Exam code: J204
A business has recently changed its main objective from ‘survival’ to ‘growth’.
What would most likely explain this change of objective?
The business has become too big
The business has reduced its productivity
The business is experiencing high demand
The business needs to lower its costs
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Five firms operate in a market. The pie chart below shows the annual revenue for each of these five firms. Awareness of market share will inform the decisions Firm E need to make to achieve business growth.
What is the market share of Firm E?
25%
30%
33 
%
90%
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Boohoo was started in 2006 by two entrepreneurs who had the idea of starting a business where customers could buy the latest fashions online.
Boohoo has expanded using organic growth, and has become a global online retailer of its own brand clothes, shoes and accessories. It now sells in over 100 countries. Boohoo charge for delivery. It has millions of website users per month.
The target market for the Boohoo brand is men and women who are 16 to 24 years old and are fashion conscious. To reach this market, Boohoo uses social media. The business is active on Facebook, Twitter, YouTube and Instagram.
Boohoo has also introduced apps for smartphones and tablets that allow customers to browse and buy products very easily.
Explain how Boohoo’s objectives may have changed since 2006.
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DM plc manufactures canned drinks. The company’s main objective for the coming financial year is to increase its market share by 2%.
What would help the company achieve its objective?
Increasing the cost of its canned drinks
Increasing the number of retail outlets it supplies
Increasing the price of its canned drinks
Increasing the time it takes to process orders
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Firms A and B both operate in the same industry.
Firm A’s objective is to make a profit
Firm B’s objective is survival.
What would explain this difference in objectives?
Firm A has a low market share and Firm B has a high market share
Firm B is a start‑up business and Firm A is an established business
The owners of Firm A have less determination than the owners of Firm B
The owners of Firm B are more confident than the owners of Firm A
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Alex, a sole trader, opened a hair salon three years ago. He has recently changed the main objective of the business from ‘profit’ to ‘survival’.
Alex, a sole trader, opened a hair salon three years ago. He has recently changed the main objective of the business from ‘profit’ to ‘survival’.
The hair salon has already achieved its profit objective
The hair salon has gained a lot of new customers
The hair salon is experiencing intense competition
The hair salon is now an established business
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Two clothing manufacturers have different objectives.
Which of the following is not a possible reason why the two businesses have different objectives?
One business makes coats and the other makes jeans
Only one of the businesses makes designer clothing
There is little innovation in the clothing industry
They have different owners
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A business whose main objective is to survive is likely to be:
experiencing growth in its market share
making a large profit
well established and successful
working hard to stay in existence
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Superdry plc
Superdry is a successful international brand of clothing featuring American- and Japanese-inspired graphics. In 2018, over 4800 people were employed by the company, which is committed to high quality. Superdry’s policies include one against discrimination in its workforce and another to support employee retention.
The company uses many different distribution channels. These include:
135 Superdry stores across the UK and Europe
Superdry’s own website
other retailers, including Next in the UK, which allows the brand to reach new customer groups.
Superdry regularly invests in its own stores. To keep its retail stores exciting and encourage customers to visit, there is a regular re-fit programme. In 2017, the company spent £41.4m on store-related investment, including the re-fitting of 11 stores.
The company faces competition from retailers of all sizes, ranging from sole traders to other public limited companies.
Analyse one way Superdry’s business objectives may change as the business grows.
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EDF
EDF is a limited company which supplies gas and electricity to homes and businesses throughout the UK. It is the largest producer of low-carbon electricity in the UK and owns two fossil fuel power stations, three wind farms and eight nuclear power stations.
In 2016, EDF started to build the new Hinkley Point C nuclear power station in Somerset, which will eventually provide 7% of the UK’s electricity needs for 60 years. Managers at EDF expect it to open in 2025.
During the construction stage, the project has created thousands of jobs. A number of these construction jobs are filled by self-employed workers. Once it is fully operational, the power station will employ over 900 people, most of whom will be employed by EDF.
EDF produces around 20% of the UK’s electricity and is the largest supplier. As EDF operates in a competitive market, the price that it charges its customers is very important.
Explain how the construction of Hinkley Point C nuclear power station may help EDF to achieve one business objective.
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The ‘objectives of a business’ are:
negative comments from the local community
the buildings and equipment the business owns
the items the business makes and sells
what the business intends to achieve
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