Manchester. She is unfamiliar with the London area.
Item A:
Identify two objectives of a business. (2 marks)
1 mark for each correct objective identified × 2.
Answers may include:
* survival
* profit
* growth/sales/new products
* market share/customer retention * customer satisfaction
* social and ethical objectives
* shareholder value
* lower costs
* improve cash flow
Item A:
Premium Motors has received a booking for a wedding in Manchester that requires four cars. Premium Motors will make £50 profit per car.
The costs will be as follows:
* driver £50 per car
* petrol £20 per car
* £200 payment towards fixed costs.
(5 marks)
Revenue = £680 (5)
Method 2
VC per car = £50 + £20 = £70 (1)
Total variable cost = £70 × 4 = £280 (1)
Total costs = £280 OFR + 200 = £480 (1)
Total profit = £50 × 4 = £200 (1)
Revenue = £480 OFR + £200 = £680 (1)
Method 1
Total Driver VC = 50 X 4 = £200 (1)
Total Petrol VC = 20 X 4 = £80 (1)
Total costs = 200 + 80 OFR + 200 OFR = £480 (1)
Total profit = £50 × 4 = £200 (1)
Revenue = £480 OFR + £200 = £680 (1)
Markers note: Candidates must use method 1 or 2 and not combine their approach.
Item A:
Since Premium Motors started 10 years ago it has expanded slowly using organic growth.
Recommend whether Premium Motors should now take over LLC.
Give reasons for
your recommendation. (9 marks)
- Think about 9 key words to base your answer around.
- Make a point and then so what?
- Give at least 3 reasons for your recommendation and explain each.
- If you’re struggling, write the key words at the top of the page and then think about how to write the sentences.
7-9 Marks:
Detailed analysis and evaluation of topics based on context:
* Sustained line of reasoning, which is coherent, relevant, substantiated with a focused conclusion that is fully justified.
* Business areas are fully analysed.
* Applies knowledge and understanding to the context sufficiently
Key points:
- Premium motors - growing using organic growth which has taken 10 years.
- Premium Motors will gain LLC’s customer base instantly.
- Highly competitive market.
- Taking over established business = quick method of growth.
- Instantly give Premium Motors an existing customer base, with contracts with hotels lasting for another 12 months.
- This will save time of having to establish a customer base and reputation compared with organic growth.
- London market = competitive
- Risk using organic growth that Janet will not be able to attract customers away from the competition in an area where she has no reputation.
- As organic growth took 10 years in the past the external growth will enable Premium Motors to expand quicker.
Item B: Premium Motors
Janet has decided not to expand the business in London as demand for its services has increased in the Manchester area. A new website now helps to manage the increase in enquiries. Customers can look at the cars from a web page of photos and videos. They can use the live online chat service to ask questions and get instant feedback. There is no set price for the hire of a car. The price depends on several factors, such as:
* distance and day of the journey
* the amount of time the car is needed
* the number of pickup and drop off locations.
At present there are no prices for car hire on the website. Customers must telephone a salesperson between 9 am and 6 pm Monday to Friday to agree the price of their car hire booking.
Premium Motors prides itself on the quality of its service. Drivers are encouraged to greet customers with a smile and engage in conversation several times throughout the journey. Janet has previously issued new drivers with a leaflet outlining the company policy on customer service.
Janet is considering introducing a new induction training programme for the new drivers. It will include:
* a video of an experienced driver dealing with a customer
* a role play exercise where a new driver can practise dealing with difficult
Item B:
Explain one economic change that can affect a business. (2 marks)
1 mark for knowledge of an economic change
1 mark for the effect or an explanation of the economic change
Answers may include:
* interest rates
* inflation
* gross domestic product * levels of employment
* consumer spending
* exchange rates
* taxes
* recession/trade cycle
Example:
An economic change could be rise in interest rates (1) this will decrease consumer spending (1). An economic change could be inflation (1) this may increase the cost of supplies (1).
Item B:
Janet is considering introducing a new induction training programme for the new drivers to ensure a high level of customer service.
Analyse one benefit of introducing the new induction training for drivers. (6 marks)
- Think about 6 key words to base your answer around.
- Make a point and then so what?
5-6 Marks:
Detailed analysis of topics based on the context:
* Business areas are fully analysed.
* Applies knowledge and understanding to the context sufficiently.
Application:
* the video will help drivers review how to deal with customers and have a high customer service – induction helps employees carry out their roles more efficiently
* the role play exercise will allow drivers to practise dealing with difficult customers so when faced with them they know what do to – induction can help drivers become more productive.
Example of a Level 3 developed answer:
- The role play exercise = allow drivers to practise dealing with difficult customers in an environment where they can make mistakes without it affecting the business’ reputation for quality of service.
- This will mean that the new drivers will become more productive more quickly as when faced with a difficult customer they will know what do to, as the induction will have given them the opportunity to run through a number of different scenarios.
- Compared with a leaflet this will be more effective in making sure that there are fewer complaints about drivers, especially as they have also watched the more experienced driver dealing with a customer.
Item B:
Premium Motors has developed the new website to provide information about cars before making a booking. Janet is thinking of adding the option to book cars directly on the website.
Recommend whether Janet should use e-commerce to improve customer service at
Premium Motors.
Give reasons for your recommendation. (9 marks)
- Think about 9 key words to base your answer around.
- Make a point and then so what?
- Give at least 3 reasons for your recommendation and explain each.
- If you’re struggling, write the key words at the top of the page and then think about how to write the sentences.
7-9 Marks:
Detailed analysis and evaluation of topics based on the context:
* Sustained line of reasoning, which is coherent, relevant, substantiated with a focused conclusion that is fully justified.
* Business areas are fully analysed.
* Applies knowledge and understanding to the context sufficiently.
Key points:
- Price depends on several
factors which will be difficult to manage online.
- At present there are no prices for car hire on the website.
- Customers must telephone a salesperson between 9 am and 6 pm Monday to Friday to agree the price of their car hire booking.
- E-commerce will not improve customer service as customers
may find it difficult to find the correct price due to the several factors which make up the price. - If customers do not have a straightforward booking, for example they are picking up customers from lots of locations this could make calculating the price difficult.
- If the customer books a car thinking they have worked out the price and this is not correct, then this could lead to complaints.
- As the prices are not currently on the website due to the fact there is not a set price it could mean this service is not suitable for e-commerce.
- Incorrect prices could mean that the booking does not make a profit for the business, which long term could lead to the business becoming insolvent.
