Pearson Edexcel A Level 3 GCE (9BS0/02) Business Advanced Paper 2: Business activities, decisions and strategy Exam Questions and ANSWERs

1. What is the primary objective of a company's marketing mix? A) To maximize production efficiency B) To manipulate consumer demand unfairly C) To achieve its marketing objectives in the target market D) To reduce the cost of market research ANSWER: C) To achieve its marketing objectives in the target market 2. A business is considering a merger. Which of the following is most likely to be a financial objective for this decision? A) To improve staff morale B) To achieve economies of scale C) To increase market share D) To enhance corporate social responsibility (CSR) ANSWER: B) To achieve economies of scale 3. In the context of decision trees, what does the term "expected value" represent? A) The total cost of the decision B) The actual profit that will be earned C) The weighted average of all possible outcomes D) The value of the most successful outcome ANSWER: C) The weighted average of all possible outcomes 4. A business uses job production. Which of the following is a key characteristic of this method? A) High level of standardization B) Low unit costs for high volumes C) Products are made to specific customer orders D) Continuous flow of production ANSWER: C) Products are made to specific customer orders 5. What is a key advantage of a flat organisational structure? A) Clear and distinct lines of promotion B) Improved communication and quicker decision-making C) Greater managerial control over subordinates D) Reduced span of control for managers ANSWER: B) Improved communication and quicker decision-making 6. The Boston Consulting Group (BCG) matrix classifies products based on: A) Price and quality B) Market share and market growth C) Cash flow and profitability D) Brand loyalty and product features ANSWER: B) Market share and market growth 7. A 'Dog' in the BCG matrix typically requires: A) Heavy investment to build market share B) A harvesting strategy to generate cash C) A divestment strategy to free up resources D) A holding strategy to maintain position ANSWER: C) A divestment strategy to free up resources 8. Which of the following is a potential benefit of a company pursuing a strategy of diversification? A) Reduced risk by spreading it across different markets B) Guaranteed success in all new markets C) Immediate economies of scale D) Simplified management structure ANSWER: A) Reduced risk by spreading it across different markets 9. What is the main purpose of a cash flow forecast? A) To predict future profitability B) To identify periods of potential cash shortages or surpluses C) To calculate the break-even level of output D) To set marketing objectives ANSWER: B) To identify periods of potential cash shortages or surpluses 10. A business has a gearing ratio of 65%. This indicates: A) The business is lowly geared and has low financial risk B) The business is highly geared and has high financial risk C) The business has a high proportion of equity finance D) The business is very profitable ANSWER: B) The business is highly geared and has high financial risk 11. Ansoff's Matrix is used to analyse: A) Internal organisational culture B) Strategic direction and growth options C) Operational efficiency D) Financial performance ratios ANSWER: B) Strategic direction and growth options 12. Market development in Ansoff's Matrix involves: A) Selling existing products to existing markets B) Selling new products to existing markets C) Selling existing products to new markets D) Selling new products to new markets ANSWER: C) Selling existing products to new markets 13. Which leadership style involves managers making decisions without consulting subordinates? A) Paternalistic B) Democratic C) Autocratic D) Laissez-faire ANSWER: C) Autocratic 14. A business uses Just-in-Time (JIT) production. What is a key requirement for its successful implementation? A) High levels of buffer stock B) Reliable suppliers and efficient logistics C) Large warehouse space for components D) Long lead times from suppliers ANSWER: B) Reliable suppliers and efficient logistics 15. Porter's Five Forces model analyses: A) The internal strengths of a business B) The attractiveness and competitive intensity of an industry C) The financial structure of a company D) The demographic factors affecting a market ANSWER: B) The attractiveness and competitive intensity of an industry 16. The power of suppliers is likely to be HIGH when: A) There are many alternative suppliers B) The supplied product is a commodity C) The supplier's product is unique or highly differentiated D) The buying industry is the supplier's main customer ANSWER: C) The supplier's product is unique or highly differentiated 17. What is the primary aim of quality control? A) To ensure quality is built into the production process B) To inspect products at the end of the production process C) To empower all employees to take responsibility for quality D) To reduce the cost of raw materials ANSWER: B) To inspect products at the end of the production process 18. A business calculates its net profit margin to be 8%. This means: A) For every £1 of sales, 8p is profit after all costs are deducted B) For every £1 of sales, 8p is profit before interest and tax C) The business has an 8% return on capital employed D) The business costs are 92% of its revenue ANSWER: A) For every £1 of sales, 8p is profit after all costs are deducted 19. Which of the following is a limitation of using SWOT analysis? A) It is too complex and expensive to conduct B) It can be subjective and based on opinions rather than data C) It only considers external factors D) It ignores strategic options ANSWER: B) It can be subjective and based on opinions rather than data 20. A business is considering ethical objectives. Which of the following is an example of an ethical objective? A) Maximising shareholder dividends B) Sourcing all raw materials from sustainable suppliers C) Increasing market share by 10% D) Achieving a 15% return on capital employed ANSWER: B) Sourcing all raw materials from sustainable suppliers 21. What does a high asset turnover ratio suggest about a business? A) It is very profitable B) It is using its assets efficiently to generate sales C) It has a high level of debt D) Its products have a high profit margin ANSWER: B) It is using its assets efficiently to generate sales 22. A business uses penetration pricing. What is the most likely objective? A) To skim the market and maximise short-term profit B) To establish a high-quality brand image C) To deter entry from potential competitors D) To cover high initial development costs quickly ANSWER: C) To deter entry from potential competitors 23. In Maslow's hierarchy, which need is at the base of the pyramid? A) Self-actualisation B) Esteem needs C) Safety needs D) Physiological needs ANSWER: D) Physiological needs 24. Which financial statement shows a company's assets, liabilities, and equity at a specific point in time? A) Income Statement B) Cash Flow Statement C) Statement of Retained Earnings D) Statement of Financial Position (Balance Sheet) ANSWER: D) Statement of Financial Position (Balance Sheet)