AQA A-Level Business: Managers, Leadership and Decision Making — Practice Questions (7132)

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions: the section layout follows Paper 1, but every question and tariff within it is Marlbridge’s own — AQA holds copyright in its own papers. Use these alongside the official past papers available through your school or AQA’s own resources.

Related: Topic 2 study guide and revision notes.

How this paper is laid out

This set follows the section layout of AQA A-level Business (7132) Paper 1 (written exam, 2 hours, 100 marks): Section A has 15 multiple-choice questions worth 15 marks, Section B has short-answer questions worth 35 marks, and Sections C and D each ask you to answer one essay from a choice of two, worth 25 marks each. The real Paper 1 is set on all of the A-level content; every question here is on Topic 2 only, so use it for topic practice rather than as a full mock. Allow about 2 hours.

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Section A — Multiple choice

Answer all questions. Choose one answer, A, B, C or D.

1. Which of the following is most closely associated with leadership rather than management? [1] A. Controlling spending against a budget B. Organising staff rotas C. Setting a direction and inspiring people to follow it D. Monitoring output against a plan

2. A manager makes decisions alone and tells staff what to do, with little or no consultation. Which leadership style is this? [1] A. Autocratic B. Democratic C. Laissez-faire D. Paternalistic

3. Which of the following best describes a paternalistic leader? [1] A. One who hands almost all decision making to the team B. One who makes decisions they believe are in employees’ best interests and explains them to staff C. One who puts every decision to a staff vote D. One who sets no targets and gives staff no guidance

4. What does the Tannenbaum Schmidt continuum show? [1] A. How stakeholders can be mapped by power and interest B. A range of leadership behaviour, from the manager using authority to decide alone to the team having freedom to decide within limits C. The stages in constructing a decision tree D. The probability of each outcome of a decision

5. In which situation is a laissez-faire style most likely to be effective? [1] A. A newly recruited team working to a tight deadline B. A team of highly skilled, self-motivated specialists C. A crisis that needs an immediate decision D. A team that needs close supervision to meet safety rules

6. On a decision tree, what does a square node represent? [1] A. A chance event B. A decision point C. The payoff of an outcome D. A probability

7. The probabilities on the branches leaving a single chance node must: [1] A. add up to 1 B. each be greater than 0.5 C. be equal to one another D. add up to the cost of the option

8. An option costs £10,000. It has a 0.6 chance of returning £30,000 and a 0.4 chance of returning £5,000. What is its net gain? [1] A. £10,000 B. £20,000 C. £25,000 D. £35,000

9. The opportunity cost of a decision is: [1] A. the total cost of the option chosen B. the benefit of the next best alternative given up C. the money spent researching the decision D. the fixed costs of the business

10. How does uncertainty differ from risk? [1] A. With uncertainty, the likelihood of outcomes cannot be reliably estimated B. Uncertainty always leads to a loss C. Risk cannot be measured D. Risk applies only to financial decisions

11. Which of the following is a limitation of using a decision tree? [1] A. It sets out the options clearly B. Its probabilities and payoffs are estimates that may be inaccurate C. It forces managers to consider more than one option D. It allows options to be compared numerically

12. Intuitive decision making is most likely to be appropriate when: [1] A. there is plenty of time and reliable data is available B. the decision is urgent, data is limited and the manager has relevant experience C. a large investment is involved and detailed data is available D. shareholders require a quantitative justification

13. Which of the following is a resource constraint on a business’s decision making? [1] A. A competitor launches a rival product B. The business lacks the finance to fund all of its proposed projects C. The mission statement emphasises sustainability D. Consumer tastes change

14. Using stakeholder mapping, how should a stakeholder group with high power and high interest in a decision normally be treated? [1] A. Monitored with minimum effort B. Kept informed C. Kept satisfied D. Managed closely

15. Which of the following is the best example of stakeholder needs overlapping? [1] A. Shareholders and employees both gain from the long-term growth of the business B. Customers want lower prices while shareholders want higher profit margins C. Local residents oppose a factory extension that shareholders support D. Suppliers want prompt payment while the business wants to pay later

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Section B — Short answer

Answer all questions.

16. Define “opportunity cost”. [2]

17. Explain the difference between management and leadership. [3]

18. Explain the two dimensions used in stakeholder mapping. [4]

19. A fast-growing retail chain must decide quickly whether to expand into a new city. It has limited market data, but its operations manager has led several similar expansions.

(a) Justify whether scientific or intuitive decision making is more likely to be used here. [3] (b) Explain one risk of relying on this approach for a decision of this scale. [3]

20. A business must choose a leadership style for a team of experienced research scientists working on a long-term project with no urgent deadline.

(a) Justify which leadership style would be most appropriate for this team. [4] (b) Explain why an autocratic style would be likely to be less effective in this context. [3]

21. A manufacturer is choosing between two options.

• Option A: launch a new product, costing $60,000. There is a 55% chance of a return of $200,000 and a 45% chance of a return of $40,000.
• Option B: upgrade an existing product line, costing $20,000, with a certain return of $85,000.

(a) Calculate the net gain of Option A. [3] (b) Calculate the net gain of Option B, and the difference between the net gains of the two options. [2] (c) Explain two limitations of choosing between Options A and B on the basis of these net gains alone. [4]

22. Explain one way a business could manage its relationship with a stakeholder group that has high power and high interest in a proposed decision. [4]

Section B total: 2 + 3 + 4 + 6 + 7 + 9 + 4 = 35 marks.

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Section C

Answer one question from this section.

23. Evaluate the extent to which a democratic leadership style is the most effective way to lead a business through a period of major change. [25]

OR

24. Evaluate the extent to which managers should rely on scientific decision making rather than intuition when making strategic decisions. [25]

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Section D

Answer one question from this section.

25. Evaluate the extent to which a business should give priority to its most powerful stakeholders when making major decisions. [25]

OR

26. Evaluate the extent to which a business’s mission and objectives, rather than its external environment, determine the decisions its managers make. [25]

Paper total: Section A 15 + Section B 35 + Section C 25 + Section D 25 = 100 marks.

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Worked answers

Section A: 1C 2A 3B 4B 5B 6B 7A 8A 9B 10A 11B 12B 13B 14D 15A [15 — 1 mark each]

Question 8: expected value = (0.6 × £30,000) + (0.4 × £5,000) = £18,000 + £2,000 = £20,000; net gain = £20,000 − £10,000 = £10,000.

16. Opportunity cost is the value (benefit) of the next best alternative [1] that is given up when one course of action is chosen instead of another [1]. [2]

17. Management is concerned with planning, organising and controlling existing operations [1]. Leadership is concerned with setting a direction and inspiring or motivating people to follow it, often to drive change [1]. So a manager can keep a process running to plan without changing where the business is heading, whereas a leader shapes that direction and wins people’s commitment to it [1]. [3]

18. Power [1]: the ability of the stakeholder group to influence the business or the decision, e.g. a major lender that could withdraw finance [1]. Interest [1]: how much the stakeholder group is affected by, or cares about, the decision, e.g. employees whose jobs depend on it [1]. [4]

19. (a) Intuitive decision making is more likely [1]: the retail chain has only limited market data, which weakens a data-based (scientific) approach [1], while the manager’s experience of several similar expansions, and the need to decide quickly, favour relying on judgement [1]. [3] (b) A valid risk [1], explained [1] and applied to the new city [1], e.g. the manager’s experience comes from other cities, so local competition, rents or customer incomes that differ in the new city could be overlooked, and an expansion of this scale could lose a large sum if the judgement is wrong. [3]

20. (a) A democratic (or laissez-faire) style is most appropriate [1]. The scientists are experienced specialists, so consulting them, or giving them freedom to decide, draws on expertise the leader may not have [1]. With no urgent deadline, the extra time that consultation takes is not a serious drawback [1], and skilled staff who are involved in decisions are likely to be better motivated over a long project [1]. [4] (b) An autocratic leader decides alone, so the scientists’ specialist knowledge would not be used [1], which could lower the quality of decisions on a technical project [1]; highly skilled staff who are not consulted may also become demotivated or leave, and the main advantage of autocratic leadership, speed, is not needed when there is no urgent deadline [1]. [3]

21. (a) Expected value of Option A = (0.55 × $200,000) + (0.45 × $40,000) [1] = $110,000 + $18,000 = $128,000 [1]. Net gain = $128,000 − $60,000 = $68,000 [1]. [3] (b) Net gain of Option B = $85,000 − $20,000 = $65,000 [1]. Option A’s net gain is higher by $3,000 [1]. [2] (c) Any two limitations, 1 mark for each limitation and 1 for applying it to these options (2 × 2):

• The probabilities and returns are estimates [1]; if the chance of the $200,000 return were lower than 55%, Option A’s small $3,000 advantage would disappear [1].
• Net gain is an average, not an outcome that will actually happen, and it ignores risk [1]: Option A will return either $200,000 or $40,000, and the lower return would leave a loss of $20,000 after its $60,000 cost, whereas Option B’s $65,000 is certain [1].
• It ignores qualitative factors [1], e.g. the effect of a new product on the brand, or whether the business has the staff to launch it [1].
• It ignores the timing of the returns and the business’s ability to fund the $60,000 cost [1], e.g. a business short of cash may prefer the cheaper Option B [1]. [4]

22. A valid method [1], explained [1] and linked to high power and high interest [1] [1], e.g. consultation: the business meets the group, such as a trade union representing staff affected by a relocation, before the decision is final [1]. Because the group is strongly affected, it will want its concerns heard, and taking them into account can reduce opposition [1]; because it has high power, it could delay or block the decision, for example through industrial action [1], so managing it closely in this way makes the decision more likely to be implemented successfully [1]. [4]

23–26 (Sections C and D) are marked as whole answers against levels, not discrete points. The level descriptors below are Marlbridge’s own guide, not AQA’s published mark scheme:

• Level 1 (1–5 marks): isolated or generic points about leadership, decision making or stakeholders, with little application to the question.
• Level 2 (6–10 marks): relevant knowledge applied to the question, but the analysis is one-sided or the chains of reasoning are incomplete.
• Level 3 (11–15 marks): developed analysis of both sides of the argument, with clear application.
• Level 4 (16–20 marks): balanced, well-applied analysis with a judgement, but the judgement is asserted rather than supported by the argument.
• Level 5 (21–25 marks): a sustained argument leading to a supported judgement that explains what the answer depends on.

Indicative content for 23: for — change is more likely to be accepted when staff are consulted and feel ownership of it; consultation draws on staff expertise about how the change can work in practice; resistance and labour turnover may be lower. against — consultation is slow, and a business facing a crisis may need an autocratic approach to act quickly; staff may resist change that is against their own interests (e.g. job losses) however much they are consulted; inexperienced staff may lack the knowledge to contribute; the Tannenbaum Schmidt continuum suggests leaders can move along a range of behaviour rather than choose one fixed style. judgement — the most effective style depends on the urgency of the change, the skills and attitudes of the workforce and the leader’s own expertise; a leader may consult on how to implement a change while deciding its direction alone.

Indicative content for 24: for — data-based methods such as decision trees make assumptions explicit, allow options to be compared by expected value and net gain, and make large strategic decisions easier to justify to shareholders and lenders. against — strategic decisions often involve uncertainty, where probabilities cannot be reliably estimated; data may be out of date or unavailable for a new market; gathering it takes time and money; experienced managers’ intuition can capture qualitative factors that numbers miss. judgement — for most strategic decisions the two work together: data should inform the decision, but how much weight it deserves depends on its reliability, the time available and how new the situation is.

Indicative content for 25: for — powerful stakeholders (e.g. major shareholders, lenders, key customers or government) can block or undermine a decision, so failing to satisfy them risks the decision failing; stakeholder mapping suggests high-power, high-interest groups should be managed closely. against — stakeholders with less power may still be highly affected, and ignoring them raises ethical concerns and can damage reputation; less powerful groups can gain power (e.g. employees organising, or customers campaigning on social media); stakeholder needs often overlap, so a decision can meet several groups’ needs at once. judgement — power matters for whether a decision can be carried out, but the business’s mission, ethics and long-term objectives should determine how far less powerful stakeholders’ needs are weighed; communication and consultation can reduce conflict rather than forcing a choice between groups.

Indicative content for 26: for — the mission and objectives set what managers are trying to achieve, so they shape which options are considered and how success is judged; ethical commitments in the mission can rule some options out. against — the external environment, including competition, can force decisions (e.g. a competitor’s price cut, or new regulation); resource constraints limit what is possible whatever the objectives; objectives themselves may be changed in response to external changes. judgement — the mission and objectives usually set the direction, but the external environment and resource constraints determine which decisions are realistic and when they must be made; the balance depends on how stable the business’s market is.

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A note on command words in this set

“Define” (question 16) needs a precise meaning, not an example. “Explain” (questions 17, 18, 19b, 20b, 21c, 22) needs a developed point: say what something is and why or how it matters. “Justify” (questions 19a and 20a) needs a clear choice plus reasons tied to the scenario’s details, so question 19(a)’s marks come from applying the approach to this retail chain’s limited data and experienced manager, not from defining intuitive decision making in general. “Calculate” (question 21a-b) needs the working and the answer. “Evaluate” (Sections C and D) needs a balanced argument that reaches a supported judgement.

Why question 21 does not stop at the calculation

The specification asks for decision trees to be understood and interpreted, with expected value and net gain calculated, and names risks, rewards, uncertainty and opportunity cost as parts of decision making. Question 21(c) therefore asks what the net-gain figures leave out. An answer that calculates both net gains correctly but concludes “choose Option A because its net gain is higher” misses that Option A’s $3,000 advantage rests on estimated probabilities and carries a 45% chance of a $20,000 loss.

Official syllabus

AQA A-level Business (7132) specification, subject content, section 3.2 Managers, leadership and decision making – aqa.org.uk – the same source cited by the Topic 2 study guide and revision notes.