IGCSEBusinessEdexcelExam Questions1. Business Activity & Influences on BusinessTypes of Organisations

Types of Organisations (Edexcel IGCSE Business): Exam Questions

Exam code: 4BS1

1 hour26 questions
Easy
Medium
Hard
1
1 mark

Case Study

TUI is a holiday business that has over 100 years of experience. It offers customers a variety of holidays including staying in hotels, and river and ocean-going cruises. There are many extras that it offers to holiday makers including: car hire, extensions to the holiday and arranging day trips at all its holiday destinations.

The business is well known and flies its customers to over 180 destinations around the world, including Greece, Turkey and Spain. It has 1,600 travel agencies and 27 million customers. Holidays can be booked by visiting a travel agency or online.

TUI has holidays to meet the needs of all its customers: families, children, couples and those with disabilities.

Which one of the following is a reason why a sole trader would want to become a private limited company?

Select one answer

  • The business can keep financial records confidential

  • The business will have unlimited liability

  • Shareholders are liable for all debts

  • Increased ability to raise finance

Choose your answer

2
1 mark

Define the term franchise.

How did you do?

3
1 mark

Case Study

TUI wants to maintain its reputation by continuing to provide quality holidays and experiences that customers will enjoy. This will encourage them to return to book future holidays with TUI.

Define the term multinationals.

How did you do?

4
1 mark

Define the term social enterprise

How did you do?

5
1 mark

Case Study

The first Premier Inn hotel was opened in 1987. Premier Inn now has over 820 hotels in the UK, United Arab Emirates (UAE) and India with over 83,000 rooms. It has recently expanded by opening the first Premier Inn in Germany and has plans to open more in other countries.

The majority of the hotels have restaurants with facilities for guests to buy meals and drinks.

Which one of the following is a benefit to a franchisee?

Select one answer.

  • The franchisee can buy supplies from any supplier

  • The franchisee is given support from the franchisor

  • The franchisee is guaranteed a set wage

  • The franchisee has total control

Choose your answer

6
1 mark

Define the term public corporation.

How did you do?

7
1 mark

Define the term limited liability.

How did you do?

8
1 mark

Case Study

Most people recognise Heinz for the phrase ‘57 varieties’ even though it now produces many more than the original 57 varieties. H J Heinz, the founder of the Heinz business, believed the phrase sounded lucky.

Kraft Heinz is a world-wide producer of food products. It was formed from the merger of Kraft Foods and Heinz in 2015. This created the third largest food and drinks business in the USA and the fifth largest food and drinks business in the world.

Kraft Heinz has over 24 different brands, including Greenseas in Australia and Nutri+Plus in New Zealand. America has the largest number of brands from Maxwell House to Cool Whip. Kraft Heinz produces many different products including tomato sauce, ‘Mac&Cheese’, pasta and its famous baked beans that are used and eaten by many people.

Kraft Heinz uses many methods to advertise its products. These include posters, billboards and leaflets in supermarkets.

On 13 September 2022 the share price of Kraft Heinz in America at 10.00 am was $36.55 and at 4.00 pm it was $35.06.

Which one of the following is the percentage decrease in the share price?

Select one answer

  • 1.49%

  • 1.96%

  • 4.08%

  • 4.25%

Choose your answer

9
1 mark

Case Study

Kraft Heinz has set itself many targets to reach before 2025. These include reducing its impact on the environment and improving its use of robotic technology for production. It is hoped that these targets will lower the impact Kraft Heinz production has on the environment by reducing its waste and greenhouse gases that contribute to global warming

Define the term public limited company.

How did you do?

10
1 mark

Case Study

The LEGO Group is a privately-owned business in Denmark. The business was founded in 1932 by the Kristiansen family. The family still owns it. The name LEGO is an abbreviation of two Danish words, ‘leg godt’ which means ‘play well’. It is now one of the world’s largest manufacturers of toys with 15 factories and over 18,000 employees around the world.

LEGO manufactures toys, games and art materials for boys and girls of all ages, and products from films such as Star Wars and Harry Potter. It believes that children are the role models of the future and playing with LEGO can support children in a developing and complex world

Which one of the following is a benefit of being a franchisee?

Select one answer.

  • Being able to choose your own suppliers

  • Selling an established brand

  • Not having to pay interest on a bank loan

  • Having complete control of the business

Choose your answer

11
2 marks

Case Study

LEGO ensures its employees are fully prepared to carry out the tasks they are employed for. It looks after and encourages its employees to develop and improve their own skills

Outline one benefit to LEGO of being a privately-owned family business.

How did you do?

12
1 mark

Case Study

NEXT is a well-known clothing retailer that operates in 70 countries and employs over 43,000 employees. Since NEXT commenced trading it has introduced many other products to its range such as home interiors, flowers and a wedding list service.

In 1999 NEXT launched its own online shopping platform, enabling customers to purchase its products where ever they live. It continues to improve its customer service by introducing new initiatives such as next day delivery.

NEXT mainly uses its own factories for production. However, it does purchase some clothes such as ladies dresses from Turkish factories

Which one of the following is a benefit of buying a franchise?

Select one answer.

  • The franchisor provides training to the franchisee

  • A franchisee pays a lower rate of Value Added Tax (VAT)

  • The franchisor pays the franchisee to set up in business

  • A franchisee makes all his/her own decisions

Choose your answer

13
1 mark

Case Study

Huawei is a leading global provider of information and communications technology, infrastructure and smart devices. In March 2011, over one million of its C8500 smartphones were sold in China following its launch.

It now manufactures a wide variety of different products including Huawei smartphones, watches and tablets. In recent years Huawei has won many awards. In 2018 it was named the 68th most valuable brand by Best Global Brands. In 2019 it introduced a smartphone which had new photographic technology.

Which one of the following would be a disadvantage for a partner in a partnership?

Select one answer

  • Sharing the workload

  • Liability for all debts

  • Access to more capital

  • Sharing skills

Choose your answer

14
1 mark

Define the term sole trader.

How did you do?

15
1 mark

Case Study

The Alternative Drum School (TADS) was set up in the wealthy area of Cricklade, England in 2008 by Ollie Tanner who had a passion for and enjoyed drumming.

Ollie invested all of his savings into the drumming school. He saw the potential of being located away from other drumming schools. Ollie promotes his business by writing columns in local papers, performing at local music festivals and by word of mouth recommendations. He has invested heavily in computer technology to allow students to produce the music they enjoy playing.

Ollie finds it difficult to maintain a good work-life balance. Ollie currently works 60 hours a week in a business that does not have reliable profits.

Which one of the following could a sole trader pay on its profits?

Select one answer.

  • Sales tax

  • Income tax

  • Corporation tax

  • Indirect tax

Choose your answer

16
1 mark

Case Study

In 1985 Emirates started its airline business with just two aircraft. It is now a well‑known airline with over 265 aircraft flying to over 180 destinations around the world.

Emirates has won many awards for service and reliability. Until 2016 passengers rated Emirates the leading airline to travel with. However, in 2017 its rating dropped from first to fourth.

Which one of the following only applies to a public limited company?

Select one answer

  • Controlled by the government

  • Shares are traded on the stock exchange

  • A maximum of 50 shareholders

  • Restriction in the transfer of shares

Choose your answer

1
3 marks

Explain one advantage to a business of having limited liability.

How did you do?

2
6 marks

Case Study

IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a price that people could afford to buy.

He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All IKEA stores are run as franchises.

Analyse the benefits to IKEA of all its stores being franchises

How did you do?

3
3 marks

Explain one benefit to a business that operates as a sole trader.

How did you do?

4
3 marks

Explain one benefit to a business of being a partnership

How did you do?

5
3 marks

Explain one disadvantage of being in a partnership

How did you do?

6
3 marks

Explain one drawback of setting up a small business as a private limited company.

How did you do?

7
6 marks

Case Study

BrightSpark is an electrical repair business in Manchester, England. It was set up two years ago by two friends, Amir and Priya, who each invested £5,000 of their own savings. The business has grown quickly and now employs four technicians. Amir and Priya currently operate as a partnership but are considering becoming a private limited company.

Analyse the benefits to BrightSpark of becoming a private limited company.

How did you do?

1
12 marks

Case Study

The Alternative Drum School (TADS) was set up in the wealthy area of Cricklade, England in 2008 by Ollie Tanner who had a passion for and enjoyed drumming. Ollie invested all of his savings into the drumming school. He saw the potential of being located away from other drumming schools.

Ollie promotes his business by writing columns in local papers, performing at local music festivals and by word of mouth recommendations. He has invested heavily in computer technology to allow students to produce the music they enjoy playing.

Ollie finds it difficult to maintain a good work-life balance. Ollie currently works 60 hours a week in a business that does not have reliable profits.

At the moment TADS operates as a sole trader. As it becomes more successful Ollie is considering becoming a private limited company.

Evaluate whether TADS should consider becoming a private limited company. You should use the information provided as well as your own knowledge of business.

How did you do?

2
9 marks

Case Study

Smile Dental Practice is a small dental clinic in Lisbon, Portugal. It was set up two years ago by Dr Amara Osei as a sole trader. The business has grown steadily thanks to positive online reviews and word-of-mouth recommendations from satisfied patients. It now has a waiting list of over 50 patients. Amara is struggling to manage the workload alone and often works late into the evening, which is affecting her work-life balance. She wants to bring in another dentist to help the business grow.

Amara is considering two options for changing the structure of the business:

  • Option 1: Form a partnership with another qualified dentist

  • Option 2: Establish a private limited company and sell shares to raise finance for expansion

Justify which one of these two options Smile Dental Practice should choose.

How did you do?

3
12 marks

Case Study

Pulse is a small chain of three fitness studios based in Tenerife, Spain. It was founded in 2018 by Elena Vargas, a former personal trainer, who used her savings and a bank loan to set up the business. Pulse offers high-intensity group classes and personal training sessions using a unique training method that Elena developed herself. The studios have become popular through social media and positive customer reviews, and Elena has built up €120,000 in retained profit over the past three years.

Elena personally trains all new instructors to make sure they deliver classes to her standard. She believes the quality of instruction is what sets Pulse apart from other gyms in Tenerife. Each studio is designed with the same layout, colour scheme and branding.

Elena wants to expand Pulse across mainland Spain and into other European countries. However, opening new studios requires significant investment in equipment, premises and staff training. Elena is considering whether to sell franchises as a way to grow the business.

Evaluate whether Pulse should sell franchises to expand the business. You should use the information provided as well as your own knowledge of business.

How did you do?