IGCSE Business: Business objectives and stakeholder objectives (Cambridge 0264) – 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.

This set covers section 1.5 (Business objectives and stakeholder objectives) of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029. Both papers are based on all the subject content. Revise first with the study guide and the revision notes. See also the course hub, the printable checklist and the free diagnostics.

Money figures are in dollars. All businesses and people are invented.

Questions

1. Define the term business objective. [2]

2. State two examples of business objectives. [2]

3. Lindenmoor Toys had sales revenue of 96,000 dollars in a toy market worth 640,000 dollars. The next year its sales revenue was 112,000 dollars and the market was worth 700,000 dollars.

(a) Calculate Lindenmoor Toys’ market share in the first year. [2] (b) Calculate its market share in the second year. [2] (c) Explain why the owner may learn more from market share than from sales revenue alone. [3]

4. Identify two internal stakeholder groups and two external stakeholder groups of a business. [4]

5. Explain one objective of employees and one objective of lenders/banks. [4]

6. Explain one reason why the objectives of a business may change over time. [3]

7. Explain two reasons why it is important for a business to have objectives. [4]

8. Brambleford Dairy makes a profit of 60,000 dollars a year. It spends 250,000 dollars a year on milk and other materials. Its main supplier announces a price rise of 4%. Assume the dairy buys the same quantity and does not raise its own prices.

(a) Calculate the extra yearly cost of materials. [1] (b) Calculate the dairy’s new profit. [1] (c) Calculate the percentage fall in profit, to one decimal place. [2] (d) Explain how the objectives of the dairy’s owners and its supplier may conflict. [4]

9. Fernshaw Textiles is a company with 100,000 shares. It made a profit of 120,000 dollars. The shareholders want 60% of the profit paid out as dividends. The managers want to keep the rest to open a new factory.

(a) Calculate the total dividend if 60% of profit is paid out. [1] (b) Calculate the dividend per share. [1] (c) Calculate the profit left in the business. [1] (d) Explain how the objectives of shareholders and managers may conflict here. [3]

10. Mira Sandoval is the sole trader who owns Tamarind Wharf Cafe. Sales revenue rose from 150,000 dollars to 186,000 dollars this year, but profit was only 9,000 dollars. She still owes the bank 60,000 dollars. She wants to open a second cafe, which needs a further bank loan of 80,000 dollars. Her employees would like more hours. Neighbours near the planned site are worried about parking.

(a) Calculate the percentage growth in sales revenue. [2] (b) Justify whether Mira should open the second cafe now or concentrate on survival. [8]

11. Norcastle Printers has 20 employees and makes a profit of 30,000 dollars a year. The owners plan to move to a cheaper site out of town. This would cut costs by 36,000 dollars a year but 5 employees would lose their jobs. Some customers use the shop because it is in the town centre.

Justify whether the owners should go ahead with the move. Consider at least three stakeholder groups. [8]

Answers

1. A target [1] that a business sets for itself and aims to achieve [1]. [2] Examiner insight: A definition earns more when it has both the idea of a target and the idea of the business setting it. Writing “profit” or “what a business wants” gives a vague answer.

2. Any two of: survival [1]; growth [1]; profit; market share. [2] Examiner insight: Answers of one word each are enough here. Writing the same objective twice in different words, such as “growth” and “getting bigger”, is likely to count once.

3. (a) Market share = 96,000 / 640,000 × 100 [1] = 15% [1]. [2] (b) 112,000 / 700,000 × 100 [1] = 16% [1]. [2] (c) Sales revenue rose by 16.7% [1], which looks strong, but the market itself grew by 9.4% [1]. Market share shows the toy business is winning a larger part of the whole market, so it is beating its rivals and not just riding market growth [1]. [3] Examiner insight: In a calculation, showing the formula with the numbers in it helps a marker see your method even if the arithmetic slips. In part (c), quoting both growth figures from the data is how an explanation moves from general to applied.

4. Internal, any two of: owners; managers; employees [1][1]. External, any two of: customers; suppliers; lenders/banks; government; local community [1][1]. [4] Examiner insight: Check the groups you put in each list. A common slip is placing customers or suppliers under internal, which can lose the mark for that group.

5. Employees: fair pay, job security or good working conditions [1], because they depend on the business for their income and daily working life [1]. Lenders/banks: to be paid interest and have the loan repaid [1], so they want the business to survive and stay able to pay [1]. [4] Examiner insight: The second mark in each pair is for the reason. Saying only “employees want wages” gives the objective but no development, so add a short “because” clause.

6. A new business may start with survival [1]. Once it has built up customers and a steady income [1], the owners may aim for growth or a bigger market share instead [1]. Allow other reasoned changes, for example a recession pushing a firm back to survival. [3] Examiner insight: A one-line statement that “objectives change” will not usually reach full marks. Giving a before and after objective with the trigger for the change shows the chain of reasoning.

7. Any two developed points, each earning one mark for the point and one for the development. For example: objectives give direction [1], so every department works towards the same aim [1]; objectives allow success to be measured [1], because results can be compared with the target [1]. [4] Examiner insight: “Two reasons” means two different points. Splitting one idea into two similar sentences is likely to be treated as a single reason.

8. (a) 4% × 250,000 = 10,000 dollars [1]. [1] (b) 60,000 − 10,000 = 50,000 dollars [1]. [1] (c) 10,000 / 60,000 × 100 [1] = 16.7% [1]. [2] (d) The dairy’s owners want low costs and high profit [1], so they want to pay the supplier less [1]. The supplier wants higher prices to raise its own revenue and profit [1]. Both cannot be met in full because a higher price for the supplier is a higher cost for the dairy [1]. [4] Examiner insight: Later parts can use your earlier answers, so show each step even when it looks obvious. In part (d), using the pair “owners and supplier” and the 4% rise, not a general statement, makes the answer applied.

9. (a) 60% × 120,000 = 72,000 dollars [1]. [1] (b) 72,000 / 100,000 = 0.72 dollars per share [1]. [1] (c) 120,000 − 72,000 = 48,000 dollars [1]. [1] (d) Shareholders want a return on their investment through a large dividend [1]. Managers want to keep profit to pay for the new factory and growth [1]. The money is limited, so more dividend means less for the factory and the reverse [1]. [3] Examiner insight: Giving units (dollars, dollars per share) makes the answer complete. A conflict answer is stronger when it says why the two aims cannot both be met.

10. (a) (186,000 − 150,000) / 150,000 × 100 [1] = 24% [1]. [2] (b) For going ahead: sales rose by 24%, which suggests strong demand [1]. A second cafe could bring more profit, growth and more hours for employees [1]. Against: profit is only 9,000 dollars on sales of 186,000, so there is little cushion [1]. Adding 80,000 dollars to the 60,000 dollars already owed raises the risk that repayments cannot be met, and the bank could suffer if the business fails [1]. Other stakeholders: neighbours may object about parking and delay the plan [1]; employees want hours but would lose jobs if the business failed [1]. Judgement: Mira should concentrate on survival for now and build up profit before taking on more debt [1], because the low profit and existing loan mean growth now risks the whole business, and she could revisit the plan once profit is higher [1]. Allow a reasoned decision for going ahead if the risks are clearly weighed. [8] Examiner insight: A justification is likely to score better when it uses figures from the case, covers both sides and then commits to a decision. A decision without a reason, or a list of points with no decision, usually leaves marks unearned.

11. Owners: costs fall by 36,000, so profit would rise from 30,000 to 66,000 dollars, a rise of 120% [1], which supports the owners’ profit and survival objectives [1]. Employees: 5 of 20 employees, or 25%, lose their jobs [1], and the remaining staff may worry about their own security [1]. Local community: lost jobs reduce local spending and income [1]. Customers: some use the shop because of the town centre site, so sales could fall [1]. Judgement: the owners should go ahead only if they take steps to limit the harm, such as helping staff to move or find other work, because the profit gain is large [1], but the loss of customers and the 25% job cut could damage the business if it is done without a plan [1]. Allow a reasoned decision against the move if the harm is weighed. [8] Examiner insight: With “at least three stakeholder groups”, answers are likely to be limited if they cover only owners and employees. Using the numbers in the case (66,000, 25%) and weighing them against the harm shows evaluation, not description.

Where marks are usually lost

• Defining an objective with a single word such as “profit” instead of saying it is a target the business sets.
• Placing customers and suppliers in the internal stakeholder list.
• Naming what a stakeholder wants but not giving a reason.
• Writing “market share” answers without showing the formula or the % sign.
• Mixing up sales revenue growth and market share growth.
• Giving a conflict as a list of two wants without explaining why both cannot be met.
• Writing generic points that could apply to any business, not using names and figures from the case.
• Justifying a decision without weighing the other side.
• Offering two points that are really the same point reworded when two reasons are asked for.

Next steps

• Re-read the study guide for any question you missed.
• Use the revision notes for a final recall check.
• Go to the course hub and the printable checklist.
• Take the free 10-minute diagnostics to find your next weak area.
• Book a free trial class: /trial/.

Frequently asked questions

What are common mistakes on business objectives questions in IGCSE Business 0264? Students often define an objective with a single word such as “profit” instead of saying it is a target, put customers and suppliers among internal stakeholders, and mix up sales revenue growth with market share growth. Justifying a decision without weighing the other side also loses marks.

How do you explain a conflict between two stakeholder groups? State what each group wants and explain why both cannot be fully met, for example because the money available is limited. Listing two wants without that explanation earns less credit.

Which section of the Cambridge IGCSE Business 0264 syllabus covers objectives and stakeholders? Section 1.5 covers business objectives and stakeholder objectives: 1.5.1 on business objectives and their importance, and 1.5.2 on stakeholder groups and how their objectives may conflict.

How should you show a market share calculation? Write the formula, sales revenue of the business divided by total sales revenue of the market times 100, substitute the figures and give the answer with a % sign.

Official syllabus

Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029, published by Cambridge University Press and Assessment (Cambridge International Education). Section 1.5 covers business objectives and the role of stakeholder groups.