Sample Question Paper

Level 4 Dynamic Business Environments

Total marks: 100

Examination duration: 2h

Section A – 20 marks
(20 multiple choice questions x 1 mark)

Select one correct answer from the four options on each of the following 20 questions

1. Which of the following can be transformed by a business from an input to an output?

A. Information

B. Finance

C. Services

D. Ideas

2. A concert venue has a seating capacity of 8000 and has estimated the level of demand at different ticket
prices. Which of the following options should the venue take to achieve the equilibrium price?
A. Price £20 Quantity demanded 6000 Quantity supplied 8000

B. Price £18 Quantity demanded 7000 Quantity supplied 8000

C. Price £16 Quantity demanded 8000 Quantity supplied 8000

D. Price £14 Quantity demanded 9000 Quantity supplied 8000

3. Which of the following is classified as merit goods?

A. Junk food

B. Vaccinations

C. Tobacco

D. Alcohol

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 4. Which of the following is a consequence of free trade?

A. Lower government spending

B. Technology transfer

C. Foreign investment

D. Increased job outsourcing

5. Which of the following trade blocs matches the description below?

Known as the Common Market of the South, its official languages are Portuguese and Spanish. Its main
objective is to bring about the free movement of goods, capital, services and people among its member
states.
A. NAFTA

B. European Union

C. Mercosur

D. ASEAN

6. Attitudes towards tobacco advertising are changing around the world.

This can be explained as an influence of which of the following?
A. The technological environment

B. The social environment

C. The legal environment

D. The economic environment

7. Which of the following industries comes closest to perfect competition?

A. Motor vehicle manufacturing

B. Fast food

C. Wheat farming

D. Computer software

8. All monopolies exist because of:

A. Firms’ desire to maximise profits

B. Failure of antitrust laws

C. Natural selection

D. Barriers to entry

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 9. Which of the following best describes an oligopoly?

A. Many monopolistically competitive firms

B. A few firms sharing monopoly power

C. A former monopoly that has been broken up by the government

D. A government-granted franchise or monopoly

10. A PESTLE analysis is conducted on which of the following of an organisation’s environments?

A. Internal environment

B. Market environment

C. Historical environment

D. Macro environment

11. The capability of an organisation which helps it gain an advantage over its competitors is classified as

A. Managerial competency

B. Core competency

C. Organisational competency

D. Workforce competency

12. Michael Porter’s generic strategies are:

A. Low price, differentiation, production focus, customer focus

B. Cost leadership, differentiation, cost focus, focus differentiation

C. Price leadership, differentiation, customer focus, positioning

D. Low cost, customer differentiation, focus differentiation

13. Which of the following analytical tools draws attention to the cash flow and investment characteristics of a
firm and indicates how financial resources can best be used over the long-term?
A. SWOT analysis

B. Political analysis

C. Portfolio analysis

D. Competitive analysis

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 14. An outline of the fundamental purpose of an organisation is called its:

A. Mission

B. Values

C. Policy

D. Vision

15. Johnson’s Cultural Web (1987) consists of the paradigm and which of the following six determinants of
culture?
A. Routines and rituals, stories, symbols, power structures, organisational structures and control systems
Routines and rituals, stories, symbols, power and interest, matrix structures and financial control
B.
systems
Ritualistic behaviour, organisational history, trophies, power structures, organisational structures and
C.
management styles
Routines and rituals, stories, trophies, power and interest, decentralised structures and management
D.
styles

16. Which of the following features are the primary activities in Porter’s Value Chain (1985) framework?

A. Inbound Logistics – Operations – Outbound Logistics – Marketing and Sales – Service

B. Procurement – Operations – Outbound Logistics – Marketing and Sales – Service

C. Inbound Logistics – Operations – Distribution – Marketing and Sales – Service

D. Procurement – Operations – Distribution – Marketing and Sales – Service

17. Which of the following does the Boston Consulting Group Growth Matrix essentially support?

A. A balanced portfolio of products

B. Product specialisation

C. A concentration on question marks

D. Process specialisation

18. The VRIN framework can be used to identify:

A. A firm’s resources and external opportunities

B. The organisational structure of multinational firms

C. A firm’s technical resources

D. A firm’s core competencies

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 19. Which of the following best describes ‘substitute’ in Michael Porter’s Five Forces (1980) framework?

A. Something else consumers would rather spend their money on

B. An alternative that performs the same function for the consumer

C. A rival firm offering the same products

D. An alternative manufacturing process

20. Ansoff’s Matrix (1957) is a strategic marketing tool used to plan for:

A. Business growth

B. Product positioning

C. New product development

D. Market segmentation

Section B – 30 marks
(Short answer questions: 3 x 10 marks each = 30 marks total)

Answer all questions

21 (10 marks)
Discuss the need for government intervention in the provision of merit, demerit and public goods.

22 (10 marks)
Discuss the advantages and disadvantages of relying on existing external sources of information
(e.g. government statistics) when undertaking business planning and decision-making.

23 (10 marks)
A SWOT analysis is a commonly used tool when undertaking business planning.
a. Explain how understanding the organisation’s strengths and weaknesses can contribute to effective
planning. (5 marks)
b. Explain how the organisation’s planning might respond to opportunities and threats. (5 marks)

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 Section C
(Essay questions: 2 out of 3 x 25 marks each = 50 marks total)

Answer TWO questions only

24 (25 marks)
Tanzania is a developing country with a flourishing tourist industry. It is not technologically advanced and it
imports more goods than it exports. The government would like to reverse the country’s negative balance of
trade by developing various industries, thereby taking Tanzania from a net importer to a net exporter. The
government decides to pursue a policy of trade protectionism in order to help bring about the required
changes in the country’s economy.
Required: Analyse the advantages and disadvantages of the various trade protection options available to the
government of Tanzania.

25 (25 marks)
Stam Homes is a privately-owned, family-run company operating four residential care homes for the elderly.
A residential care home is a building where older people live and receive care. The residents may pay the
fees themselves or they may be paid by relatives or by the local government authority. Two of the Stam
Homes are located in Robarno, a large coastal town which is a popular destination for people who are
retiring. The other two smaller homes are situated in two nearby villages. Unemployment rates in Robarno
are quite low. The town has a college of further education that caters for many of the town’s school leavers.
Stam Homes employs around 100 staff, many of whom work part-time, and a small team of administrators
largely drawn from the Stam family. Stam Homes all have modern facilities and their staff are highly trained
and dedicated. Stam Homes has always been a profitable business, even though its care homes normally
have a small amount of spare capacity. Stam Homes has approximately 20% market share in that area of the
country. The remainder of the market is shared by a small number of local government-funded care homes
and some other small private businesses. Due to rising costs, several privately-owned care homes in the
region have recently closed. The owners of some others are considering closing or selling them, citing the
difficulty of recruiting suitably trained staff as a determining factor. Stam Homes is aware that these trends
are occurring nationally across the country.
A national shift in the demographics of the population and the increased social movement of families has
resulted in an increasing demand for care homes for the elderly. Stam Homes undertakes limited advertising,
relying more on word-of-mouth recommendations and referrals from the local hospital and doctors to
obtain its customers. The prices charged by the local government-run care homes are lower than those
charged by Stam Homes. Although Stam Homes offers only full-time care for its residents, there is a growing
need for the market to offer ‘relief care’ packages. This is where elderly people who normally live at home
could use any of the four care homes’ facilities for short periods of time (normally one week), to enable their
normal carers (usually family members) to take holidays or rest periods. Several Stam Homes’ residents are
often referred to local hospitals by their doctors for treatments and therapies. Many of Stam Homes’ staff are
fully qualified nurses and these treatments and therapies could be undertaken by the staff of Stam Homes in
each of its care homes. However, if Stam Homes were to offer these additional facilities within its care homes,
it will need investment in training and new facilities.
Required:
a. Describe two potential advantages of using Ansoff’s Growth Model in developing future strategy and
aiding decision-making. (6 marks)
b. Using the information given in the above case study, analyse how the owners of Stam Homes can use
Ansoff’s Growth Model to inform its future strategy and decision-making. (19 marks)

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26 (25 marks)
Cundy Leisure Services (CLS) is responsible for the delivery of sport and leisure facilities on behalf of Cundy
Town Council.
CLS operates the following main facilities:
Cundy Leisure Centre: a large indoor sporting arena with shower, changing and catering facilities; it can
accommodate up to 1000 spectators.
Cundy Splashpoint Pool: the facilities include 2 heated pools, a diving pool, and a baby/toddler pool.
Silva Leisure Centre: this is a small dual-use gymnasium style facility which is part of The Silva Secondary
School for Girls.
Mikus Field Centre: an outdoor facility consisting of a number of grass pitches with associated
changing rooms.
The CLS vision is ‘More People, More Active, More Often’.
The CLS mission is to provide a clean, safe and happy leisure experience for all visitors to Cundy Leisure sites
for the benefit of their health and social wellbeing.
Cundy currently has 105,900 residents. CLS has 10,000 members who use all four facilities. The breakdown of
these members is as follows:
Male 47%
Female 53%

Member ages:
0-15 years 20%
16-24 years 13%
25-34 years 21%
35-44 years 20%
45-54 years 16%
55 years plus 10%

CLS is a not-for-profit element of the wider Cundy Town Council. The eleven Leisure Service officers are
serving members of the council and numerically reflect the current state of the wider council’s political
parties. These officers are responsible for appointing the full-time management team to oversee and develop
the business. CLS employs over 250 staff, which equates to over 140 full-time employees.
Overall expenditure across the facilities increased last year by 50% from £3.44 million to £5.15 million. The
biggest areas of expenditure last year were: Staffing £2.8 million, Utilities £470,000.
Required:
CLS officers decide to conduct a PESTLE analysis of the key factors which will impact on the service over the
next few years.
Using the information given above, and making any other assumptions as necessary, discuss the findings and
strategic implications of this analysis.

End of question paper

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