Innovation (AQA A Level Business): Exam Questions

Source B: Dyson

Dyson designs and sells vacuum cleaners, hair care products, air purifiers and robots. It began in the United Kingdom, it is privately owned by its founder's family, and its global headquarters is now in Singapore. It employs over 14 500 people worldwide.

The company competes by inventing things other manufacturers have not, and then stopping them from copying it. In 2025 it spent more than £400 million on research and development, including on artificial intelligence and machine learning, and filed 252 patents to protect what it had invented. It filed 238 the year before. In the same year it launched 13 new products, more than in any previous year.

Dyson designs in one place and makes in another. Around 2 000 people work in Singapore, nearly half of them engineers and scientists, and its Singapore Advanced Manufacturing site has produced roughly 100 million of the Hyperdymium motors that go inside its machines. In Johor, Malaysia, it has a 50 000 square metre site with over 1 200 professionals. In late 2024 it scaled back the hair care work in Malaysia and moved almost 50 staff to other work on the same site.

Trading has been hard. Revenue fell from £7.1 billion in 2023 to £6.6 billion in 2024 and £6.13 billion in 2025, and tariffs and movements in exchange rates both hurt. Even so, earnings before interest, tax, depreciation and amortisation rose 18% in 2025 to £1.11 billion and operating profit rose 15% to £0.6 billion.

Getting a new machine from an idea to a shop shelf is a project with many stages, and some of those stages cannot start until others have finished.

Source: Dyson financial results for 2024 and 2025

Appendix E: Selected data for Dyson

Source: Dyson

Appendix H: How Dyson spent its research and development budget in 2025

Source: Analyst

Assess whether Dyson's spending on research and development is worthwhile.

Calculate Dyson's operating profit margin in 2025 to support your answer.

Source B: Rolls-Royce

Rolls-Royce makes the engines that power large passenger aircraft, equipment that generates electricity, and nuclear systems for submarines. It is one of a very small number of companies in the world that can design a large civil aero engine at all.

The business has recovered strongly. In 2025 group revenue reached £20.06 billion and underlying operating profit £3.46 billion, lifting the underlying operating margin to 17.3% from 13.8% the year before. Civil Aerospace revenue rose 15% to £10.4 billion, helped by more engines coming in for overhaul. Power Systems revenue rose 19% to £4.9 billion, with power generation up 30% and the part of it that supplies data centres up 35%.

Almost everything Rolls-Royce does takes a very long time. A new civil aero engine is designed, tested, certified by regulators and then flown for decades, and the company spends the money years before any of it comes back. Its UltraFan technology programme is developing the next generation of ducted engine.

It is also trying to build something it has never built before. Rolls-Royce SMR is developing a small modular reactor: a nuclear power station small enough that most of it can be made in a factory and delivered to site, rather than built from scratch in the open. The idea is that making the same thing many times is cheaper and more predictable than building each one by hand. The unit employed 1 005 people and grew its headcount 26% in a year. It was treated as a separate company in the 2025 results rather than being consolidated into the group.

The question that follows is how to make them: in one large factory that Rolls-Royce owns and controls, or through a network of suppliers.

Source: Rolls-Royce Holdings plc 2025 full year results

Appendix E: Selected data for Rolls-Royce, 2025

Source: Rolls-Royce Holdings plc

Appendix G: How long a new civil aero engine takes

Source: Analyst

Assess whether an eleven-year wait before a new engine enters service is too long for Rolls-Royce.

Source B: Arm Holdings

Arm designs the processors at the centre of almost every mobile phone in the world, and increasingly of the computers in data centres and cars. It does not make a single chip. It designs them, licenses those designs to companies such as Apple, Qualcomm and Nvidia, and then collects a royalty on every chip those companies ship.

That is an unusual way to run a technology business, and a very profitable one. In the financial year to March 2025 Arm's revenue passed $4 billion for the first time. Royalties brought in about $2.16 billion and licensing about $1.84 billion, up 29%. In the final quarter alone revenue rose 34% to a record $1 241 million, with royalty revenue up 18% to $607 million as customers moved to the newer Armv9 architecture and as Arm-based chips spread through data centres. Headcount reached 8 330, up 17%.

Because Arm does not manufacture, almost everything it spends goes on people and on the years of design work before a single chip exists. A new processor architecture is designed, verified, licensed, built into a customer's own chip, manufactured by a third party and only then sold, by which time several years have passed and the royalties begin.

The question the company is asked repeatedly is whether it should go further. It could design and sell complete chips itself rather than licensing the designs to others. That would earn far more for each chip. It would also mean competing with the customers who currently pay it.

Source: Arm Holdings plc results for the financial year ended 31 March 2025

Appendix E: Selected data for Arm Holdings, year to 31 March 2025

Source: Arm Holdings plc

Appendix F: Where Arm's revenue comes from

Source: Arm Holdings plc

Assess the importance of royalties to Arm's future.

Calculate Arm's sales per employee to support your answer.

Source B: Oxford Nanopore Technologies

Oxford Nanopore Technologies makes devices that read DNA by passing a single strand of it through a hole a few atoms wide. It spent more than a decade in research before it sold anything, holds over a hundred patent families, and in 2024 had revenue of £183.2 million against £169.7 million the year before. Underlying growth, setting aside £16.0 million from two large programmes coming to an end, was 23.3%.

The money arrives in an unusual shape. A customer buys a device once, and then buys flow cells and reagents to use in it again and again. Three quarters of revenue comes from those consumables rather than from selling devices, so every device placed with a customer is the start of a stream of orders rather than the end of a sale.

The company grew from 1 133 full-time employees to 1 315 during 2024, a rise of 16%. Almost none of that growth was in manufacturing, which went from 156 people to 158. Making the flow cells is highly automated, and the design is difficult to copy from a finished product.

What now has to happen is a change of scale rather than a change of idea. A new flow cell is ready, and getting it made in volume means finalising a design, ordering tooling, validating the product with regulators and customers, training operators and proving a line. On the project plan, the tooling is the activity nothing else can get past.

Every week the new flow cell is not on sale is a week of orders not taken.

Source: Oxford Nanopore Technologies plc annual results for the year ended 31 December 2024

Appendix E: Oxford Nanopore Technologies, published figures for 2024

Source: Oxford Nanopore Technologies plc

Appendix F: Where the growth went, and how the technology is protected

Full-time employees

Source: Analyst

Assess the importance to Oxford Nanopore Technologies of customers buying flow cells again and again rather than buying a device once.

Calculate Oxford Nanopore Technologies' sales per employee in 2024 to support your answer.

Source A: Halewood Robotics Ltd

Halewood Robotics Ltd designs and builds robots that pick items in warehouses. It employs 196 people near Warrington, delivered about 240 robots last year, and in the year to March 2025 had revenue of £31.5 million and an operating profit of £2.1 million. Thirty-four customers buy from it and the five largest provide 51% of revenue.

It spends heavily on being first. Research and development cost £4.2 million last year, up from £2.1 million five years ago, and six new designs were completed. Sixty-two per cent of revenue now comes from products launched in the last three years, and the company holds forty-eight patents across nine patent families.

The factory practises what it sells. Seventy-one per cent of its own assembly is automated and fourteen of its own robots work on its own lines, which is how a business of 196 people builds 240 machines a year.

Selling a robot is not the end of the job. Each customer gets an installation that runs from surveying the site to training their staff, and building the robots is the activity nothing else can get past. Eleven installations were completed last year and 73% finished on time.

The decision in front of the board is about a new gripper that lets a robot pick soft items such as clothing. Nobody else can do it yet. Patenting it means publishing how it works and waiting; launching now means a rival can take it apart and copy it.

Source: Halewood Robotics Ltd

Appendix A: Halewood Robotics Ltd selected data, year to March 2025

Source: Halewood Robotics Ltd

Appendix B: What Halewood spends on research, and what it gets back

Spending on research and development, £ million

Source: Analyst

Assess how well Halewood Robotics Ltd turns its research and development spending into products.

Calculate the average cost of developing one new design to support your answer.

Source B: Rolls-Royce

Rolls-Royce makes the engines that power large passenger aircraft, equipment that generates electricity, and nuclear systems for submarines. It is one of a very small number of companies in the world that can design a large civil aero engine at all.

The business has recovered strongly. In 2025 group revenue reached £20.06 billion and underlying operating profit £3.46 billion, lifting the underlying operating margin to 17.3% from 13.8% the year before. Civil Aerospace revenue rose 15% to £10.4 billion, helped by more engines coming in for overhaul. Power Systems revenue rose 19% to £4.9 billion, with power generation up 30% and the part of it that supplies data centres up 35%.

Almost everything Rolls-Royce does takes a very long time. A new civil aero engine is designed, tested, certified by regulators and then flown for decades, and the company spends the money years before any of it comes back. Its UltraFan technology programme is developing the next generation of ducted engine.

It is also trying to build something it has never built before. Rolls-Royce SMR is developing a small modular reactor: a nuclear power station small enough that most of it can be made in a factory and delivered to site, rather than built from scratch in the open. The idea is that making the same thing many times is cheaper and more predictable than building each one by hand. The unit employed 1 005 people and grew its headcount 26% in a year. It was treated as a separate company in the 2025 results rather than being consolidated into the group.

The question that follows is how to make them: in one large factory that Rolls-Royce owns and controls, or through a network of suppliers.

Source: Rolls-Royce Holdings plc 2025 full year results

Appendix E: Selected data for Rolls-Royce, 2025

Source: Rolls-Royce Holdings plc

Appendix G: How long a new civil aero engine takes

Source: Analyst

Evaluate two ways in which Rolls-Royce could protect the value of what it invents and recommend which one it should choose.

Source B: Quenby Instruments Ltd

Quenby Instruments Ltd designs and builds bedside patient monitors for hospitals from a single site in Leicester. It employs 140 people, had revenue of £21.5 million in the year to March 2025 and an operating profit of £1.6 million. Nine out of ten of its monitors are sold to NHS trusts.

For the past three years a team of eleven engineers has been developing a sensor that measures a patient's oxygen level continuously rather than every few minutes. Quenby has spent £2.9 million on it, has filed a patent application in the United Kingdom, and believes two competitors are working on something similar.

Nothing can be sold until the regulator approves it. A medical device cannot reach a ward in Britain without approval, and approval cannot be hurried: the file has to be complete, the testing has to be finished, and the regulator takes as long as it takes. On Quenby's own project plan, obtaining approval is the single longest activity and sits squarely on the critical path.

Everything else is ready to move. The prototypes work. The assembly line can be built in twelve weeks and there is time in hand to do it. The sales team can be trained in a month. All of it waits on one activity that Quenby does not control.

Abbie Thornton, who runs the project, has told the board that the company has two realistic ways of reaching hospitals sooner, and that neither of them is comfortable.

Source: Quenby Instruments Ltd

Appendix E: Quenby Instruments Ltd selected data, year to March 2025

Source: Quenby Instruments Ltd

Appendix F: The new sensor, how it is protected and how it will be assembled

Spending on developing the new sensor

Total spent: £2.9m

Source: Analyst

Evaluate two ways in which Quenby Instruments Ltd could protect its new sensor from competitors, and recommend which one it should choose.

Source A: Halewood Robotics Ltd

Halewood Robotics Ltd designs and builds robots that pick items in warehouses. It employs 196 people near Warrington, delivered about 240 robots last year, and in the year to March 2025 had revenue of £31.5 million and an operating profit of £2.1 million. Thirty-four customers buy from it and the five largest provide 51% of revenue.

It spends heavily on being first. Research and development cost £4.2 million last year, up from £2.1 million five years ago, and six new designs were completed. Sixty-two per cent of revenue now comes from products launched in the last three years, and the company holds forty-eight patents across nine patent families.

The factory practises what it sells. Seventy-one per cent of its own assembly is automated and fourteen of its own robots work on its own lines, which is how a business of 196 people builds 240 machines a year.

Selling a robot is not the end of the job. Each customer gets an installation that runs from surveying the site to training their staff, and building the robots is the activity nothing else can get past. Eleven installations were completed last year and 73% finished on time.

The decision in front of the board is about a new gripper that lets a robot pick soft items such as clothing. Nobody else can do it yet. Patenting it means publishing how it works and waiting; launching now means a rival can take it apart and copy it.

Source: Halewood Robotics Ltd

Appendix A: Halewood Robotics Ltd selected data, year to March 2025

Source: Halewood Robotics Ltd

Appendix D: Two ways of handling the new gripper

The gripper would earn £82 000 a week once it is on sale. Option 1 would delay the launch by 52 weeks compared with Option 2.

Source: Analyst

Halewood Robotics Ltd is considering two ways of handling its new gripper:

Option 1: file patents for the gripper in twelve countries before launching

Option 2: launch now and keep the design a trade secret

Evaluate both options and recommend which one Halewood Robotics Ltd should choose.

Calculate the revenue forgone while waiting for the patents to support your answer.