GCSE Business: Growth, Competition and the Market

Two of these questions are arithmetic and the other eight are about what happens to a business that gets bigger. Both halves are lost in predictable ways, and the wrong options are those ways.

A bakery selling forty-five thousand pounds into a three hundred thousand pound market has fifteen per cent of it. Among the wrong answers is six hundred and sixty-six per cent, which is the division done the other way up — and the reason it is worth including is that a share above a hundred per cent should stop a candidate before the pen moves, since no firm sells more than the whole market does. Revenue rising from two hundred thousand to two hundred and fifty thousand is growth of twenty-five per cent, with twenty per cent offered because that is what dividing by the new figure gives, and a hundred and twenty-five per cent offered because that is the new revenue as a share of the old, a real number answering a different question.

Then growth itself. Opening a second branch is organic and buying a rival is external, and the answer has to trade them: control and slowness against speed and cost. Two firms join and their staff cannot work together, one used to being told and one used to deciding — a culture clash, and the option saying a merger produces savings automatically is there because that is the assumption the whole question exists to test.

Economies of scale are given with their mechanism, buying materials in bulk, and with the distinction that matters: the cost of each chair falls while the total cost of making more chairs rises. A toy shop competing with a national retailer through gift-wrapping and advice is building a unique selling point, and the reason to avoid a price war is stated plainly — the larger firm can hold a low price for longer than the smaller one can survive it.

The last four are the realities of a growing business. An online shop reaches everybody and is now competed against by everybody, with delivery and returns arriving as new costs. A start-up paying wages and suppliers now while its customers pay in sixty days is overtrading, and what eases it is the payment terms at both ends. A cheaper import cannot be beaten on price alone by a firm that is not cheaper, so the answer names quality and service alongside cost. And a jeweller designing for one group of customers is segmenting, which works for a small firm because its resources land in one place instead of being spread across a market it cannot afford to address.

Every business and person described is invented. No real company or brand is named. Nothing is reproduced from any exam board specification, past paper or mark scheme.

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• Calculate a market share the right way up and sanity-check the result
• Calculate percentage growth from the original figure, not the new one
• Distinguish organic from external growth and state the trade-off
• Name the culture clash risk in joining two firms
• Explain economies of scale without confusing unit cost with total cost
• Say what a unique selling point is and why a price war favours the larger firm
• List what an online shop gains and what new costs it takes on
• Recognise overtrading and name what would ease it
• Give a realistic response to a cheaper import
• Say why segmentation suits a firm with limited resources

Ten invented firms and situations: a bakery with forty-five thousand pounds of a three hundred thousand pound market, a retailer going from two hundred to two hundred and fifty thousand, a cafe opening a branch while a rival buys one, two logistics firms whose staff work differently, a furniture maker buying in bulk, a toy shop beside a national retailer, a boutique going online, a start-up waiting sixty days to be paid, a kitchenware maker meeting a cheaper import, and a jeweller designing for one group. Twelve flashcards carry the vocabulary — market share and market size, organic and external growth, takeover, merger, economies of scale, unique selling point, e-commerce, overtrading, segmentation, competitive advantage.