Business Ownership (OCR GCSE Business): Exam Questions

J Sainsbury plc (Sainsbury’s)

Sainsbury’s is one of the UK’s largest supermarket chains. Sainsbury’s targets middle to high income customers nationally. Sainsbury’s is owned by shareholders who have limited liability.

The supermarket industry is very competitive, and marketing promotions are important. An example is Sainsbury’s price match against similar products sold by Aldi, one of its competitors. Sainsbury’s also spends a large proportion of its marketing budget on television advertising.

Developing new products is important to remain competitive, as customers are always looking for something new. Sainsbury’s uses market segmentation to support successful product development.

Sainsbury’s managers believe that good food should be accessible to everyone. They use primary market research to ensure the business develops products that meet the needs of its customers.

Shirtz Ltd

Shirtz Ltd is a private limited company owned by Shamira and her husband, Zubair. The business manufactures colourful T-shirts with logos and pictures on the front.

Shirtz Ltd has been operating from a room in their house. Shamira and Zubair make the T-shirts and sell them through online stores such as Amazon and eBay.

Shamira and Zubair would like to expand the business. They have created a business plan to help them.

Shirtz Ltd’s business plan

Aims and objectives
To grow by purchasing new machinery and renting a new location for production

Finance
New finance will be required to fund the business’ aims and objectives

Business needs

• New machinery

• Larger premises/location for production

Market research

Changes to the marketing mix

Product – expand the range of T-shirts produced and sold
Price – set price to gain highest revenue
Place – develop links with a high street shop to sell Shirtz Ltd’s products
Promotion – use point of sale promotion

Human resources
Employ two full-time production workers

Shinz Ltd

Five years ago, brothers Tom and Amir set up a car washing business called Shinz Ltd in the town of Littlelong. The business has been very successful and currently offers ‘economy’, ‘gloss’ and ‘high-gloss’ washing services. Tom is responsible for the administration, finance and marketing functions. Amir is responsible for the car washing operations and supervises two fulltime employees. The prices Shinz Ltd charges are not low when compared to its competitors. Customer service is a priority for the business.

Tom and Amir are keen to expand the business and are planning to launch a new ‘resin polish’ service, to protect car paintwork during the cold winter months. Many of Shinz Ltd’s customers have requested this service. ‘Resin polish’ is not currently available in Littlelong but is offered by a business in another town five miles away. Tom is considering whether to use competitor pricing or price skimming for this new service.

Littlelong Motors Ltd is a used car retailer. The business has three owners. They have suggested a merger with Shinz Ltd. Littlelong Motors Ltd offers a basic car washing service in addition to its car sales. It prides itself on offering the lowest prices in the town. 26% of Littlelong Motors Ltd’s customers are ‘extremely satisfied’ with the car washing service provided. This compares to 68% of Shinz Ltd’s customers saying they are ‘extremely satisfied’.

The car washing market in Littlelong is valued at £460 000 per year. The chart below shows the market share of the four car washing businesses located in the town.

Miles Ahead

Miles Ahead is a bicycle retailer which was set up in 2001 by entrepreneur, Reg Patel. Reg started with one shop, but the business has gradually expanded. There are now six ‘Miles Ahead’ shops. Despite the growth in Miles Ahead, Reg still operates the business as a sole trader, with 15 employees and a tall organisational structure. Reg segments the market (e.g. different bicycles according to age, gender, lifestyle and income), which he thinks has supported his success.

Reg is going to retire in six months’ time. He is selling the business to Nessa Watts. Nessa has a lot of business experience. She has sold jewellery online as a sole trader for many years. Nessa has plans to expand Miles Ahead.

Nessa has had to borrow £500 000 to purchase the business from Reg. Nessa is considering whether to open more ‘Miles Ahead’ shops or launch a ‘Miles Ahead’ website so that customers can purchase online. Sales within the business have fallen over the past two years (see Fig. 2) which Nessa feels is due to the traditional appearance of the shops.

The latest customer satisfaction information is also of concern to Nessa (see Fig. 3).

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.