OCR A Level Business: Mission statement and Corporate social responsibility (CSR) (H431) – 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 1.3 (Mission statement) and 1.4 (Corporate social responsibility (CSR)) of the OCR A Level Business specification (H431, Version 2.1, January 2026). Read the study guide first and use the revision notes for recall. Related topic pages: Objectives and Strategic Decisions practice and the topic study guide. Course hub: OCR A Level Business. Printable list: checklist. Definitions, payback and percentages follow standard forms; the specification gives none. Check your level first with the free diagnostics.

Questions

1. Define the term “mission statement”. [2]

2. Explain two purposes of a mission statement for a business. [4]

3. Explain what is meant by corporate social responsibility (CSR). [3]

4. Kestrel Valley Dairy has sales revenue of £9.6 million and operating profit of £1.8 million. It plans to give 1.5% of sales revenue each year to local school food projects.

(a) Calculate the annual cost of the donation. [2] (b) Calculate the donation as a percentage of operating profit, to one decimal place. [2]

5. Explain two ways in which a CSR policy might conflict with a business’s profit or other objectives. [6]

6. Aldersgate Tiles employs 140 people making hand-finished tiles for the restoration of old buildings. It sells mainly to architects and builders, and exports 30% of its output. The owners have never had a mission statement.

Recommend and justify a suitable mission statement for Aldersgate Tiles. [8]

7. Fenwick & Rowe is a consultancy with 60 staff that advises small manufacturers. The founders are considering writing a mission statement.

Evaluate the advantages and disadvantages to Fenwick & Rowe of having a mission statement. [8]

8. Fenwick & Rowe has decided to change its mission statement to focus on advising firms on sustainable manufacturing. The change will cost £40,000 (new materials, staff training and a website rewrite). The directors expect the change to raise contribution by £12,500 a year. About a quarter of its current clients are in traditional manufacturing.

(a) Calculate the payback period for the change. [2] (b) Evaluate the impact of the change in mission statement on Fenwick & Rowe and its stakeholders. [6]

9. Kestrel Valley Dairy buys 12 million litres of milk a year from 40 local farms and sells mostly to supermarkets under their own labels. It is writing a CSR policy that will pay farmers a premium of 2p per litre, switch to recyclable bottles, and publish its results. Operating profit is currently £1.8 million. Some shareholders want the money paid as dividends.

Evaluate the impact and importance of a CSR policy to Kestrel Valley Dairy and its stakeholders. [10]

10. Aldersgate Tiles is considering a £90,000 investment in solar panels for its kilns building. This is expected to save £15,000 a year in energy costs. It has £400,000 in cash reserves and wants a better reputation with architects.

(a) Calculate the payback period. [2] (b) Justify whether Aldersgate Tiles should go ahead with the investment. [6]

11. Kestrel Valley Dairy’s premium to farmers of 2p per litre on 12 million litres is paid out of operating profit. Sales revenue is £9.6 million. Each extra pound of sales brings 30p of contribution.

(a) Calculate the extra sales revenue needed to cover the premium, and express it as a percentage of current sales revenue, to one decimal place. [3] (b) Recommend and justify how Kestrel Valley Dairy could improve its CSR profile further, taking account of the conflict between CSR and profit. [9]

Answers

1. A short, public statement of what a business is for [1], covering what it does, who it serves and why (its purpose and values) [1]. [2] Examiner insight: A definition tends to need purpose plus one further feature. Confusing it with a numerical target (an objective) risks losing credit.

2. Purpose 1: it gives direction and guides decisions [1], because managers can test a proposal against it and reject those that do not fit [1]. Purpose 2: it communicates values to stakeholders [1], so customers, staff and investors know what the business stands for and may be more willing to deal with it [1]. [4] Examiner insight: Each purpose needs a reason attached; a bare list of two headings tends to gain less.

3. CSR means a business taking responsibility for the effects of its decisions on society and the environment [1], and acting ethically towards its stakeholders, such as employees, suppliers and the community [1], going beyond what the law requires, usually by choice [1]. [3] Examiner insight: “Charity” alone is too narrow; mention stakeholders and going beyond the law.

4. (a) 1.5% × £9,600,000 [1] = £144,000 a year [1]. (b) 144,000 ÷ 1,800,000 × 100 [1] = 8.0% [1]. [4] Examiner insight: Show the method. Dividing by sales revenue instead of operating profit is a typical slip.

5. Conflict 1: profit. CSR can raise costs, for example paying suppliers more or using greener materials [1], which lowers the profit margin unless prices rise or sales increase [1], and shareholders may expect higher dividends [1]. Conflict 2: growth or cost leadership. Refusing business with a supplier or customer that fails ethical standards can slow expansion [1], or higher costs reduce the ability to compete on price [1], leaving it weaker in price-sensitive markets [1]. [6] Examiner insight: Two distinct conflicts, each with a chain from action to cost to effect on the objective, tend to score better than one point repeated.

6. Statement: “To make the finest hand-finished tiles for the care of historic buildings, supplying architects and builders who value craft.” [1] Justification:

• It names the product and customers, so it fits what Aldersgate does [1] and tells staff what they are building [1].
• It stresses craft and restoration, which matches the needs of architects, its main buyers, and builds a clear reputation [1] and differentiates from mass-produced tiles [1].
• It guides decisions: a proposal to move into cheap, mass-produced tiles would contradict it [1] and could be rejected [1]. Limitation: “finest” cannot be measured, so objectives (such as defect rates or delivery times) are needed to turn it into action [1]. [8] Examiner insight: State the actual wording first, then tie each reason to the case. Generic reasons that would suit any firm tend to earn less credit.

7. Advantage 1: direction [1]. A shared statement helps the founders and 60 staff agree which clients and projects to pursue [1]. Advantage 2: reputation [1]. A clear purpose can reassure small manufacturers about what Fenwick & Rowe stands for and help it stand out from rivals [1]. Disadvantage: it may be ignored or restrict flexibility [1]. A narrow statement could discourage moves into new advice areas, and a vague one gives no guidance [1]. Judgement: for a small business whose reputation depends on trust, the benefits are likely to outweigh the costs provided the statement is specific and actually used in decisions [1], and reviewed as the business grows [1]. [8] Examiner insight: A judgement should state the condition on which it depends.

8. (a) 40,000 ÷ 12,500 [1] = 3.2 years [1]. (b) Impact on the business: 3.2 years is a fairly quick payback if the extra contribution holds [1], but it is an expectation and not certain, and the cost is paid immediately [1]. A quarter of clients are in traditional manufacturing, who might feel the firm has moved away from them and look elsewhere [1]. Impact on stakeholders: staff need retraining, which costs time but may open new work [1]. Founders and owners accept short-run cost for long-run growth [1]. Judgement: it is likely to be worthwhile if the existing clients are kept informed and the new market is real, because payback is short compared with the likely life of the strategy [1]. [8] Examiner insight: Use the data in the stem. Quoting the payback result and the one-quarter figure shows application; a general answer about disruption does not.

9. The impact on the business: the premium costs 2p × 12,000,000 = £240,000 a year [1], which is 13.3% of operating profit (240,000 ÷ 1,800,000) [1]. Recyclable bottles may add cost too [1]. Benefits: supermarkets selling own-label products may value ethical sourcing, helping retain contracts and reducing the risk of bad publicity [1], and farmers may supply more reliably [1]. Impact on stakeholders: farmers gain higher incomes and security [1]; shareholders may receive lower dividends in the short run, as some already say [1]; consumers and the environment benefit from recyclable packaging, though prices may rise [1]. Importance: high for a food business that relies on trust and on a small number of local suppliers [1]. Judgement: the policy is probably important for long-run reputation and supply security, provided the benefits (retention of contracts, reduced risk) can be shown to exceed a cost of that size, and published results make the claims credible [1]. [10] Examiner insight: Weighing stakeholders against each other, such as farmers against shareholders, shows more analysis than a list.

10. (a) 90,000 ÷ 15,000 [1] = 6 years [1]. (b) For going ahead: it improves the reputation with architects, who it wants to impress [1], and reduces future exposure to rising energy costs [1]. Cash reserves of £400,000 mean the cost can be met without borrowing [1]. After year 6 the savings are extra profit [1]. Against: 6 years is a long payback for a small business and the savings are an estimate [1]. Judgement: go ahead, provided the panels are expected to last well beyond 6 years and the reputation gains lead to sales, because the business can afford it and the aim is also to improve CSR standing [1]. [8] Examiner insight: A justified decision gives a clear choice, then reasons, then a condition or risk.

11. (a) Premium = 0.02 × 12,000,000 = £240,000 [1]. Extra sales needed = 240,000 ÷ 0.30 = £800,000 [1]. As a percentage of £9.6 million = 8.3% [1]. (b) Recommendation 1: publish independent audits of farm standards and the results [1]. This makes the claims credible to supermarkets and consumers [1] and costs little compared with the premium [1]. Recommendation 2: a staged programme, such as raising the premium only as sales grow [1], because extra sales of £800,000 (8.3%) are needed to cover the current premium, so the profit conflict is real [1] and phasing protects dividends [1]. Farmers, shareholders and supermarkets gain different things, so communicating the plan is essential [1]. Conflict with profit: the cost is certain, while the benefits (reputation, retention) are uncertain and slow [1]. Judgement: audits first, premium phased, because they build credibility while limiting the hit to profit [1]. [12] Examiner insight: Explain why the choice suits this business and how it handles the stated conflict; a list of ideas with no choice tends to score lower.

Where marks are usually lost

• Defining a mission statement as a target with figures; that is an objective.
• Defining CSR only as charity, without mentioning stakeholders or going beyond the law.
• Giving advantages and disadvantages without applying them to the named business.
• Using the wrong base figure for a percentage.
• Writing “CSR costs money” with no figure.
• Ignoring the time period.

Frequently asked questions

Are these OCR A Level Business H431 past paper questions? No. They are original practice questions written for Marlbridge on sections 1.3 (Mission statement) and 1.4 (Corporate social responsibility) of the H431 specification. Use them alongside OCR’s own past papers.

How do you show the cost of a CSR policy convincingly? Use a figure from the case and express it against the right base, for example as a share of operating profit rather than of sales revenue. Writing “CSR costs money” with no figure earns little.

Why does the time period matter in CSR and mission statement questions? Costs and savings may be one-off or yearly, so check the period in the stem before comparing them. Ignoring the time period is a common way to lose marks.

How should you answer a question asking you to write a mission statement? State the actual wording first, then tie each reason for it to the business in the case. Generic reasons that would suit any firm tend to earn less credit.

How do you analyse the effect of CSR on stakeholders? Weigh stakeholders against each other, such as suppliers who gain from a higher price against shareholders whose profit falls. A list of stakeholders shows less analysis.

Next steps

• Revise with the revision notes and re-read the study guide.
• Return to the OCR A Level Business hub and the checklist.
• Take the free diagnostics.
• Book a free trial class.

Official syllabus

OCR, Advanced GCE in Business (H431), specification Version 2.1, January 2026, for first assessment in 2017; sections 1.3 and 1.4 under Business objectives and strategy.