Edexcel A-Level Business Paper 3 Final Test Q&A Review Expert Key Questions Resolved with Correct Solutions ||Newest Update 2025

Edexcel A-Level Business Paper 3 Final Test Q&A Review Expert Key Questions Resolved with Correct Solutions ||Newest Update 2025 What is the payback period? - ANSWER How long it takes to recover initial investment cost. What is the aim of marketing? - ANSWER To help identify, anticipate and satisfy consumer needs and wants profitability. What is a mass market? - ANSWER A very large market with high sales volume in which products with mass appeal are targeted. What is a niche market? - ANSWER A small, specialized market for a particular product or service. What are 3 characteristics of mass markets? - ANSWER Less unique products Low average costs due to economies of scale Lower cost for consumers and therefore higher sales volumes Lower profit margins What are 3 characteristics of niche markets? - ANSWER More specialised & unique products Higher average costs due to small scale production Higher prices make products less affordable and lead to less sales volume Higher prices which lead to higher profit margins What is a dynamic market? - ANSWER A market that is subject to rapid or continuous changes. What are 3 advantages for firms & consumers of online retailing? - ANSWER Provides business access to more consumers, including internationally Enables longer trading hours as business is open 24/7 Cheaper to run as fixed and variable costs are lowered Businesses can collect data by tracking consumer behaviour Consumers can shop at a time that suits them Consumers can receive personalised offers they are more likely to benefit from What are 3 advantages of being a sole trader? - ANSWER Easy and inexpensive to set up Owner has complete control over the business All profits belong to the owner Simple tax arrangements What are 2 disadvantages of a private limited company? - ANSWER More expensive and time-consuming to set up More complex legal requirements and regulations than sole traders Annual financial reporting and auditing are required What is stock market flotation? - ANSWER The conversion of a private limited company to a public limited company by selling shares to the public for the first time on a stock exchange. What are 3 benefits of becoming a Public Limited Company? - ANSWER Access to Capital Shared risk (risk is spread among a larger group of shareholders) Greater public profile (Becoming a PLC can raise a company's public profile and increase its visibility with customers, suppliers, and potential investors which will help with growth). What are the 5 internal causes of business failure? - ANSWER Poor planning Lack of leadership Ineffective marketing Cash flow problems Lack of finance - investment What are the 5 external causes of business failure? - ANSWER Economic factors Changes in consumer tastes Legal factors Market challenges - competitors Technological changes What is PESTLE? - ANSWER An analysis that examines the external factors that are likely to affect the activities and outcome of a business. - Political - Economic - Social - Technological - Legal - Environmental What is the social aspect of PESTLE? - ANSWER The extent to which personal attitudes and values, culture and demographic change are expected to affect the business: - Education - Ethics & Religion - Population growth and demographic structure What is the environmental aspects of PESTLE? - ANSWER The extent to which changes in attitude and government policy towards environmental protection as well as the impact of global warming are expected to impact the business. What are Porter's Five Forces? - ANSWER They identify the key pressures on an industry that impact the ability of a business to compete with rivals: 1. Buyer Power - small number of customers with high buying power - negotiation 2. Supplier Power - business has a lot of choice for suppliers - can shop around for lower price 3. Threat of substitute products or services - If customers can easily swap a businesses products for another, the business has little power. They need to invest in their USP. 4. Threat of new entrants - if barriers to entry are low, threat of new entrants is high, meaning more rival businesses to compete with. 5. Rivalry among existing competitors