A Level Business: Business structure and Size of business (Cambridge 9609) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover sections 1.2 (Business structure) and 1.3 (Size of business) of the Cambridge International AS & A Level Business 9609 syllabus for examination in 2026, 2027 and 2028, an AS Level topic. Learn the content first from the study guide and revision notes. Also see the Cambridge A Level Business hub, the checklist, the topic practice questions and the free diagnostics. All businesses below are invented.

Questions

1. Identify the sector (primary, secondary, tertiary or quaternary) of each business. (a) A company that extracts salt from coastal pans. (b) A firm that assembles prefabricated houses. (c) A firm that sells analysis of online shopping data. [3]

2. Haverlow Candles had revenue of £2.4m last year in a market worth £25m. This year its revenue is £3.0m in a market worth £30m.

(a) Calculate the percentage growth in Haverlow’s revenue. [2] (b) Calculate its market share in each year. [2] (c) Explain why the revenue growth alone does not show that the business is doing well. [2]

3. In an economy, the share of workers in the primary sector has fallen over twenty years. Explain two reasons for this fall. [4] Then explain one consequence for workers who leave the primary sector. [2]

4. Name the type of external growth in each case. (a) A bakery chain buys a flour mill. (b) A shoe manufacturer buys a chain of shops that sell its shoes. (c) A bus company buys a chain of restaurants. [3]

5. (a) Define limited liability. [2] (b) Distinguish between a franchise and a co-operative. [4]

6. Explain two strengths and one weakness of a family business. [6]

7. Explain two reasons why small businesses remain the main form of business in industries such as hairdressing. [4]

8. Birchfield Software has 22 employees, revenue of £3.3m and capital employed of £1.1m. Dunley Care Homes has 140 employees, revenue of £2.1m and capital employed of £6.5m.

(a) Calculate revenue per employee for each business. [2] (b) Explain why the two businesses rank differently depending on the measure of size used. [4]

9. Ines Fenwood runs Fenwood Bakehouse as a sole trader. Revenue is £180,000 and profit is £34,000. She wants to open two more shops costing £90,000. A bank will lend £40,000 only if it is secured on her home. An investor offers £50,000 in return for part-ownership.

(a) Explain one risk to Ines if she borrows £40,000 and stays a sole trader. [3] (b) Evaluate whether Ines should convert to a private limited company. [9]

10. Ottermere Foods has revenue of £9.6m in a regional market worth £80m. It plans to buy a rival pie maker, Penfold Pies, which has revenue of £6.0m, for £6.0m. Ottermere expects cost savings of £0.8m a year.

(a) Identify the type of growth. [1] (b) Calculate the combined market share, assuming sales hold. [2] (c) Calculate the number of years of savings needed to cover the price. [2] (d) Explain one effect of the takeover on Penfold’s employees. [3]

11. Explain two reasons why two firms might form a strategic alliance rather than merge. [4]

12. Embervale Brewery (revenue £30m) makes a hostile bid of £39m for Corrowen Cider (revenue £18m). The bid is 30% above Corrowen’s value before the bid. Embervale expects savings of £3m a year and will fund 60% of the price by borrowing. Corrowen’s board opposes the bid. Its brand depends on local identity, and its head brewer says she will leave. Embervale’s objective is to increase market share and profit over five years. Evaluate whether the takeover is likely to achieve Embervale’s objective. [12]

Answers

1. (a) Primary [1]. (b) Secondary [1]. (c) Quaternary [1]. [3] Examiner insight: Classify by the activity the firm performs, not by the product’s name. A firm that analyses data is selling knowledge, so tertiary would not be the best answer.

2. (a) Growth = (3.0 - 2.4) ÷ 2.4 × 100 [1] = 25% [1]. (b) Last year: 2.4 ÷ 25 × 100 = 9.6% [1]. This year: 3.0 ÷ 30 × 100 = 10% [1]. (c) The market grew by 20%, so the firm’s 25% growth is only slightly faster than the market [1]. Its share rose by only 0.4 percentage points, so it is not winning much ground from rivals [1]. [6] Examiner insight: Show the formula and the substitution. In part (c) the reasoning is the point, so compare the firm’s growth with the market’s growth.

3. Any two reasons, 2 marks each. Mechanisation raises output per worker, so farms and mines need fewer workers [1] and the sector’s share of employment falls [1]. Rising incomes shift spending towards services and manufactured goods [1], so other sectors expand and take a larger share [1]. Consequence: workers may face structural unemployment because their skills do not match new jobs [1] and need retraining or relocation [1]. [6] Examiner insight: Keep reasons and consequences separate. Each reason gains full credit only when the link to the falling share is explained.

4. (a) Vertical backward integration [1]. (b) Vertical forward integration [1]. (c) Conglomerate diversification [1]. [3] Examiner insight: Name the direction for vertical growth. “Vertical” alone is less precise than backward or forward.

5. (a) The owners’ possible loss is capped at the sum they put into the firm [1], so their personal assets are not used to pay business debts [1]. (b) A franchise: a franchisor allows a franchisee to use its brand and system [1], usually in return for fees [1]. A co-operative: owned and run for the benefit of its members [1], who typically share control [1]. [6] Examiner insight: A distinction needs both forms described. Writing about only one earns little credit.

6. Strengths, any two, 2 marks each. Shared commitment means family members work hard for the firm’s reputation [1], which can raise service quality [1]. A long-term outlook, since there are no outside shareholders demanding quick returns [1], allows patient investment [1]. Weakness: a small pool of family talent [1], so the best-qualified person may not run the business, which can hurt performance [1]. [6] Examiner insight: Developing each point gains credit that a bare list of “trust, commitment, disputes” would not.

7. Any two, 2 marks each. Demand is local and personal [1], so customers choose a nearby provider and large firms gain little from size [1]. Economies of scale are limited, because each customer needs individual attention [1], so large firms have little cost advantage [1]. [4] Examiner insight: Refer to the industry named. Generic advantages of small firms answer a different question.

8. (a) Birchfield: 3,300,000 ÷ 22 = £150,000 [1]. Dunley: 2,100,000 ÷ 140 = £15,000 [1]. (b) By revenue, Birchfield is larger (£3.3m against £2.1m) [1]. By employees, Dunley is larger (140 against 22) [1]. By capital employed, Dunley is larger (£6.5m against £1.1m) [1]. Birchfield’s output depends on skills and ideas, Dunley’s on many staff and premises, so no measure ranks them in the same way [1]. [6] Examiner insight: Use the figures. Saying that measures “can differ” without data gains less than showing where the ranking flips.

9. (a) Unlimited liability means Ines is personally responsible for the debt [1]. If the shops fail to earn enough, the bank can claim her home [1], so she could lose her family’s security as well as the business [1]. (b) For conversion: limited liability protects her home if the expansion fails [1], which matters because the loan is secured on it [1]. The investor could buy shares, so she raises capital without more personal borrowing [1], and £50,000 plus the bank’s £40,000 covers the £90,000 [1]. Against: she gives up some control, as the investor becomes a part-owner [1] and may influence decisions [1]. Company status brings more formal duties and costs, which are heavy for a bakery earning £34,000 [1]. Judgement: conversion is probably sensible [1], because the personal risk of the loan outweighs the extra duties, but it depends on whether she will accept sharing control with the investor [1]. [12] Examiner insight: An evaluate answer is rewarded for a reasoned judgement that refers to Ines’s figures. Stating pros and cons without a conclusion is incomplete.

10. (a) Horizontal [1]. (b) Penfold’s share = 6.0 ÷ 80 × 100 = 7.5% [1]. Combined = 12% + 7.5% = 19.5% [1]. (c) 6.0 ÷ 0.8 = 7.5 years [1], with the unit stated [1]. (d) Cost savings may come from closing duplicated roles [1], so some Penfold employees may lose their jobs [1]. Remaining staff may face new managers and changed conditions, which can lower morale [1]. [8] Examiner insight: Give the working for calculations and state the unit. Link effects on employees to a cause in the case, such as cost savings.

11. Any two, 2 marks each. An alliance needs less money than buying a firm [1], so the partners avoid heavy borrowing [1]. The firms remain separate [1], so each keeps its own brand and can leave if the arrangement fails [1]. [4] Examiner insight: Contrast the alliance with a merger. A point that would be equally true of a merger is not an answer.

12. Gains: combined revenue would be £48m [1], giving Embervale a bigger market presence, and savings of £3m a year help profit [1]. Payback: £39m ÷ £3m = 13 years [1], well beyond the five-year objective [1]. Funding: 60% of £39m is £23.4m of borrowing [1], which adds interest costs that reduce profit [1]. Hostile: Corrowen’s board opposes the bid [1], and if the head brewer leaves, the brand’s local identity and revenue may be damaged [1]. Judgement: the takeover is unlikely to meet the objective within five years [1], because the savings take 13 years to cover the price and borrowing adds cost [1]. It could succeed if staff and brand are kept and savings exceed £3m [1], so the outcome depends on integration and the time horizon [1]. [12] Examiner insight: Use the case figures in context and judge against the stated objective and its five-year time limit.

Where marks are usually lost

• Leaving out units, and giving answers without the formula or working.
• Quoting percentage change when a change in percentage points was asked.
• Describing an ownership form without applying it to the person in the stem.
• Confusing backward and forward vertical growth.
• Listing the pros and cons in an evaluate question with no judgement.
• Writing about small firms in general instead of the industry named.
• Giving a reason when a consequence was asked for.

Next steps

• Revision notes for sections 1.2 and 1.3
• Study guide for sections 1.2 and 1.3
• Cambridge A Level Business hub and checklist
• All free 10-minute diagnostics
• Book a free trial class

Frequently asked questions

Which sections of Cambridge AS and A Level Business 9609 do these questions cover? Section 1.2 Business structure and section 1.3 Size of business, including economic sectors, forms of ownership, measuring size and business growth.

How do you classify a business into a sector? Classify it by the activity the firm performs, not by the product’s final use. The four sectors in Cambridge 9609 are primary, secondary, tertiary and quaternary.

How do I answer an evaluate question on changing a business’s legal structure? Weigh the benefits and drawbacks for the person in the case, such as liability, control and access to finance, and reach a reasoned judgement that refers to their situation. Listing pros and cons with no judgement limits the marks.

What is the difference between a percentage change and a change in percentage points? A change in percentage points is the simple difference between two percentages, such as a share moving from 20% to 25% (5 points, but a 25% increase). A percentage change compares the change with the starting value; quoting one when the other is asked for loses marks.

Official syllabus

Cambridge International AS & A Level Business 9609 syllabus for examination in 2026, 2027 and 2028, published by Cambridge University Press & Assessment (Cambridge International Education).