BTEC Level 3 Business -
Unit 7 | Exam
1. What is business decision-making?
Answer:
Business decision-making is the process of choosing the best course of action among
alternatives to achieve organizational goals. It involves identifying problems,
analyzing data, evaluating options, and selecting the most appropriate solution.
2. State two types of decisions made in a business.
Answer:
Strategic decisions – Long-term decisions affecting the overall direction of the
business (e.g. expansion).
Operational decisions – Short-term, day-to-day decisions (e.g. staffing or stock
ordering).
3. Give two examples of quantitative data used in decision making.
Answer:
Financial statements such as profit and loss accounts.
Sales figures or market share statistics.
4. Explain the purpose of a SWOT analysis.
,Answer:
A SWOT analysis helps identify a business’s Strengths, Weaknesses, Opportunities,
and Threats. It enables managers to understand internal capabilities and external
challenges to inform better decision making.
5. Define “opportunity cost.”
Answer:
Opportunity cost is the value of the next best alternative that is forgone when a
decision is made.
Section B: Data Response / Application Questions
Case Study:
“TechSmart Ltd” is a small electronics company considering launching a new tablet
device. The estimated production cost is £180 per unit, and the selling price would
be £300 per unit. Fixed costs are £240,000 per year.
6. Calculate the break-even point in units.
Answer:
Break-even point = Fixed Costs ÷ (Selling Price – Variable Cost)
= £240,000 ÷ (£300 - £180)
= £240,000 ÷ £120
= 2,000 units
7. If TechSmart sells 2,400 units, what is the profit?
Answer:
Revenue = 2,400 × £300 = £720,000
Total cost = (2,400 × £180) + £240,000 = £432,000 + £240,000 = £672,000
Profit = £720,000 - £672,000 = £48,000
8. Suggest one financial and one non-financial factor TechSmart should consider
before launching the tablet.
, Answer:
Financial: Availability of capital or potential cash flow impact.
Non-financial: Brand reputation or staff expertise in technology development.
Section C: Extended Response (10–20 marks)
9. Discuss the importance of accurate financial forecasting in business decision-
making.
Model Answer:
Accurate financial forecasting allows businesses to estimate future revenue, costs,
and profits. It supports budgeting, resource allocation, and investor confidence.
Without reliable forecasts, businesses risk overestimating income or
underestimating expenses, which can lead to cash flow issues or poor investment
decisions.
For example, if TechSmart overestimates demand for its tablet, it may face unsold
stock and financial losses. Forecasting also helps businesses assess the impact of
external factors such as inflation or interest rate changes. Therefore, financial
forecasting is essential for both short-term operational and long-term strategic
decisions.
10. Evaluate the usefulness of decision-making models such as PESTLE and SWOT in
supporting business strategy.
Model Answer:
Both PESTLE and SWOT are valuable tools for analyzing the internal and external
environment.
PESTLE examines Political, Economic, Social, Technological, Legal, and Environmental
factors that may influence operations, helping managers anticipate external changes.
SWOT focuses on internal capabilities and external challenges, allowing firms to
match strengths to opportunities and minimize weaknesses and threats.
Unit 7 | Exam
1. What is business decision-making?
Answer:
Business decision-making is the process of choosing the best course of action among
alternatives to achieve organizational goals. It involves identifying problems,
analyzing data, evaluating options, and selecting the most appropriate solution.
2. State two types of decisions made in a business.
Answer:
Strategic decisions – Long-term decisions affecting the overall direction of the
business (e.g. expansion).
Operational decisions – Short-term, day-to-day decisions (e.g. staffing or stock
ordering).
3. Give two examples of quantitative data used in decision making.
Answer:
Financial statements such as profit and loss accounts.
Sales figures or market share statistics.
4. Explain the purpose of a SWOT analysis.
,Answer:
A SWOT analysis helps identify a business’s Strengths, Weaknesses, Opportunities,
and Threats. It enables managers to understand internal capabilities and external
challenges to inform better decision making.
5. Define “opportunity cost.”
Answer:
Opportunity cost is the value of the next best alternative that is forgone when a
decision is made.
Section B: Data Response / Application Questions
Case Study:
“TechSmart Ltd” is a small electronics company considering launching a new tablet
device. The estimated production cost is £180 per unit, and the selling price would
be £300 per unit. Fixed costs are £240,000 per year.
6. Calculate the break-even point in units.
Answer:
Break-even point = Fixed Costs ÷ (Selling Price – Variable Cost)
= £240,000 ÷ (£300 - £180)
= £240,000 ÷ £120
= 2,000 units
7. If TechSmart sells 2,400 units, what is the profit?
Answer:
Revenue = 2,400 × £300 = £720,000
Total cost = (2,400 × £180) + £240,000 = £432,000 + £240,000 = £672,000
Profit = £720,000 - £672,000 = £48,000
8. Suggest one financial and one non-financial factor TechSmart should consider
before launching the tablet.
, Answer:
Financial: Availability of capital or potential cash flow impact.
Non-financial: Brand reputation or staff expertise in technology development.
Section C: Extended Response (10–20 marks)
9. Discuss the importance of accurate financial forecasting in business decision-
making.
Model Answer:
Accurate financial forecasting allows businesses to estimate future revenue, costs,
and profits. It supports budgeting, resource allocation, and investor confidence.
Without reliable forecasts, businesses risk overestimating income or
underestimating expenses, which can lead to cash flow issues or poor investment
decisions.
For example, if TechSmart overestimates demand for its tablet, it may face unsold
stock and financial losses. Forecasting also helps businesses assess the impact of
external factors such as inflation or interest rate changes. Therefore, financial
forecasting is essential for both short-term operational and long-term strategic
decisions.
10. Evaluate the usefulness of decision-making models such as PESTLE and SWOT in
supporting business strategy.
Model Answer:
Both PESTLE and SWOT are valuable tools for analyzing the internal and external
environment.
PESTLE examines Political, Economic, Social, Technological, Legal, and Environmental
factors that may influence operations, helping managers anticipate external changes.
SWOT focuses on internal capabilities and external challenges, allowing firms to
match strengths to opportunities and minimize weaknesses and threats.
