Edexcel Business A Level Paper 2 (Theme 2 & 3) – Exam with Questions and
Answers – 100% Solved
Absenteeism equation - ✔✔✔-number of staff absent / number employed x 100
Acid test ratio - ✔✔✔-adjusts the current ratio to eliminate certain current assets that are not
already in cash, less than 1 is bad
Acid test ratio - ✔✔✔-current assets - inventory / current liabilities : 1
Acid test ratio equation - ✔✔✔-current assets - stocks / current liabilities
Activist shareholders - ✔✔✔-shareholders who are more proactive in putting executive
management under pressure, for financial or non financial goals
Advantages of batch production - ✔✔✔-reduces unit costs
can still vary for specific customer needs
use of specialist machinery/skills can increase output and productivity
Advantages of critical path analysis - ✔✔✔-reduces risk/cost of complex projects
encourages careful assessments of a projects requirements
better allocation of resources using the float time
decision making and planning tool
Advantages of extrapolation - ✔✔✔-A simple method
Not much data required
quick / cheap
Advantages of horizontal integration - ✔✔✔-exploit internal economies of scale
,Edexcel Business A Level Paper 2 (Theme 2 & 3) – Exam with Questions and
Answers – 100% Solved
diversification - reduces risk
reduces competition by removing key rivals
buying an existing/well known brand can be cheaper than organically growing a brand
Advantages of job production - ✔✔✔-products usually high quality
producer meets individual customer needs
greater job satisfaction - involved in all stages of production
Advantages of just in time - ✔✔✔-holding less stock reduces storage space and therefore
rent/insurance costs
less working capital is tied up in stock
smaller chance of stock perishing, becoming obsolete or going out of date
Advantages of payback - ✔✔✔-simple and easy to calculate
focuses on cash flows - good for businesses with little cash
straightforward to compare competing projects
Adverse variances - ✔✔✔-Actual worse than budget
Costs higher than expected
Profit lower than expected
Ansoff matrix - diversification - ✔✔✔-marketing new products in new markets
most risky because the business has little/no market experience
Ansoff matrix - market development - ✔✔✔-a growth strategy where the business seeks to sell
existing product in new markets
,Edexcel Business A Level Paper 2 (Theme 2 & 3) – Exam with Questions and
Answers – 100% Solved
new geographical markets
new product dimensions/packaging
new distribution channels
different pricing policies
more risky due to new markets
Ansoff matrix - market penetration - ✔✔✔-a business focuses on selling existing products into
existing markets
seeks to maintain/increase the market share of current products
secure dominance of growth markets
restructure a mature market by driving out competitors
increase usage by existing customers
likely to be low risk - focused on products/markets it knows
Ansoff matrix - product development - ✔✔✔-introducing new products into existing markets
research/development/innovation
insights into customer needs
first mover advantage
risky due to new products
Average rate of return - ✔✔✔-Looks at the total accounting return for a project to see if it
meets target return
Backward vertical integration - ✔✔✔-an integration happening earlier in the supply chain
(manufacturer buying a raw material)
, Edexcel Business A Level Paper 2 (Theme 2 & 3) – Exam with Questions and
Answers – 100% Solved
Balance sheet - ✔✔✔-a snapshot of the business' assets and it's liabilities on a particular day,
usually the last day of the financial period
Barriers to entry - ✔✔✔-investment cost
economies of scale available to existing firms
regulations/restrictions
access to suppliers/distributers
retaliation by established products
Batch production - ✔✔✔-where many similar item are produced and each batch goes through
one stage of the production process before moving onto the next stage
Benefits of ARR - ✔✔✔-Simple to understand / easy to calculate
Focuses on the overall profitability
Easy to compare with other targets
Uses all returns generated by the projects
Benefits of cell production - ✔✔✔-closeness of cell members should improve communication,
avoiding confusion
workers become multi skilled through job rotation
greater worker motivation from variety, team working and responsibility
quality improves
Benefits of flow production - ✔✔✔-capital intensive
low unit cost
economies of scale
Answers – 100% Solved
Absenteeism equation - ✔✔✔-number of staff absent / number employed x 100
Acid test ratio - ✔✔✔-adjusts the current ratio to eliminate certain current assets that are not
already in cash, less than 1 is bad
Acid test ratio - ✔✔✔-current assets - inventory / current liabilities : 1
Acid test ratio equation - ✔✔✔-current assets - stocks / current liabilities
Activist shareholders - ✔✔✔-shareholders who are more proactive in putting executive
management under pressure, for financial or non financial goals
Advantages of batch production - ✔✔✔-reduces unit costs
can still vary for specific customer needs
use of specialist machinery/skills can increase output and productivity
Advantages of critical path analysis - ✔✔✔-reduces risk/cost of complex projects
encourages careful assessments of a projects requirements
better allocation of resources using the float time
decision making and planning tool
Advantages of extrapolation - ✔✔✔-A simple method
Not much data required
quick / cheap
Advantages of horizontal integration - ✔✔✔-exploit internal economies of scale
,Edexcel Business A Level Paper 2 (Theme 2 & 3) – Exam with Questions and
Answers – 100% Solved
diversification - reduces risk
reduces competition by removing key rivals
buying an existing/well known brand can be cheaper than organically growing a brand
Advantages of job production - ✔✔✔-products usually high quality
producer meets individual customer needs
greater job satisfaction - involved in all stages of production
Advantages of just in time - ✔✔✔-holding less stock reduces storage space and therefore
rent/insurance costs
less working capital is tied up in stock
smaller chance of stock perishing, becoming obsolete or going out of date
Advantages of payback - ✔✔✔-simple and easy to calculate
focuses on cash flows - good for businesses with little cash
straightforward to compare competing projects
Adverse variances - ✔✔✔-Actual worse than budget
Costs higher than expected
Profit lower than expected
Ansoff matrix - diversification - ✔✔✔-marketing new products in new markets
most risky because the business has little/no market experience
Ansoff matrix - market development - ✔✔✔-a growth strategy where the business seeks to sell
existing product in new markets
,Edexcel Business A Level Paper 2 (Theme 2 & 3) – Exam with Questions and
Answers – 100% Solved
new geographical markets
new product dimensions/packaging
new distribution channels
different pricing policies
more risky due to new markets
Ansoff matrix - market penetration - ✔✔✔-a business focuses on selling existing products into
existing markets
seeks to maintain/increase the market share of current products
secure dominance of growth markets
restructure a mature market by driving out competitors
increase usage by existing customers
likely to be low risk - focused on products/markets it knows
Ansoff matrix - product development - ✔✔✔-introducing new products into existing markets
research/development/innovation
insights into customer needs
first mover advantage
risky due to new products
Average rate of return - ✔✔✔-Looks at the total accounting return for a project to see if it
meets target return
Backward vertical integration - ✔✔✔-an integration happening earlier in the supply chain
(manufacturer buying a raw material)
, Edexcel Business A Level Paper 2 (Theme 2 & 3) – Exam with Questions and
Answers – 100% Solved
Balance sheet - ✔✔✔-a snapshot of the business' assets and it's liabilities on a particular day,
usually the last day of the financial period
Barriers to entry - ✔✔✔-investment cost
economies of scale available to existing firms
regulations/restrictions
access to suppliers/distributers
retaliation by established products
Batch production - ✔✔✔-where many similar item are produced and each batch goes through
one stage of the production process before moving onto the next stage
Benefits of ARR - ✔✔✔-Simple to understand / easy to calculate
Focuses on the overall profitability
Easy to compare with other targets
Uses all returns generated by the projects
Benefits of cell production - ✔✔✔-closeness of cell members should improve communication,
avoiding confusion
workers become multi skilled through job rotation
greater worker motivation from variety, team working and responsibility
quality improves
Benefits of flow production - ✔✔✔-capital intensive
low unit cost
economies of scale
