Please check the examination details below before entering your candidate information

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Centre Number Candidate Number

Pearson Edexcel International GCSE

Monday 13 November 2023
Morning (Time: 1 hour 30
minutes) Paper
referenc
e
4BS1/01
Business 🟐 🟐

PAPER 1: Investigating small businesses

You do not need any other materials.

Total Marks

Instructions

• Use black ink or ball-point pen.

• Fill in the boxes at the top of this page with your
centre number and candidate number.
•
• Answer
name, all
Answer the questions in the spaces
provided – there may be more space
questions.
than you need.

Information

• The total mark for this paper is 80.

• The marks for each question are shown in
– use this as a guide as to how much time to spend on each
• question. Calculators may be used.
brackets
Advice
• Read each question carefully before you start to answer it.
• Try to answer every
• Check your answers if you have time at the end.
question.

Turn over

P74633A
©2023 Pearson
Education Ltd.
Z:1/1/1/1/1/
 FORMULAE FOR INTERNATIONAL GCSE BUSINESS

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Gross profit margin:

Gross profit = revenue – cost of sales

gross profit
Gross profit margin = 100
revenue

Operating profit margin:

Operating profit = gross profit – other operating expenses

operating profit
Operating profit margin = 100
revenue

Markup:

Markup = profit per item100

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cost per item

Return on capital employed (ROCE):

ROCE = operating profit 100

capital employed

Current
ratio:
current
Current ratio assets current
=
liabilities

Acid test
ratio:
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current assets
Acid test ratio inventory current
= liabilities
 Answer ALL questions. Write your answers in the spaces provided.
Some questions must be answered with a cross in a box . If you
change your mind about an answer, put a line through the box and
then mark your new answer with a cross .
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1 As We Grow (AWG) is a clothing business in Iceland. The social

objective of the business is to use natural materials, such as wool,
and produce environmentally friendly products. It aims to design clothes
that will last a long time, to encourage families to buy fewer clothes and
reduce waste in society.

AWG’s increasing product range now includes jumpers, dresses, shirts

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and baby clothes. These are produced in small workshops that employ
family and friends. Waste is kept to a minimum and any leftover material
is used to make scarves and hats. The business has one store in Iceland. It
uses its website to advertise and sell its clothing online to customers in
other countries. The business has received the Icelandic Design Award
for its contribution to the environment.
(a) (i) Which one of the following is shown on the statement of

financial position? Select one answer.

(1)

A Sales
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B Cost of sales
C Current assets
D Gross profit

(ii) Which one of the following is an element of the

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marketing mix? Select one answer.

(1)

A Price
B Partnership
C Production
D Profit
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A business has fixed costs of £6 000 a month. Variable costs are £5
per unit and 8,000 units are made each month.

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(iii) Which one of the following is the total
monthly cost? Select one answer.
(1)

A £ 6 005
B £14 000
C £30 000
D £46 000

(iv) Which one of the following job roles is most likely to be

associated with capital-intensive production?
Select one answer.

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(1)

A Hairdresser
B Car assembly worker
C Soft fruit picker
D Chef

(v) Which one of the following is an internal source of

finance? Select one answer.
(1)

A Overdraft
B Venture capital
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C Retained profit
D Crowdfunding
 The currency of Iceland is the krona (ISK).

AWG’s weekly fixed costs are 440 000 ISK and the variable cost per
jumper is 2 500 ISK. Each jumper is sold for 8 000 ISK.
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(vi) Which one of the following is the weekly break-even

point? Select one answer.
(1)

A 8
B 55
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C 80
D 176

(b) Define the term profit.

(1)

The amount remaining when total costs are deducted from total revenue
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(c) Define the term span of control.

(1)
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The number of workers controlled by one manager

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(d) State one likely variable cost for AWG.

(1)
AWG will have to pay for the cost of wool used to make the jumpers
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 AWG sells a woman’s jumper on its international website for $329. AWG had
a promotional sale and offered a discount of 25% on the price of
jumpers.

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(e) Calculate, to two decimal places, the new price of the jumper in the
promotional sale. You are advised to show your working. (2)

329 x 0.25 = 82.25

329 - 82.25 = 246.75

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$........................
(3)
(f) Explain one benefit to a business that operates as a sole trader.

• Independence of the owner which means they can make decision without
reference to anyone else eliminating any conflicts or disagreements within the business
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 (g) Analyse the advantages to AWG of using e-commerce to sell its
products. (6)

AWG sells its shirts on-line to customers based in other countries •

AWG uses a website to advertise its baby clothes to attract new customers •
This helps create recognition of the business internationally allowing AWG to increase
its
sales revenue.
• This helps to reduce the costs for AWG as selling online is less expensive than opening
stores in other countries.
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2 (a) State one non-financial method AWG may use to motivate its
employees. (1)

The business could use job rotation so employees make not only jumpers but shirts as

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(b) State one task of an AWG employee working in the human resources department.
(1)
The AWG employee working in the human resources department may be
responsible for
arranging the training of new employees to use the sewing machines
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(c) Explain one benefit of globalisation to a small business.

(3)

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A small business can reach a larger audience of customers (1)
because it can sell its products into new countries (1)
leading to increased revenue and profitability for the business
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 (d) Explain one method of below-the-line promotion a business may
use to retain its customers.
(3)

Existing customers may be offered sales promotions/discounts (1)

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with the aim of enticing customers to buy at a lower price (1)

and therefore encourage repeat sales by its customers
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(e) Explain one benefit to a business of using market segmentation to

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target its customers.

(3)
To identify customers with similar characteristics (1)
in order to develop a product or service which meets those customers' needs (1)
leading to an increase in sales and consumer loyalty
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 If AWG expands its business in Iceland it may need to seek additional
finance. It is considering two options:

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Option 1: use venture capital to open new stores
Option 2: start offering franchises.
(f) Justify which one of these two options AWG should choose.
(9)

Option 1 – A venture capitalist may provide the funds to build the new stores to sell the
jumpers
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Option 1 – As well as providing the funds the venture capitalist may also have knowledge
of
the needs of Icelandic customers
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However, the venture capitalist may want to take some control of the business and
interfere
with the decision making and objectives of the business
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3 (a) Define the term job
production. (1)

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Method of production that involves all factors to complete one unit of output at a time
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(b) Outline why AWG can be classified as operating in the secondary sector.
(2)
AWG take raw materials (1) to convert them into jumpers and dresses (1)
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In 2022, AWG borrowed 70 000 ISK from its bank. At the end of the year it
paid back the loan with 6.5% interest.
(c) Calculate the total amount, including interest, AWG would have paid to
the bank. You are advised to show your working.
(2)

70 000 x 0.065 = 4 550 (1) 70 000 + 4 550 = 74 550 (1)

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...............ISK
 AWG is an importer and an exporter. It imports materials to make its
jumpers and exports its clothing to international customers.
(d) Analyse the impact on AWG of a depreciation of the ISK.
(6)
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Exchange rates will affect the price that AWG will pay for importing the wool and other
materials they buy to make the clothing
• The cost of the jumpers bought by customers in other countries will be impacted by a
change in the exchange rate AO3
• A depreciating krona could lead to an increase in the cost of material purchased by AWG
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and
may result in an increase in the price of the clothing
• A depreciating krona may lead to an increase in demand from overseas customers who
benefit
from the change in the exchange rate
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 AWG is planning to launch a new range of clothing aimed at teenagers
and younger adults. It is considering two pricing methods:

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Option 1: competition pricing
Option 2: cost plus pricing.
(e) Justify which one of these two options AWG should choose.
(9)

Option 1 – Competition pricing would see AWG selling clothing at similar prices to other
clothing retailers
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Option 1 – This may increase the chance of selling the clothes as younger customers are
likely
to compare the prices of clothing especially if their income is low
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Option 1 – However, as AWG use sustainable materials in its jumpers, the manufacturing
cost
of the clothing may be high, which means selling at a competitive price may not be
feasible
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4 AWG sells men’s jumpers for 34 000 ISK. An employee who sells a jumper is
rewarded with a commission payment. This is 2% of the price of the
jumper.

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(a) Calculate the commission payment paid to an
employee selling 12 jumpers. You are advised to
show your working.
(2)

34 000 x 0.02 = 680 (1) 680 x 12 = 8 160

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...............ISK

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 AWG is considering introducing Kaizen.
(b) Analyse how this could affect its business.
(6)
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Employees in the clothing workshop will be able to discuss different manufacturing

techniques/designs for the jumpers • A major advantage of Kaizen is efficiency.
Kaizen may help to improve the quality of children’s clothing. AO3 •
This helps create innovative ideas for AWG which will help them to stand out from other
competitors selling clothing •
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This may result in attracting more customers who are seeking sustainable and long-lasting
items of
clothing.
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 AWG’s social objectives include the use of natural materials, being
environmentally friendly and reducing waste.

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(c) Evaluate the impact on AWG of having these social objectives when
planning to grow the business. You should use the information
provided as well as your own knowledge of business.
(12)

• Social objectives aim to benefit society •

Social objectives focus on ethical factors other than profit AO2 •
AWG encourage families to re-use clothing made from natural materials and reduce waste
in
society •
In the workshops at AWG waste is kept to a minimum and spare material is used to make
hats
and scarves AO3 •
This may enable AWG to meet the needs and wants of customers who care about the
environment
and are seeking a sustainable range of clothing •
Minimising waste may enable AWG to reduce its costs and pass on the cost savings to its
customers to encourage more sales AO4 •
However, it may be more costly to use natural material which may result in a high price
for the
jumpers and dresses. This may discourage some people from buying the clothes resulting
in slow
growth for the business •
However, many people in society may not be concerned about social objectives and the
environment.
They may be more concerned about current fashion which may lead to a decrease in sales
revenue for
AWG
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