EXAM-STYLE QUESTIONS

Short answer questions

1 Define the term ‘adding value’. [2]
2 Define the term ‘entrepreneur’. [2]
3 Analyse one characteristic of successful entrepreneurs. [5]
4 Explain one barrier faced by entrepreneurs, apart from limited finance. [3]
5 Explain one example of opportunity cost for an individual planning to become an
entrepreneur. [3]
6 Analyse one way a country is likely to benefit from the expansion of its business
enterprises. [5]
7 Explain one role of an intrapreneur in an existing business. [3]
8 Analyse one benefit of a detailed business plan to an entrepreneur. [5]
9 Explain one limitation of business plans. [3]
10 Explain one reason why a new hairdressing business will need a factor of production
of your choice. [3]
11 Explain one need that a new business must fulfil if it is to be successful. [3]
12 Analyse one way a supermarket could add value to the food and other goods it buys
in. [5]
13 Explain one reason why there are so many new business enterprises providing
consumer services. [3]
14 Explain one way in which an entrepreneur could overcome the barrier of having no
savings to invest. [3]
15 Analyse one benefit of entrepreneurship to your country’s economy. [5]
Essay questions

1 a Analyse two ways a bakery could increase added value. [8]

b Evaluate whether the success of an entrepreneur depends more on luck rather
than personal qualities and skills. [12]
2 a Analyse two benefits to your country’s economy of an increase in the number of
new business start-ups by entrepreneurs. [8]
b Evaluate the barriers that business entrepreneurs experience in your country. [12]
Data response questions
1 Rivelino
‘We are a global business,’ states Rivelino, one of three partners in Total Fintech Solutions
(TFS). This is a fast-growing business. It responds to the changing needs of other businesses by
developing the latest software to facilitate payment systems for e-commerce transactions within
the global marketplace. TFS has four full-time computer programmers.
This is not Rivelino’s first business venture. He also started up a herbal tea business and
arranged boat tours for tourists. He is always looking out for business opportunities. TFS is his
biggest success by far. He discussed setting up a software development company with a school
 friend who was trained in software design and development. There have been opportunity costs.
Rivelino gave up time to start the new business venture and he used all his savings. His friend
had a marketing qualification and many business contacts. They were joined by another partner
who brought financial skills and further software design experience.
Rivelino encourages his employees to become intrapreneurs. He wants his employees to show
enterprise and initiative by developing their own business ideas. After much success in the
Caribbean market, he wants TFS to provide advanced customised software on a global scale.
Rivelino has vision, a drive to succeed and a love of software development. He recognises the
strength of competing businesses and the changes occurring in the business world, especially in
e-commerce.

a i Identify one quality of successful intrapreneurs. [1]

ii Explain the term ‘opportunity costs’. [3]
b Explain two qualities Rivelino has that make him a successful entrepreneur. [6]
c Analyse two ways the partners’ management skills contributed to the success of
TFS. [8]
d Evaluate the likely impact of a dynamic business environment on the future
success of TFS. [12]
2 Wesley’s laundry
Six months ago, Wesley was congratulated on his detailed business plan for a new laundry by
the bank manager. She agreed to lend him $30 000, half of the capital he needed for starting the
business. Wesley planned to offer a premium laundry service for local hotels and guesthouses.
His promise was ‘RETURNED NEXT DAY, or NOTHING TO PAY’.
There were few customers at first, as forecast in the business plan. But news of Wesley’s service
standards and next day promise soon spread. By the end of month three, the laundry was
working to full capacity. His business plan had not allowed for this level of demand. Wesley
needed more factors of production. He recruited three workers to help him.
It is now the end of month four. The bank manager has asked to see Wesley. He is shocked by
what he is told: ‘You have reached your overdraft limit. Cash coming into the business is not
enough to ensure survival. I want to see all of your accounting and sales records next week,’ she
tells him.
Wesley knows this will be a problem. He has been so busy that his accounting records are three
weeks out of date. Customers have not paid during this period. No bills have been sent out.
Some customers are claiming that they should not pay. Their laundry has taken three days to be
returned. The workforce is another problem. The workers often argue because there are some
jobs no one wants to do, such as handling chemicals and cleaning the boiling tanks at the end of
each day. Wesley has not clearly allocated jobs and the workers cannot decide themselves.
Wesley sat down with all the company’s paperwork and wondered why he had not gained some
experience in computer-based accounting. His own business skills were mainly in marketing.
No wonder the sales of the laundry were doing so well.

a i Identify one factor of production. [1]

ii Explain the term ‘customers’. [3]
b Explain two problems that Wesley now faces in managing his business. [6]
c Analyse two reasons why Wesley would benefit from understanding the concept
of opportunity cost. [8]
d Evaluate the benefits and limitations to Wesley of the detailed business plan. [12]
SELF-EVALUATION CHECKLIST

After studying this chapter, complete a table like this:

You should be able to: Needs more Almost there Ready to
work move on
Understand that business activity uses resources to
satisfy customers’ needs
Understand that businesses aim to add value to the
resources they buy in
Understand that entrepreneurship is about taking risks
to set up new businesses
Analyse the characteristics of successful entrepreneurs
and intrapreneurs
Analyse the benefits to an economy from
entrepreneurship
Understand the challenges and barriers faced by
entrepreneurs, including a dynamic business
environment
Analyse the main elements, benefits and limitations of
business plans