Business Activity | OCR A-Level Business H436 (H436)

Business Activity

326 questions
22 subtopics
Component 01: Business activity, marketing and people
Component 01

Business Activity is examined in Component 01, Business activity, marketing and people.

It covers buying, selling and adding value, spotting an opportunity and starting a business, entrepreneurs and intrapreneurs, risk, reward and uncertainty, business objectives: profit, growth, survival and sustainability, SMART objectives and the usefulness of objectives, primary, secondary and tertiary sectors, sole traders and partnerships, private and public limited companies, liability, legal status and choosing an ownership structure, social enterprises and not-for-profit organisations, the stakeholders of a business, what each stakeholder wants from a business, conflicting stakeholder objectives, measuring the size of a business, organic growth and franchising, mergers, takeovers, integration and diversification, factors influencing the scale of operations, economies and diseconomies of scale, market power and overtrading, stages of the customer journey and customer experience and how it is measured.

Sample questions from Business Activity

Answer each one closed book first, then open the answer.

Buying, selling and adding value

Why must most businesses buy before they can sell?

Show the answer
Almost every business has to pay for materials, stock, labour or equipment before it has anything to sell, which is why a start-up needs finance in place well before its first sale.
Entrepreneurs and intrapreneurs

Why do entrepreneurs matter to the wider economy?

Show the answer
New firms create jobs and tax revenue, introduce competition and innovation that push established businesses to improve, and serve gaps that larger firms find too small to bother with.
SMART objectives and the usefulness of objectives

Why should an objective be time-based?

Show the answer
A deadline creates urgency, allows progress to be reviewed part way through, and makes it possible to say whether the objective was met or merely postponed.
Sole traders and partnerships

Why are professional firms such as solicitors and accountants often partnerships?

Show the answer
The partners themselves are the product, so the firm needs their skills and judgement rather than large capital, and the structure lets senior professionals share ownership, profits and clients.
Social enterprises and not-for-profit organisations

Give two legal forms a social enterprise in the UK can take.

Show the answer
It can be set up as a community interest company or as a company limited by guarantee.
What each stakeholder wants from a business

Why might a supplier prefer a customer that grows slowly to one that grows very quickly?

Show the answer
Rapid growth strains the supplier's capacity and usually comes with demands for lower prices and longer payment terms, whereas steady growth lets it plan and protects its margins.
Organic growth and franchising

Give two ways a business can win new customers without changing its product.

Show the answer
It can advertise and promote to reach people who do not know it, and it can enter new geographical markets or new sales channels such as selling online.
Factors influencing the scale of operations

Why is choosing too large a scale dangerous?

Show the answer
Capacity that is not used still carries its fixed costs, so unit costs rise, cash is tied up in assets earning nothing, and the business becomes very exposed to any fall in demand.

The 22 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
Buying, selling and adding value	Recall questions on business activity and the transformation process, the difference between goods and services, calculating added value, the ways a business adds value and why added value differs from profit.	13
Spotting an opportunity and starting a business	Recall questions on spotting a gap in the market, generating and testing business ideas, invention and innovation, customer needs and wants, the purpose of a business plan and the barriers facing a new start-up.	16
Entrepreneurs and intrapreneurs	Recall questions on the entrepreneur and the intrapreneur, the functions and qualities of an entrepreneur, risk-bearing and opportunity cost, how businesses encourage intrapreneurship and its main drawback.	14
Risk, reward and uncertainty	Recall questions on the difference between risk and uncertainty, the risks and rewards of a new venture, calculated risk, how market research and limited liability reduce risk, and why many start-ups fail early.	13
Business objectives: profit, growth, survival and sustainability	Recall questions on business objectives including profit, survival, growth, revenue, market share, cost control and sustainability, and why objectives change as a business matures or differ between rivals.	17
SMART objectives and the usefulness of objectives	Recall questions on SMART objectives, rewriting an aim as a SMART objective, the difference between an aim and an objective, how objectives coordinate and motivate, and their limitations.	14
Primary, secondary and tertiary sectors	Recall questions on the work of the primary, secondary and tertiary sectors, tracing a chain of production, deindustrialisation, how the sectors depend on one another and why primary producers face price swings.	12
Sole traders and partnerships	Recall questions on sole traders and partnerships, unlimited liability, the deed of partnership, limited liability partnerships, and the advantages, drawbacks and suitability of each structure.	15
Private and public limited companies	Recall questions on private and public limited companies, incorporation and the documents it requires, flotation on a stock exchange, the divorce of ownership and control, and the suitability of each structure.	15
Liability, legal status and choosing an ownership structure	Recall questions on limited liability, incorporated and unincorporated businesses, continuity of existence, personal guarantees, and the control, tax and privacy factors in choosing a legal structure.	13
Social enterprises and not-for-profit organisations	Recall questions on not-for-profit organisations and social enterprises, the triple bottom line, asset locks, co-operatives, community interest companies, and the tension between social mission and commercial survival.	15
The stakeholders of a business	Recall questions on internal and external stakeholders, the main stakeholder groups from shareholders and lenders to government and suppliers, stakeholder mapping, and why stakeholders are identified before major decisions.	14
What each stakeholder wants from a business	Recall questions on the objectives of shareholders, employees, managers, lenders, customers, investors, government, local communities and suppliers, and why understanding them improves a business's decisions.	14
Conflicting stakeholder objectives	Recall questions on stakeholder conflict over pay, relocation, supplier prices, growth, dividends and environmental costs, the ways a business manages conflicting objectives and how the balance of power decides them.	14
Measuring the size of a business	Recall questions on measuring business size by revenue, market share, market capitalisation, capital employed, employees, outlets and floor space, with calculations and the weaknesses of each measure.	17
Organic growth and franchising	Recall questions on organic growth and its methods, advantages and pace, franchising from the franchisor's and franchisee's side, calculating a franchise royalty, and when organic growth suits better than acquisition.	16
Mergers, takeovers, integration and diversification	Recall questions on mergers and takeovers, hostile takeovers, horizontal and vertical integration, diversification, synergy, why takeovers fail and why competition authorities may block a merger.	17
Factors influencing the scale of operations	Recall questions on how the product, cost structure, customers, suppliers, technology and infrastructure influence a business's scale of operations, and the dangers of operating at too large or too small a scale.	14
Economies and diseconomies of scale	Recall questions on internal and external economies of scale, the purchasing, technical, managerial, financial and marketing types, diseconomies of scale and their causes, minimum efficient scale and the long-run average cost curve.	17
Market power and overtrading	Recall questions on market power and how it affects suppliers, customers and new entrants, why competition authorities watch it, and the causes, warning signs, consequences and avoidance of overtrading.	14
Stages of the customer journey	Recall questions on the five stages of the customer journey from awareness to advocacy, customer retention, customer lifetime value, and why mapping the journey is useful even though it is rarely linear.	15
Customer experience and how it is measured	Recall questions on customer experience, speed and quality of service, staff product knowledge, after-sales service, personalisation, the Net Promoter Score and other ways of measuring customer experience.	17

Business Activity is 326 of the 2,383 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.