Growing the Business (Edexcel GCSE Business): Exam Questions

Mind Candy Ltd produces games and apps for computers and mobile devices. Its most successful game was Moshi Monsters. The game was aimed at young teenagers and was a global hit, with 80 million users in 2012.

In 2013, Mind Candy made large losses as sales revenue fell due to the falling popularity of its games. This was blamed on the short product life cycle of Moshi Monsters and increased competition in its market. As a result of these losses, Mind Candy reduced its workforce of software developers.

Mind Candy now needed to raise £1.2 million of extra finance. It required this finance to pay existing costs and fund the development of new apps such as Petlandia. Mind Candy believes Petlandia will allow it to return to organic growth. The app is free to download and allows players to design a virtual version of their own pet. This virtual pet can go on an adventure within the app. The adventure is then turned into a personalised storybook which can be purchased for £19.99.

Kentucky Fried Chicken (KFC) is a fast food chain that sells fried chicken. Amongst its most popular products are Popcorn Chicken, Boneless Chicken boxes and Zinger Tower burgers. These are freshly cooked in batches in each of its 900 restaurants across the UK.

In 2017, KFC changed the company it used to transport its supplies of chicken. It replaced Bidvest with DHL. Bidvest had three distribution centres across the UK, but DHL only had one. In February 2018, DHL started to have logistical problems causing many KFC restaurants to run out of chicken. This led to a temporary closure of many KFC branches due to poor supplier reliability.

As a result of these closures, KFC started losing market share to rival fast food restaurants such as Burger King. KFC used social media and a viral advertising campaign to apologise to customers. It also considered lowering the prices of its most popular food items to win back lost customers and recapture market share.

Greggs plc is a company that produces baked goods such as sausage rolls, savoury snacks and cakes. It has more than 1,900 shops and a number of factories located across the UK.

In 2018, Greggs planned to open a further 130 shops to cope with its continued growth in sales. It wanted to increase the use of technology in its factories, where it uses batch production. To be able to cope with this expansion, Greggs also planned to invest in improved logistics.

The growth of Greggs has been a UK high street success story. From originally being based in Newcastle and the north-east, it has expanded rapidly across the whole of the UK. It has switched away from selling traditional bakery products, such as bread, to become more like a fast food chain. As a result, Greggs now sell a variety of takeaway goods such as pizza, soup, coffee and sandwiches and operates in the very competitive ‘food-to-go’ market. Its main rivals are Pret a Manger, Costa and Starbucks.

In 2019, Greggs gained national publicity by becoming the first food retailer to start selling vegan sausage rolls. It is hoped that products such as this will help Greggs stand out from its rivals. The vegan sausage roll is priced at £1, 10p more than the meat-based equivalent.

TechGear Ltd is a UK-based company specialising in wearable technology such as smartwatches and fitness trackers. The business has grown rapidly in the last five years, expanding into Europe and Asia. Its focus is on innovative design and advanced features.

However, the market is highly competitive, with strong rivals such as Apple and Samsung. TechGear faces high research and development costs and pressure to cut prices to remain competitive.

The directors are considering how to maintain growth and secure long-term success. They are discussing whether to continue investing heavily in research and development (R&D) or to shift focus towards lowering prices to attract more customers.

Mind Candy Ltd produces games and apps for computers and mobile devices. Its most successful game was Moshi Monsters. The game was aimed at young teenagers and was a global hit, with 80 million users in 2012.

In 2013, Mind Candy made large losses as sales revenue fell due to the falling popularity of its games. This was blamed on the short product life cycle of Moshi Monsters and increased competition in its market. As a result of these losses, Mind Candy reduced its workforce of software developers.

Mind Candy now needed to raise £1.2 million of extra finance. It required this finance to pay existing costs and fund the development of new apps such as Petlandia. Mind Candy believes Petlandia will allow it to return to organic growth. The app is free to download and allows players to design a virtual version of their own pet. This virtual pet can go on an adventure within the app. The adventure is then turned into a personalised storybook which can be purchased for £19.99.

In August 2017, UK supermarket group Sainsbury’s decided to cut its costs by £500 million to remain competitive.

One of the changes Sainsbury’s made was to end its membership of Fairtrade. The Fairtrade scheme gives farmers in countries such as Kenya a higher price for their crops, such as tea. In return, Sainsbury’s can use the Fairtrade logo on its products. This makes its groceries, such as bananas, more attractive to ethically-minded customers.

Sainsbury’s has decided to replace Fairtrade with its own scheme called ‘Fairly Traded’. Critics of the change believe that it confuses customers. Protests about this change have already been held in London.

Sainsbury’s also decided to reduce its head office workforce by 1,000. This allowed the company to increase wages for its shop floor employees, including checkout operators and shelf stackers, by 4.4% to £8 per hour. This reduced the wage difference with Aldi, which pays £8.53 per hour. Sainsbury’s wants to retrain shop floor employees to improve the customer service in its stores.

Tesla is a public limited company based in California, USA. Its founder and main shareholder, Elon Musk, wanted to produce an electric car that is affordable to a large number of potential customers. This car is called the Tesla Model 3 .

Introduced in 2017, the basic version of the Model 3 was originally priced at $50 000 and the company wanted to reduce this price to $35 000 by 2019. However, this was difficult to achieve because Tesla’s California factory suffered from low levels of productivity. These problems resulted in Tesla making a $976 million loss in 2018.

Following the introduction of tariffs on US imports by the Chinese government in 2018, Tesla decided to invest $5 billion in the construction of a new car factory in Shanghai, China. This factory will use flow production. However, with only $2.4 billion of available capital, Tesla needs to raise external finance to fund it.

In 2019, Tesla decided to close most of its showrooms to reduce costs. The company believes customers will be happy to purchase electric cars using e-commerce.

Green Cleaners is a small family business that provides eco-friendly cleaning services to households in a suburban area. The business was started three years ago by two sisters, who now employ three cleaners. They use biodegradable cleaning products and market themselves as an environmentally responsible company.

The business advertises through leaflets, social media, and word-of-mouth recommendations. Its main customers are local families with busy lifestyles who want reliable cleaning services. The owners believe their focus on eco-friendly products sets them apart from larger national cleaning companies.

At present, Green Cleaners earns steady income from weekly and fortnightly home cleaning jobs. However, demand can fluctuate, and the owners are looking at ways to grow the business. They are considering two options:

• Option 1: Employ more staff to take on additional home cleaning customers.

• Option 2: Offer cleaning contracts to local offices, which may provide larger and more regular sources of revenue.

Eco-friendly cleaning products are more expensive than standard alternatives, which raises costs. The owners are confident that “green” cleaning is a growing trend, but they also know that customers often make decisions based on price as well as values. They must decide how best to secure the long-term success of the business.

Green Cleaners is a small family business that provides eco-friendly cleaning services to households in a suburban area. The business was started three years ago by two sisters, who now employ three cleaners. They use biodegradable cleaning products and market themselves as an environmentally responsible company.

The business advertises through leaflets, social media, and word-of-mouth recommendations. Its main customers are local families with busy lifestyles who want reliable cleaning services. The owners believe their focus on eco-friendly products sets them apart from larger national cleaning companies.

At present, Green Cleaners earns steady income from weekly and fortnightly home cleaning jobs. However, demand can fluctuate, and the owners are looking at ways to grow the business. They are considering two options:

• Option 1: Employ more staff to take on additional home cleaning customers.

• Option 2: Offer cleaning contracts to local offices, which may provide larger and more regular sources of revenue.

Eco-friendly cleaning products are more expensive than standard alternatives, which raises costs. The owners are confident that “green” cleaning is a growing trend, but they also know that customers often make decisions based on price as well as values. They must decide how best to secure the long-term success of the business.

TechGear Ltd is a UK-based company specialising in wearable technology such as smartwatches and fitness trackers. The business has grown rapidly in the last five years, expanding into Europe and Asia. Its focus is on innovative design and advanced features.

However, the market is highly competitive, with strong rivals such as Apple and Samsung. TechGear faces high research and development costs and pressure to cut prices to remain competitive.

The directors are considering how to maintain growth and secure long-term success. They are discussing whether to continue investing heavily in research and development (R&D) or to shift focus towards lowering prices to attract more customers.

JD Sports plc is a multinational sports, fashion and footwear retailer based in the UK. It owns a number of brands including Footpatrol and Kukri. It has over 2,400 stores in 18 different countries. Most of its brands are targeted at the ‘athleisure’ market. This market consists of 16–24 year olds who choose to wear sportswear outside of the gym. It uses targeted online advertising to direct customers to one of its websites, such as www.jdsports.co.uk. It also sponsors UK boxing star, Anthony Joshua and Bournemouth football club.

In March 2019, JD Sports announced that it was taking over loss-making, rival sports footwear retailer Footasylum for £90.1 million. Footasylum, like JD Sports, had its headquarters in Greater Manchester and was started by an ex-JD Sports director, David Makin. Footasylum had 69 stores in the UK in similar locations to JD Sports. Footasylum also targeted the ‘athleisure’ market and used to sell identical trainer brands to JD Sports such as Nike, Adidas and Puma. JD Sports brands itself as the ‘King of trainers’, in an attempt to compete with main rival Sports Direct.

In July 2019, the Competition and Markets Authority (CMA) announced an investigation into the takeover. It was worried about the impact that the takeover might have on consumers and suppliers.

In 2004, entrepreneur Mark Zuckerberg started Facebook. Then, in 2012, the company floated on the stock exchange and became a public limited company (plc). By 2020, Facebook plc had become the largest social networking website in the world with 2.5 billion users and advertising revenues of $70.1 billion. The company has used internal and external growth to expand. Between 2012 and 2020, Facebook purchased over 60 different companies, including WhatsApp, Instagram and the virtual reality company, Oculus. However, Facebook wants to reduce its reliance on revenue from advertising on its websites and sees its future growth coming from new markets such as selling virtual reality headsets. Facebook believes that social media is now reaching the maturity phase in its product life cycle in most of its main markets.

In 2020 Facebook decided to give employees in its European headquarters in Dublin the option to work from home. Facebook believes that remote working will not result in lower productivity. It also believes it will allow Facebook to attract talented people such as coders, graphic designers and software engineers who cannot afford to live in expensive locations such as Dublin. Facebook believes that having less office space will reduce costs and give the company a competitive advantage against its rivals such as Snapchat and Twitter.

Cineworld plc is the UK’s largest cinema chain. It owns 127 multi-screen cinemas in a variety of city centre and out of town locations. Several sites have 4DX screens, which have seats that move ‘in sync’ with what is happening in the movie. In 2019, Cineworld had accumulated £2.3 billion of debt due to rapid external growth. Due to the global health crisis in 2020, the government forced a shut-down of all cinemas. Since re-opening in 2021, ticket sales at Cineworld cinemas have been low. The blockbuster movies that normally attract people to the cinema, such as ‘Spider-Man: No Way Home’, have been lacking in number and quality. Home streaming services, such as Apple TV and Netflix, have made visiting the cinema less attractive. These factors led to Cineworld making a £537 million loss in 2022, leaving the company close to failure. The Cineworld share price has fallen from over £3 in 2019 to less than 2p in 2023. The company needs cash to cover its loan repayments.

Rival cinema companies, such as Vue, have encountered similar problems and have reduced the price of a ticket to £6.99 to attract people back to watching movies at the cinema. However, Cineworld has so far refused to do this. It still charges £18.69 for its most expensive tickets.