1
3 marks
Explain one way an increase in competition could lead to fixed costs rising for a business.
Was this exam question helpful?
The External Environment (AQA AS Business): Exam Questions
Exam code: 7131
1 hour6 questions
2
20 marks
Read the source in the Insert.
To what extent are demographic factors, rather than environmental factors such as recycling, likely to have a bigger impact on the future profits of all businesses?
Was this exam question helpful?
3
20 marks
Read the source in the Insert.
‘Decisions of managers have a bigger influence on the demand for the products of any business than changes in the external environment.’
Do you agree? Justify your view.
Was this exam question helpful?
4
5 marks
Analyse one effect of an ageing population on the level of profits of a private hospital business.
Was this exam question helpful?
5
1 mark
Which of the following statements is true?
An increase in interest rates is likely to lead to more demand for houses.
The population size is a demographic factor in the external environment.
A soft approach to human resource management is likely to involve a low level of delegation.
A mission will have a more specific target than a business objective.
Was this exam question helpful?
6
16 marks
Case Study
Richer Sounds
Richer Sounds is a highly successful hi-fi, home cinema and TV retail specialist based in the UK. It sells through its 53 stores and online. It has won several awards for its high level of sales and for its levels of customer service. Its sales are influenced by the external environment; for example, demand is said to be income elastic. Trading conditions have been difficult in recent years as consumers have been uncertain about their jobs and incomes. The increased use of digital technology in marketing and its impact on the way customers search for information and shop is a serious threat to Richer Sounds’ growth. It faces competition from rivals such as Amazon and Argos who offer a much wider range of products and are investing heavily in their online operations.
Richer Sounds’ mission is ‘Experience Better’. Staff aim to beat its competitors by providing customers with superior:
knowledge and expertise
products and pricing
customer service.
The company recruits employees based on their natural friendliness and their passion for its products. Staff are trained regularly to keep them up to date with new products. The company is committed to providing employees with secure, well-paid jobs and a stimulating working environment. Employees receive an excellent salary, good career opportunities and a number of additional benefits linked to customer satisfaction such as free massages and facials. The company’s suggestion scheme offers a cash bonus of at least £5 for each idea and incentives for the best ones. It has been remarkably successful, producing on average 20 suggestions a year from each employee.
Richer Sounds has a low price strategy. If a customer finds any product cheaper elsewhere for up to seven days after purchase, Richer Sounds will charge £100 less. To enable it to pursue this approach Richer Sounds deliberately chooses ‘out of the way’ locations for its shops; this means its rents are lower than its competitors. It has spent nearly 40 years building relationships with suppliers, meaning it can negotiate lower prices and pass these savings on to customers.
To what extent do you think the level of demand for Richer Sounds’ products is determined by its external environment? Justify your view.
Was this exam question helpful?