OCR A Level Business: Models of strategic choice (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 section 1.10 “Models of strategic choice” of the OCR A Level Business (H431) specification, Version 2.1 (January 2026), for first assessment in 2017 and final assessment in summer 2027. Read the study guide and revision notes first. See also the course hub, the checklist, the strategy practice set and the free diagnostics. All businesses are invented.

Questions

1. Define the term competitive advantage. [2]

2. Identify three of the five forces in Porter’s Five Forces model. [3]

3. Explain the nature and purpose of Porter’s Five Forces model. [4]

4. Gorsefield Bakery sells plain loaves at £1.80 each, with a unit cost of £1.35, and sells 90,000 a year. Tinsley Artisan Bakers sells hand-shaped loaves at £4.20 each, with a unit cost of £3.15, and sells 20,000 a year.

(a) Calculate Gorsefield’s gross profit per loaf and its gross margin. [2] (b) Calculate the annual gross profit of each bakery. [2]

5. Vellan Print Studio prints leaflets and menus for small local firms. There are 14 print firms within 20 miles, with similar prices. Three online printers advertise nationally at lower prices. A basic digital press costs about £18,000. Vellan has 400 clients and none provides more than 4% of its revenue. Two wholesalers supply about 90% of the paper in the area, and one has raised prices by 8% this year.

Analyse the competitive forces facing Vellan, using Porter’s Five Forces. [6]

6. Explain the nature and purpose of Porter’s generic strategies. [4]

7. Identify the generic strategy that each business is following. [3]

(a) A firm sells one design of folding chair at the lowest price in the country, using one huge factory. (b) A firm makes luxury dog beds, sold only through independent pet boutiques. (c) A firm sells designer watches to all age groups through shops and online, backed by a strong brand.

8. Gorsefield Bakery (see question 4) runs one automated plant, buys flour in bulk and sells plain loaves mainly to supermarkets. It plans a stone-baked sourdough range at £3.40 a loaf, made on a slower process with a unit cost of £2.70. Evaluate Gorsefield’s current and proposed position using Porter’s generic strategies. [8]

9. Evaluate the usefulness of Porter’s Five Forces model to a business thinking of entering a new market. [8]

10. Evaluate the usefulness of Porter’s generic strategies to a business. [8]

11. Using your answer to question 5, recommend and justify a generic strategy for Vellan Print Studio. [6]

Answers

1. A feature of a business that lets it outperform its rivals [1], such as lower costs or something customers value, leading to more customers or higher margins [1]. [2] Examiner insight: A definition on its own is short; the second mark usually needs the source or the result of the advantage, not a repeat of the word “advantage”.

2. One mark for each of three correct forces from: rivalry among existing competitors; threat of new entrants; threat of substitutes; bargaining power of buyers; bargaining power of suppliers [3]. [3] Examiner insight: Identify questions need names only. Writing a full explanation of each force uses time that the later questions need.

3. Nature: a framework that examines five competitive pressures within an industry [1]. Purpose: to judge how attractive and profitable the industry is [1]. Strong forces push prices down or costs up, which squeezes profit [1]. A business can use this to decide whether to enter or stay, or what barriers or strategy to use [1]. [4] Examiner insight: “Nature and purpose” questions reward separating what the model is from what it is used for.

4. (a) Gross profit per loaf = 1.80 − 1.35 = £0.45 [1]. Gross margin = 0.45 ÷ 1.80 × 100 = 25% [1]. (b) Gorsefield: 0.45 × 90,000 = £40,500 [1]. Tinsley: (4.20 − 3.15) × 20,000 = 1.05 × 20,000 = £21,000 [1]. [4] Examiner insight: Show the formula and the working. A final figure that is wrong can still earn credit for a correct method, but only if the working is visible.

5. Any three forces, each worth two marks: evidence from the case, then an effect on profit. For example: rivalry is strong, because 14 firms with similar prices compete locally [1], which pushes prices down [1]. Substitutes are strong, because the online printers offer a close alternative at a lower price [1] that limits what Vellan can charge [1]. Supplier power is strong, because two wholesalers control 90% of paper and one has raised prices by 8% [1], which raises Vellan’s costs [1]. (Buyer power is weak, as no client exceeds 4% of revenue. New entrants are a moderate threat, as an £18,000 press is a low barrier.) [6] Examiner insight: Analysis answers gain credit when evidence is followed by an effect on profit. Naming a force with no case evidence earns little.

6. Nature: they are broad routes to competitive advantage, namely cost leadership, differentiation and focus [1]. Cost leadership means the lowest cost in the market; differentiation means a valued difference; focus means a narrow segment [1]. Purpose: to help a business choose a clear route to competitive advantage [1] and align its operations, marketing and finance behind it [1]. [4] Examiner insight: Naming the strategies without explaining them is a common way to stop at one mark.

7. (a) Cost leadership [1]. (b) Focus (differentiation focus) [1]. (c) Differentiation [1]. [3] Examiner insight: Look for scope as well as source. Part (b) is narrow, while part (c) targets the whole market.

8. Currently Gorsefield follows cost leadership: one automated plant, bulk buying and low prices [1]. Its margin of 25% on £1.80 gives £0.45 per loaf, so it relies on volume [1]. The sourdough range is differentiation: a higher price of £3.40 for a distinct product [1]. Its margin is £0.70 per loaf (20.6%), higher per loaf but lower as a percentage [1]. Risks: the slower process may not suit the automated plant, so costs and complexity rise [1]; a premium product in the same brand as cheap loaves may confuse customers [1]; supermarket buyers may resist the higher price [1]. Judgement: the move is worthwhile only if it is run as a separate, clearly branded range and volumes are sufficient; otherwise it risks weakening the cost advantage that currently works [1]. [8] Examiner insight: Evaluation needs a judgement that depends on a condition from the case, not just “it depends”.

9. For: it provides a structured check of rivalry, entry barriers, substitutes, buyers and suppliers [1], so it shows how profitable the new market might be [1] and where the entrant will face its strongest pressure [1]. Against: it is a snapshot, and technology or regulation can change the forces [1]; it describes the industry rather than the entrant’s own strengths [1]; judging how strong each force is involves opinion [1]; it does not say what to do [1]. Judgement: it is a useful first filter before entering, but only alongside other tools and forecasts [1]. [8] Examiner insight: A generic list of pros and cons scores less than points tied to entering a market. Link at least one point to the entrant’s position.

10. For: simple and forces a clear choice [1]; links to competitive advantage [1]; helps align functions behind one aim [1]. Against: many firms mix strategies successfully [1]; four boxes oversimplify, because differentiation can mean many things [1]; the model does not say how to build the needed capability [1]; it does not show whether the market is profitable [1]. Judgement: most useful for diagnosing what a business is doing, and best used with Five Forces [1]. [8] Examiner insight: A conclusion that states when the model helps most (for instance, for a firm with limited resources) reads as a judgement.

11. Recommend differentiation focus: a local, service-led offer for small firms [1]. Cost leadership is unsuitable: online printers already offer lower prices [1], and a local firm lacks the scale to beat them [1]. Differentiation focus fits because local clients value quick turnaround and design help [1] and 400 small clients give a stable base [1]. Risk: clients may still switch if the price gap grows, so Vellan should check that clients will pay a premium [1]. [6] Examiner insight: A justified recommendation names the strategy, then uses case evidence both to rule out an alternative and to support the choice.

Where marks are usually lost

• Describing a single business’s strengths instead of the industry in Five Forces answers.
• Listing forces without case evidence or an effect on profit.
• Treating all forces as equally important and not ranking them.
• Mistaking a low price for cost leadership.
• Ignoring scope when identifying focus.
• Giving margin as an amount rather than a percentage, or the reverse.
• Evaluating a model with points that would fit any model.
• Omitting a final judgement in “evaluate” and “recommend” answers.

Frequently asked questions

What models of strategic choice are in OCR A Level Business H431? Section 1.10 of the H431 specification covers Porter’s Five Forces, Porter’s generic strategies and competitive advantage. You need to explain each model’s nature and purpose, use it to evaluate a business’s position or proposed position, and evaluate its usefulness.

How do you approach an evaluate question on the usefulness of a model? Give points both for and against the model, then reach a judgement about when it is most useful. For Five Forces, for example, the trade-off is a structured check of the main pressures against the fact that it is only a snapshot of a changing market.

Is a low price the same as a cost leadership strategy? No. Cost leadership means having the lowest costs in the whole market, which allows a business to charge less and still earn a margin. A business can charge a low price without having low costs, which is not a sustainable advantage.

Next steps

• Revise from the revision notes and the study guide.
• Check the course hub and the checklist.
• Take the free diagnostics to find other weak topics.
• Book a free trial class.

Official syllabus

OCR, A Level Business (H431), Version 2.1 (January 2026), for first assessment in 2017 with final assessment in summer 2027: area of study “Business objectives and strategic decisions”, section “Models of strategic choice”.