Paper 1 : May/June 2025 – 12

Instructions:

• Carefully review all given instructions and past paper guidelines before starting each practice session.

• Attempt the past paper questions independently first, just as in an actual exam environment.

• Use a notebook or exam-style sheets to write your answers. Ensure your work is neat, clearly labeled with question numbers, and follows proper exam format.

• After completing each section, check your answers using the provided marking schemes and examiner reports (if available).

• Review your mistakes and rewrite incorrect answers to improve accuracy and exam technique.

• If you find any questions difficult or unclear, watch the video given below for that paper. In that video, each paper is discussed in detail.

• If you still face difficulties or have doubts after watching the video, note them down and discuss them with your instructor or course coordinator for clarification.

• Revise question-solving strategies and repeat similar past paper questions to strengthen your understanding and performance.

Click Here to download the Video Handout

Hello everyone. Today we are going to go through a full O Level Business Studies Paper 1. This paper covers four case studies: NFC the shoe manufacturer, FLD the furniture retailer, Hal’s Bakery, and MHL the tyre manufacturer. I will walk you through each question and part, showing how to answer them correctly and how to get the maximum marks.

Question 1(a) asks you to define batch production.
Batch production is when a business makes a group of identical products together as one batch. Each batch goes through one stage of production before moving on to the next. To get both marks, your definition should include both ideas: that the products are identical and that they are produced in groups or stages.

Question 1(b) asks you to identify two aims of promotion.
You can write that promotion aims to increase customer awareness of a product and to persuade customers to buy or remain loyal to the brand. Each correct aim is worth one mark, so two short points will get you full marks here.

Question 1(c) asks you to outline one advantage and one disadvantage to NFC of using quality assurance.
For the advantage, explain that quality assurance checks at every stage of production help identify faults early, which means fewer defective shoes and happier customers. For the disadvantage, explain that it can be expensive and time-consuming to train employees to maintain quality standards, and production might slow down if staff are not consistent. Each point must have a short explanation in context for full marks.

Question 1(d) asks you to explain two benefits to NFC of using market segmentation.
The first benefit is that market segmentation helps NFC identify specific customer groups such as athletes, children, or fashion buyers. This allows the company to design products that meet their needs and advertise directly to each group, which increases sales. The second benefit is that segmentation allows NFC to use different pricing strategies for each market, for example charging higher prices for premium models and lower prices for budget shoes. This helps the company cover a wider market and earn more profit. Each benefit should be clearly explained to earn six marks.

Question 1(e) asks if the benefits for a business of developing new products are greater than the limitations.
Start with the benefits. Developing new products helps NFC stay competitive, attract new customers, and follow fashion trends. It can extend the life of the product range and maintain sales growth. Then mention the limitations. Developing new products takes time, costs money, and can be risky if customers do not like the new design. Finally, give your judgement. Say that the benefits are greater if NFC researches the market carefully and tests new ideas before launching. In the shoe industry, innovation is essential to stay successful.

Question 2(a) asks you to define profit.
Profit is the financial gain a business makes when total revenue is greater than total costs over a certain period. For full marks, make sure you include both revenue and cost in your definition.

Question 2(b) asks you to identify two expenses a business might have.
You can say wages and salaries as one expense, and rent or utility bills as another. Each correct answer gives one mark.

Question 2(c) asks you to outline two possible reasons why FLD’s gross profit is decreasing.
One reason is that the cost of goods from suppliers might have increased, which raises cost of sales and lowers gross profit. Another reason is that FLD might have reduced its selling prices to stay competitive, which decreases total revenue. To earn all four marks, briefly explain both reasons.

Question 2(d) asks you to explain two advantages to FLD of using internal recruitment when hiring new managers.
The first advantage is that internal recruitment saves time and cost because the business already knows its employees, and there is no need for external advertising or long interviews. The second advantage is that it motivates staff by giving them a chance to be promoted, which improves morale and reduces staff turnover. You must explain both advantages in context to reach the top band of marks.

Question 2(e) asks if job rotation is the best method for a large business to use to motivate its employees.
Start with arguments for. Job rotation gives variety and prevents boredom by moving employees between tasks. It also helps staff understand more parts of the business, which improves teamwork and flexibility. Now explain the arguments against. Constantly moving employees can lower productivity because they must keep learning new roles, and some workers prefer to specialise in one job. Finally, give your judgement. Job rotation can work well in a large business like FLD, but it should be combined with other methods such as training, bonuses, or recognition to be most effective.

Question 3(a) asks you to define the private sector.
The private sector is made up of businesses owned and controlled by individuals or groups that aim to make a profit rather than being owned by the government. A one-sentence answer like that gets both marks.

Question 3(b) asks you to identify two reasons why new businesses are at greater risk of failure.
You can say that new businesses often fail because of lack of experience in management and poor financial planning, or because of limited finance and cash flow problems.

Question 3(c) asks you to identify four stakeholder groups a business might have.
You can list owners or shareholders, employees, customers, and suppliers. Each correct group is worth one mark.

Question 3(d) asks you to explain two characteristics Hal will need to become a successful entrepreneur.
One characteristic is creativity. Hal needs to design bakery products that attract customers, such as special cakes or unique packaging. Another characteristic is determination. Running a new business involves long hours and challenges, so he must be persistent and willing to take risks to achieve success.

Question 3(e) asks if a bank loan is the best source of start-up capital for a new business.
Start with arguments for. A bank loan gives a large amount of money quickly and allows Hal to keep full ownership. Then mention the arguments against. Loans must be repaid with interest, which increases costs and financial pressure, especially if sales are low. End with your judgement. Bank loans can work well if the business has a solid plan, but for a small bakery, using personal savings or government grants might be safer in the beginning.

Question 4(a) asks you to define average cost.
Average cost is the total cost of production divided by the total number of units produced. For two marks, always include both total cost and total output in your definition.

Question 4(b) asks you to calculate total variable cost per month.
You are told that the variable cost per unit is twenty-five dollars and monthly output is two hundred thousand units. Multiply them to get five million dollars. Show your working in the answer, as one mark is given for correct working and one for the correct answer.

Question 4(c) asks you to outline two external costs MHL might create when producing tyres.
You can say air pollution from factory emissions, which damages the environment, and noise pollution, which disturbs nearby residents. Each point should have a short explanation in context for full marks.

Question 4(d) asks you to explain two opportunities of globalisation for MHL.
One opportunity is access to international markets. MHL can sell tyres in more countries, increasing sales and profits. Another opportunity is cheaper raw materials and labour from other countries, which helps reduce production costs and stay competitive. Each opportunity needs a clear explanation related to MHL’s tyre business.

Question 4(e) asks you to explain two methods of communication a business could use to communicate with suppliers, and decide which is best.
One method is email, which allows quick written communication and lets MHL send orders or invoices easily. Another method is video conferencing, which allows managers to speak face-to-face online with overseas suppliers, saving time and travel costs. For your judgement, say that video conferencing is the best for MHL because it allows immediate feedback and builds strong relationships with suppliers across different countries.

Now let’s review how to get maximum marks.
For two-mark questions, write one clear and complete sentence that includes the key term or definition.
For four-mark questions, identify a point and explain how it affects the business in context.
For six-mark questions, give two developed explanations or two sides of an argument, then finish with a short conclusion or recommendation.

Always apply your answer to the business named in the question. Use simple, clear language. Avoid repeating points and always finish your answer with a direct link back to the case.

By the end of this paper, you should be able to define key terms, explain business decisions, and justify your conclusions confidently. If you follow this structure in the exam, you will gain marks steadily across every question.

Press “Mark As Complete” Button To proceed

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