AQA A LEVEL BUSINESS FINAL
EXAM WITH CORRECT
DETAILED ANSWERS
B2C - ANSWER --When business sell directly to the consumer without a middle man e.g.
Spotify
B2B - ANSWER --When business sell directly to other businesses e.g. Hootsuite
Primary Sector - ANSWER --Extract or grow raw materials e.g. fishing mining and forestry
Goods - ANSWER --Tangible products that can be physically held
Services - ANSWER --Intangible activities that are performed by other people for money
Transformation Process - ANSWER --Converting inputs into outputs in order to add value
and to satisfy the needs and wants of other consumers and businesses
Secondary Sector - ANSWER --Manufacture goods using raw materials e.g. clothes,
smartphones
Tertiary Sector - ANSWER --Provides services and sells goods e.g. cinema, hotel
Costs - ANSWER --All of the expenses that a business incurs e.g. wages, electricity
,Average Unit Cost Formula - ANSWER --Total Costs / Output
Interest - ANSWER --A sum paid or charged for the saving or borrowing of money.
Interest = Interest Rate x Size of Loan
Sole Trader - ANSWER --A single person who is the exclusive owner of a business.
+ Get to be their own boss
+ Own 100% of the profit
- Unlimited liability
- More difficult to raise finance
Private Limited Company (Ltd) - ANSWER --Companies where ownership of shares is
restricted, with all shareholders having to agree before shares can be sold.
Advantages and Disadvantages of Being a Private Limited Company (Ltd) - ANSWER --+
Owners retain a lot of power over how the business is managed
+ Limited Liability
- High incorporation costs (transitioning from sole trader/ partnership)
- Legally required to publish accounts each year
Public Limited Company (Plc) - ANSWER --A company that sells shares publicly on the
stock exchange, usually in the aim to expand
Flotation - ANSWER --When a private limited company converts into a public limited
company and begins selling shares publicly on the stock exchange e.g. Snapchat in 2017 became
a Plc
,Advantages and Disadvantages of Being a Public Limited Company (Plc) - ANSWER --+
Shareholders keep their limited liability
+ Easier to raise finance
- Liable to a takeover if a competitor buys enough shares
- Business' accounts must be made public
Not-for-Profit Organisations - ANSWER --Organisations with a social, environmental or
ethical goal, with profits (surpluses) being reinvested into the business
Social Enterprises - ANSWER --Revenue-generating business with social objectives at the
core of their operations; profits are therefore reinvested to support this aim.
Mission Statement - ANSWER --Sets out the business's beliefs and values, used to create
corporate aims - the long term goals of the business
Corporate Objectives - ANSWER --Functional (departmental), team and individual
objectives
SMART - ANSWER --Specific, Measurable, Achievable, Realistic, Time-Bound
Satisficing - ANSWER --Making an acceptable level of profit to satisfy shareholder needs
Profit Maximization - ANSWER --A business objective that requires the firm to make the
largest amount of profit achievable to satisfy shareholders.
, Survival - ANSWER --A business objective that ensures the business keeps trading despite
challenges in the external environment
Growth - ANSWER --A business objective that aims to increase a firm's number of stores,
sales volume or product range
Social Objectives - ANSWER --A business objective that aims to better society through
initiatives such as sustainability or fair trade
Benefits of Settings Objectives - ANSWER --- Provide direction and support planning
- Allows firm to co-ordinate resources
Revenue Formula - ANSWER --Number of sales x Sales price
Unincorporated Association - ANSWER --A voluntary association of individuals that work
together to fulfil a social goal; however, managers have unlimited liability for the business'
debts.
Charities - ANSWER --Not-for-profit organisations established to support good causes,
which receive certain tax breaks and grants by following specific regulations e.g. Oxfam.
Franchising - ANSWER --Where a business gives someone the right to sell its products and
use its trademarks, in return for an upfront fee and a percentage of profits.
Advantages and Disadvantages of Franchising - ANSWER --+ Allows for expansion at a
lower upfront cost
+ Lower risk of diseconomies of scale
- Less control over franchisee
EXAM WITH CORRECT
DETAILED ANSWERS
B2C - ANSWER --When business sell directly to the consumer without a middle man e.g.
Spotify
B2B - ANSWER --When business sell directly to other businesses e.g. Hootsuite
Primary Sector - ANSWER --Extract or grow raw materials e.g. fishing mining and forestry
Goods - ANSWER --Tangible products that can be physically held
Services - ANSWER --Intangible activities that are performed by other people for money
Transformation Process - ANSWER --Converting inputs into outputs in order to add value
and to satisfy the needs and wants of other consumers and businesses
Secondary Sector - ANSWER --Manufacture goods using raw materials e.g. clothes,
smartphones
Tertiary Sector - ANSWER --Provides services and sells goods e.g. cinema, hotel
Costs - ANSWER --All of the expenses that a business incurs e.g. wages, electricity
,Average Unit Cost Formula - ANSWER --Total Costs / Output
Interest - ANSWER --A sum paid or charged for the saving or borrowing of money.
Interest = Interest Rate x Size of Loan
Sole Trader - ANSWER --A single person who is the exclusive owner of a business.
+ Get to be their own boss
+ Own 100% of the profit
- Unlimited liability
- More difficult to raise finance
Private Limited Company (Ltd) - ANSWER --Companies where ownership of shares is
restricted, with all shareholders having to agree before shares can be sold.
Advantages and Disadvantages of Being a Private Limited Company (Ltd) - ANSWER --+
Owners retain a lot of power over how the business is managed
+ Limited Liability
- High incorporation costs (transitioning from sole trader/ partnership)
- Legally required to publish accounts each year
Public Limited Company (Plc) - ANSWER --A company that sells shares publicly on the
stock exchange, usually in the aim to expand
Flotation - ANSWER --When a private limited company converts into a public limited
company and begins selling shares publicly on the stock exchange e.g. Snapchat in 2017 became
a Plc
,Advantages and Disadvantages of Being a Public Limited Company (Plc) - ANSWER --+
Shareholders keep their limited liability
+ Easier to raise finance
- Liable to a takeover if a competitor buys enough shares
- Business' accounts must be made public
Not-for-Profit Organisations - ANSWER --Organisations with a social, environmental or
ethical goal, with profits (surpluses) being reinvested into the business
Social Enterprises - ANSWER --Revenue-generating business with social objectives at the
core of their operations; profits are therefore reinvested to support this aim.
Mission Statement - ANSWER --Sets out the business's beliefs and values, used to create
corporate aims - the long term goals of the business
Corporate Objectives - ANSWER --Functional (departmental), team and individual
objectives
SMART - ANSWER --Specific, Measurable, Achievable, Realistic, Time-Bound
Satisficing - ANSWER --Making an acceptable level of profit to satisfy shareholder needs
Profit Maximization - ANSWER --A business objective that requires the firm to make the
largest amount of profit achievable to satisfy shareholders.
, Survival - ANSWER --A business objective that ensures the business keeps trading despite
challenges in the external environment
Growth - ANSWER --A business objective that aims to increase a firm's number of stores,
sales volume or product range
Social Objectives - ANSWER --A business objective that aims to better society through
initiatives such as sustainability or fair trade
Benefits of Settings Objectives - ANSWER --- Provide direction and support planning
- Allows firm to co-ordinate resources
Revenue Formula - ANSWER --Number of sales x Sales price
Unincorporated Association - ANSWER --A voluntary association of individuals that work
together to fulfil a social goal; however, managers have unlimited liability for the business'
debts.
Charities - ANSWER --Not-for-profit organisations established to support good causes,
which receive certain tax breaks and grants by following specific regulations e.g. Oxfam.
Franchising - ANSWER --Where a business gives someone the right to sell its products and
use its trademarks, in return for an upfront fee and a percentage of profits.
Advantages and Disadvantages of Franchising - ANSWER --+ Allows for expansion at a
lower upfront cost
+ Lower risk of diseconomies of scale
- Less control over franchisee
