Cambridge IGCSE Commerce: Outsourcing, Wholesaling and Communication — Practice Questions (0715)

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 available free from your board.

Related: Outsourcing, Wholesaling and Communication revision notes | Outsourcing and Wholesaling study guide | Commercial operations practice questions

These questions cover sub-topics 2.2 Outsourcing, 2.4 Wholesaling and 2.6 Communication of Cambridge IGCSE Commerce (0715). The main Commercial operations practice page covers enterprises, retailing and trading documents.

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Section A

1. Define outsourcing. [1]

2. Identify the two areas in which outsourcing has grown. [2]

3. State two services a wholesaler provides to a retailer. [2]

4. Identify the four types of communication. [4]

Section B

5. A toy company designs its products in Pakistan but has them made by a factory in another country under contract. It also pays a logistics firm to store and deliver orders to customers.

(a) Explain two reasons why the company outsources its manufacturing. [4] (b) Explain one risk for the company of outsourcing. [2] (c) Explain one benefit of using a logistics firm for its deliveries. [2]

6. Explain the importance of the wholesaler to the manufacturer. [6]

7. Many independent wholesalers have lost trade to supermarkets that buy direct from manufacturers. Explain how cash and carry and voluntary chains help independent wholesalers survive. [6]

8. A shop owner needs to (a) order more stock urgently from a nearby supplier, (b) send a formal complaint that may be used as evidence later, and (c) hold a meeting with a supplier in another country. Recommend a method of communication for each and justify your choice using factors from the syllabus. [6]

9. Discuss whether a retailer should use a chatbot on its website to deal with customer questions. [5]

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Answers

1. Paying another enterprise to carry out an activity the business could do itself (in-house) [1].

2. Contract manufacturing [1]; contract logistics [1].

3. Any two: breaking bulk; offering a wide range of goods; credit; delivery; advice on products or displays; packing, labelling or price-marking [1] [1].

4. Written [1], oral [1], electronic [1], visual [1].

5. (a) Any two, 2 marks each: lower costs — the overseas factory may have lower wages or economies of scale, so each toy costs less [1] [1]; expertise — a specialist factory already has the machinery and skilled workers [1] [1]; focus on core activities — the company can concentrate on design and marketing [1] [1]; flexibility — it can order more or fewer toys without building its own factory [1] [1]. (b) Less control over quality: if the factory makes faulty or unsafe toys, the company’s brand is damaged [1] [1] (or: delays in delivery, risk of designs being copied, or unethical working conditions harming reputation). (c) The logistics firm has specialist warehouses and vehicles, so orders reach customers faster or more cheaply than the company could manage itself [1] [1].

6. The wholesaler buys in bulk, giving the manufacturer large regular orders and long production runs [1] [1]; it stores goods, so the manufacturer saves warehousing costs [1]; it bears the risk of goods not selling or being damaged [1]; it distributes to many retailers, so the manufacturer deals with a few wholesalers rather than many shops, saving time and transport costs [1]; it pays promptly, helping the manufacturer’s cash flow, and passes on market information [1].

7. Cash and carry: retailers visit the warehouse, select goods, pay at once and transport them themselves [1]; because there is no credit or delivery, the wholesaler’s costs and therefore prices are lower [1], attracting small shops, cafés and restaurants that buy little and often [1]. Voluntary chains: independent retailers agree to buy most of their stock from one wholesaler [1]; the wholesaler’s bulk buying lowers prices for them [1], and they share a common brand name and promotions, helping them and the wholesaler compete with supermarkets [1].

8. (a) Telephone — the matter is urgent and the supplier is nearby, so a quick two-way conversation confirms the order at once [1] [1]. (b) Letter (or email with a written record) — the message is important and a formal written record can be kept as evidence [1] [1]. (c) Videoconferencing — the distance is great, so it saves travel cost and time while allowing face-to-face discussion, provided networks are available [1] [1].

9. Benefits: answers simple questions instantly, 24 hours a day [1]; cheaper than employing staff for every query [1]. Limitations: cannot handle complex or unusual complaints, which may frustrate customers [1]; customers may prefer a human, and personal service is lost [1]. Judgement: use a chatbot for simple questions with an option to reach a person [1].

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Frequently asked questions

Is web chat a type or a method of communication? It is a method. The syllabus types are written, oral, electronic and visual; web-based chat (including chatbots) is an electronic method.

Does a voluntary chain mean the shops are owned by the wholesaler? No. The retailers stay independently owned; they agree to buy mainly from one wholesaler and share branding and promotions.

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Where marks are usually lost

• Giving a reason for outsourcing without explaining how it benefits the business in the scenario.
• Describing wholesaler functions without saying who benefits.
• Recommending a communication method without naming the factor that justifies it.