Edexcel GCE Business Unit 1 – Topic 1(1) Spotting a Business
Opportunity
Questions
1. Which of the following best describes the type of market research that Joseph Mait carried out?
( )Desk research
( )Secondary research
( )Primary research
( )Government research
( )Observation
2. Which ONE of the following competitive advantages is Dave likely to enjoy have over competitors
such as B&Q?
( )Brand name
( )Customer service
( )Lowest prices
( )Value for money
( )Convenience
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3. Which one of the following market research options would NOT be suitable for Ravi to use?
( )Buying a market research report containing
details of the music market in London
( )Using information about peoples' hobbies and
interests from National Statisitics
( )Sending a questionnaire to previous customers
whose details she has on her database
( )Asking customers who visit her shop to fill in a short
questionnaire
4. Which THREE of the following statements are the most important in helping to spot a new business
opportunity??
[ ]Having a new product idea
[ ]Charging a low price
[ ]Knowing your potential customers
[ ]Identifying the possible competitors
[ ]Having family employees
[ ]Having shares sold on the stock market
5. Which TWO of the following methods of market research would be classed as sources of secondary
data?
[ ]The Internet
[ ]Government statistical reports
[ ]Customer questionnaires
[ ]Observation
[ ]Focus group looking at a new product
[ ]Internet survey of web site visitors
6. Which THREE of the following would be the most important actions for an entrepreneur setting up
an online luxury fashion store?
[ ]Protecting the business idea with a patent
[ ]Effective use of online advertising to drive web site
visitors
[ ]Offering the lowest prices through frequent
discounting
[ ]A professional and effective web site design
[ ]Agreeing contracts with target supplies and brands
[ ]Secondary research into the overall UK retail
sector
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7. Which TWO of these statements are most applicable to a service business rather than one which
produces goods?
[ ]The main operating cost is that of the people
employed
[ ]Not commonly provided by franchises
[ ]Requires a factory or other production location
[ ]Product is delivered at point in time
[ ]Important to minimise the value of stocks held in
the warehouse
[ ]Banks are more likely to provide long-term bank
loans
8. Which TWO of the following statements are examples of qualitative market research data?
[ ]85% of the people asked have access to the
Internet
[ ]46% of survey respondents rate their last holiday as
providing good value for money
[ ]19% of the UK population is aged between 16 and
25
[ ]Of those asked, most people felt that young drivers
should pay more for car insurance
[ ]Most survey respondents want better information
from their local councils
9. Which TWO of the following might be a source of added value for a cleaning business?
[ ]Cash flows from customers who pay their bills
[ ]Buying cleaning materials from several suppliers
[ ]Exceeding cleaning quality targets for a key
customer
[ ]Employing better skilled and more reliable staff
[ ]Offering pricing discounts for repeat business
10. Which TWO of these would be reasons why a retailer would want to open its own stores rather
than grow using franchises?
[ ]To keep full control over the retail brand and
store format
[ ]To increase the value of franchise fees and
royalties
[ ]To reduce the amount invested in opening new
stores
[ ]To maximise the profits earned from each store
[ ]To encourage shop managers to become
entrepreneurial
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11. Which TWO of these statements are common purposes of a business?
[ ]To ensure that suppliers are able to avoid
insolvency
[ ]To maximise tax revenues for the government
[ ]To provide employment for young people
[ ]To earn profits in return for taking the risk of
investment
[ ]To provide an income from which someone can
live
12. An entrepreneur wants to launch a new chocolate bar. Which TWO of these would be the most
suitable dimensions for a market mapping exercise for the product?
[ ]Low-tech v High-tech
[ ]Low-price v high price
[ ]Young consumers v older consumers
[ ]Necessity v luxury
[ ]Retail v online
13. Mike Smith has just bought the right to operate a Subway sandwich shop. What does this make
Mike?
( )A franchisor
( )A franchisee
( )A distribution agent
( )An employee
14. Which of the following statements about quantitative data is true?
( )It is data that can must be collected using
primary research
( )It is data related to facts
( )It is data that describes opinions
( )It is data relating to product quality
15. Identify the reason why adding value is so important for a small business
( )It reduces the need for primary market
research
( )It allows the business to raise bank finance
( )Adding value increases the output of the
business
( )Customers recognise and will pay for their needs being
met
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16. Which statement about a franchisor is true?
( )A franchisor owns the right to sell the
business format
( )A franchisor is a partnership
( )A franchisor cannot trademark its business
format
( )A franchisor pays a royalty to a franchisee
17. What is a USP?
( )Unique selling point
( )Unsuccessful sales promotion
( )Untried sales proposition
( )Unusual selling price
18. Which ONE of these is an advantage of starting up as an established franchise?
( )It is not your own business
( )A franchise is often a tried and tested format
( )No need for external advice or training
( )Very small (if any) investment required
19. A DISADVANTAGE of setting up as a franchise compared with a standalone business is...
( )The franchise only lasts up to 10 years
( )A franchise has a higher risk of failure
( )The franchisor levies charges on the
franchisee
( )Customers are more likely to trust a franchise
20. Which ONE of these statements about adding value is INCORRECT? Adding value enables a
business to...
( )Often charge a higher price
( )Achieve a lower profit margin than the
competition
( )Protect a business by building customer loyalty
( )Focus better on a target market segment
21. Which one of the following statements describes a disadvantage of primary research?
( )It is cheaper than carrying out secondary
research
( )Competitors will not have the information
( )The information collected is up-to-date
( )The information often takes time to collect and analyse
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22. A market map is best defined as:
( )Two axes that plot the relationship between three
features of a branded product
( )A method of plotting the geographical
segmentation of a product
( )A detailed drawing of the product range in a
market
( )A grid that measures two different aspects of
products within a market
23. Market mapping is most likely to benefit a business because it...
( )Allows a business to identify any changes in
demand
( )Can help to identify possible cash flow problems
before they occur
( )Helps identify if a product has a clear position in
the eyes of customers
( )Identifies how much value is being added during
production
24. Which of the following statements best describes market segmentation?
( )Breaking a market into small sections according
to the products available
( )Separating a market into smaller sections based
on customer needs and wants
( )Targeting the whole of a market to sell on mass
( )Peeling away sections to find the main
purchasers of a particular product
25. The iPod is the most successful MP3 player on the market, despite heavy competition. Which one
of the following is the most important competitive advantage for Apple's product?
( )Customer service
( )Value for money
( )Brand image and quality
( )Product availability
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Answers
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Primary research (Asking people to complete a survey is one method of primary
research)
Customer service (The quality of the personal customer service and product knowledge
is likely to be an advantage for Dave)
Using information about peoples' hobbies and interests from National Statistics (Asking
people to complete a survey is one method of primary research)
Having a new product idea
Knowing your potential customers
Identifying the possible competitors
(Knowing your customers, your competitors in addition to having a good product idea
are all important factors in a successful business)
The Internet
Government statistical reports
(Secondary research data is research or information that has been prepared for a
different purpose)
Effective use of online advertising to drive web site visitors
A professional and effective web site design
Agreeing contracts with target suppliers and brands
(All three of those would help to maximise the performance of the online store)
The main operating cost is that of the people employed
Product is delivered at point in time
(People are the main operating cost of nearly every service business and a service is
generally delivered at a moment in time - it cannot be stored!)
Of those asked, most people felt that young drivers should pay more for car insurance
Most survey respondents want better information from their local councils
(Those two statements involve opinions rather than hard data)
Exceeding cleaning quality targets for a key customer
Employing better skilled and more reliable staff
(Both those two are likely to result in a higher value of the service provided by the
business)
To keep full control over the retail brand and store format
To maximise the profits earned from each store
(Franchises result in some loss of control and less profit compared with opening your
own stores - but the investment required is much less if a retailer goes down the
franchise route)
To earn profits in return for taking the risk of investment
To provide an income from which someone can live
(most businesses are set up with the purpose of earning profits and to provide returns
(including income) for the entrepreneur)
Low-price v high price
Young consumers v older consumers
(Mapping using the price point of the bar (low-high) and the age of the target consumer
(young -old) would really help measure the positioning of the product versus the
existing competition)
A franchisee (A franchisee is someone who buys the right to operate a business using
an existing business name)
It is data related to facts (Quantitative research is concerned with data)
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Customers recognise and will pay for their needs being met (adding value occurs when
a business is able to persuade customers to pay a premium for their needs being met)
A franchisor owns the right to sell the business format (The franchisor has the right to
sell the business format for others (franchisees) to operate)
Unique selling point (A USP is a characteristic that makes a product (goods or
services) unique in the eyes of customers (e.g. quality, features, design, branding))
A franchise is often a tried and tested format (A established is likely to be already
successful in other locations and the format will be well-proven)
The franchisor levies charges on the franchisee (A significant chunk of the franchises
revenue and profits is taken by the franchisor through a range of different charges)
Achieve a lower profit margin than the competition (Adding value should enable a
business to improve its profit margin over time)
The information often takes time to collect and analyse (Primary research is often timeconsuming to obtain and then produce the required analysis)
A grid that measures two different aspects of products within a market (A market map
gives an overview of products in a market based on two dimensions that are important
to customers (e.g. price and quality))
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Helps identify if a product has a clear position in the eyes of customers (A market map
helps assess how clearly a product is positioned based on factors that customers
consider important)
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Separating a market into smaller sections based on customer needs and wants (Market
segmentation is about identifying groups of consumers who have similar needs and
wants)
Brand image and quality (The image that Apple has created for the iPod has been the
key to its success)
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