OCR A Level Business: The global environment of business (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.

This set covers the global environment of business in the OCR A Level Business (H431) specification, Version 2.1 (January 2026): globalisation, trade, exchange rates, the EU, emerging markets and the international points under other headings. Read the study guide and revision notes first; the earlier global context practice set has more. All businesses and figures are invented, and every exchange rate is given as foreign units per £1.

Questions

1. (a) Distinguish between a national business and a multinational business. [2] (b) Explain how a multinational that makes parts in one country and assembles them in another helps to deepen globalisation. [2]

2. Greaves Bakery is a village shop. Orbital Gadgets sells phone accessories online to several countries. Explain why Orbital Gadgets is likely to be more affected by globalisation than Greaves Bakery. [4]

3. Hollinfirth Audio, a UK firm, sells speakers abroad for USD 390 each and buys parts invoiced at ¥1,710,000. The rates are £1 = USD 1.30 and £1 = ¥190. (a) Calculate the pound price of one speaker. [2] (b) Calculate the pound cost of the parts invoice. [2] (c) The rates change to £1 = USD 1.20 and £1 = ¥180. Hollinfirth sells 500 speakers and pays one invoice a month. Calculate the net change in its monthly pound position. [4]

4. A country puts a 12% tariff on imported tiles. A UK firm exports tiles that cost the importer £45 before the tariff. (a) Calculate the cost to the importer including the tariff. [2] (b) Explain the purpose of the tariff and one effect on the UK firm. [3]

5. (a) Distinguish between free trade and membership of a trading bloc. [2] (b) Tyrrelby Tools, a UK hand-tool maker, buys steel abroad and sells mostly at home. A free trade agreement removes all tariffs between the UK and the steel-producing country. Analyse one advantage and one disadvantage of this agreement for Tyrrelby Tools and its employees. [4]

6. Penrhallow Homeware makes 30,000 kettles a year in the UK at a unit cost of £26.00. It plans to offshore production. The overseas unit cost is £15.50, with a tariff of 10% of that cost on entry to the UK and shipping of £3.10 a unit. The one-off set-up cost is £120,000. (a) Calculate the landed cost per unit. [2] (b) Calculate the annual saving. [2] (c) Calculate the payback period in months, to one decimal place. [2] (d) State two non-financial reasons Penrhallow might keep production in the UK. [2]

7. Explain how political instability in an overseas country may affect a UK firm that exports to it. [4]

8. UK interest rates rise. Explain what this may do to the pound against other currencies, and the effect on a UK importer. [3]

9. Fernbury Skincare sells moisturiser in the UK and plans to enter a new overseas market. Option 1 is a standardised mix: UK packaging and price, expected sales of 60,000 units a year with a contribution of £6.00 a unit. Option 2 is an adapted mix: local-language packs, smaller sizes and a lower price, expected sales of 95,000 units a year with a contribution of £4.20 a unit, and a one-off adaptation cost of £110,000. Evaluate which mix Fernbury should use. [9]

10. Strathorne Foods is considering an emerging market with 3.2 million middle-income households, expected to grow by 11% a year. (a) State two features of an emerging market. [2] (b) Calculate the number of middle-income households after four years (to two decimal places, in millions) and the percentage rise (to one decimal place). [2] (c) Evaluate the impact of this emerging market on Strathorne Foods. [6]

11. Kestlemoor Robotics makes warehouse sensors in the UK and sells 20,000 a year at £85 each. Variable cost is £52 a unit and fixed costs are £420,000 a year. An overseas rival now sells a similar sensor in the UK for £70. Kestlemoor’s options are as follows. Response A: keep the price at £85, with sales expected to fall to 14,000. Response B: cut the price to £72, keeping sales at 20,000 and costs unchanged. Response C: buy the housings and circuit boards abroad, which cuts variable cost (including tariff and shipping) to £41 a unit, and cut the price to £72 with sales at 20,000. Response C adds £60,000 a year to fixed costs for quality checking, plus a one-off £90,000 retooling cost in year one. Recommend and justify how Kestlemoor should respond to increasing globalisation. [12]

Answers

1. (a) A national business operates in one country [1]; a multinational operates in more than one [1]. (b) Linking factories in different countries into one chain [1] ties together the economies, workers and suppliers involved, so trade and dependence between countries grow [1]. Examiner insight: A distinction needs both sides in one answer. Two separate definitions without a contrast are weaker.

2. Orbital buys and sells across borders, so it faces overseas rivals and currency changes [1] [1]. E-commerce makes it easy for customers to compare prices worldwide [1]. Greaves serves local customers with local inputs and few overseas rivals [1]. Examiner insight: Both businesses need to appear in the answer. A general statement about globalisation without applying it to Orbital would not answer “why more affected”.

3. (a) 390 ÷ 1.30 [1] = £300 [1]. (b) 1,710,000 ÷ 190 [1] = £9,000 [1]. (c) Speaker revenue: 500 × 390 = USD 195,000, which is £150,000 at 1.30 and £162,500 at 1.20, a gain of £12,500 [1] [1]. Invoice: 1,710,000 ÷ 180 = £9,500, a rise of £500 [1]. Net gain £12,000 a month [1]. Examiner insight: Show each conversion step, and state whether the net is a gain or a loss.

4. (a) 45 × 0.12 = £5.40 [1]; 45 + 5.40 = £50.40 [1]. (b) A tariff raises the price of imports [1], to protect home producers or raise revenue [1]. The UK firm’s tiles become dearer than local ones, so it may sell fewer [1]. Examiner insight: Purpose and effect are separate asks. Tie the effect to the exporting firm, not to the country.

5. (a) Free trade has no tariffs, quotas or similar barriers between trading partners [1]; a bloc cuts barriers among its members only, so outsiders still face them [1]. (b) Advantage: steel arrives without a tariff [1], so costs fall and Tyrrelby can cut prices or raise margins [1]. Disadvantage: overseas toolmakers also reach the UK tariff-free [1], so Tyrrelby may lose sales and employees may face reduced hours or redundancy [1]. Examiner insight: Analysis needs a chain: the feature, then the effect on this business. A bare list of points scores less.

6. (a) Tariff = 0.10 × 15.50 = £1.55 [1]; landed cost = 15.50 + 1.55 + 3.10 = £20.15 [1]. (b) Saving per unit = 26.00 − 20.15 = £5.85 [1]; annual saving = 5.85 × 30,000 = £175,500 [1]. (c) 120,000 ÷ 175,500 = 0.684 years [1] = 8.2 months [1]. (d) Any two: quality control, shorter supply lines, protecting the “made in the UK” reputation, currency or political risk abroad [1] [1]. Examiner insight: Convert years to months at the end, keeping the unrounded figure until then.

7. Instability can disrupt supply routes and deliveries [1] and may lead to sudden changes in rules, tariffs or payment [1]. Customers may cut spending or be unable to pay [1], so the exporter faces lower and less certain sales and may need to find other markets [1]. Examiner insight: Link each effect to exporting: orders, payment and risk.

8. Higher UK rates attract overseas savers [1], who need pounds, so demand for pounds rises and the pound tends to appreciate [1]. An importer then pays fewer pounds for goods priced in foreign currency [1]. Examiner insight: State the direction of the pound and then the effect on the importer. Reversing exporter and importer is a common slip.

9. Option 1 earns 60,000 × 6.00 = £360,000 a year [1]. Option 2 earns 95,000 × 4.20 = £399,000 a year [1], but £289,000 in year one after the £110,000 cost [1]. Cumulatively Option 2 trails after two years (£688,000 against £720,000) and leads after three (£1,087,000 against £1,080,000) [1]. Adapting suits local language and buying habits and may win more customers [1]; standardising keeps one brand image and avoids upfront cost [1]. The demand forecasts are uncertain, and the lead is small [1]. Judgement: adapt if Fernbury plans to stay in the market for at least three years and trusts the forecast [1]; otherwise a standardised launch is safer [1]. Examiner insight: Compare the two options with the figures and give a condition under which the answer would change. Quoting numbers without a comparison does not make a judgement.

10. (a) Any two: rapid economic growth, industrialisation, rising incomes, less developed or less stable than advanced economies [1] [1]. (b) 3.2 × 1.11⁴ = 4.86 million [1]; the rise is 1.11⁴ − 1 = 51.8% [1]. (c) Opportunity: a 51.8% rise in middle-income households suggests strong growth in demand for packaged food [1] [1]. Threats: local rivals know tastes and distribution [1]; currency swings could cut pound profit [1]; instability may disrupt trade [1]. Judgement: the growth justifies entry, probably through a local distributor to limit risk until the firm knows the market [1]. Examiner insight: Use the calculated growth in the evaluation. Judgement that rests on a stated condition reads as more convincing than a bare “it depends”.

11. Response A: contribution is 14,000 × (85 − 52) = £462,000, so profit is £462,000 − £420,000 = £42,000 [1] [1]. Response B: 20,000 × (72 − 52) = £400,000, so a loss of £20,000 [1] [1]. Response C: unit contribution is 72 − 41 = £31, giving £620,000; fixed costs are £480,000, so profit is £140,000 a year [1] [1], or £50,000 in year one after retooling [1]. In year one C already beats A by £8,000, and by £98,000 a year after that [1]. Weighing up: A adds no new risk but profit falls by 82.5% from £240,000 and stays exposed to further price cuts [1]. B makes a loss, so it is rejected. C carries risks: quality control, longer supply lines and currency movements [1]. Recommendation: choose C [1], provided sales hold near 20,000 and quality stays reliable; if buyers valued UK provenance enough for A’s volume to hold, A would be safer [1]. Examiner insight: A “recommend and justify” answer needs a chosen response, supporting figures and a reason the alternatives are weaker. Calculations alone leave the question unanswered.

Where marks are usually lost

• Using the wrong operation in a currency conversion.
• Stating an exchange rate effect without saying whether it helps the exporter or importer.
• Describing a tariff or quota without both its nature and its purpose.
• Writing textbook definitions that never mention the business in the case.
• Quoting case numbers without comparing them.
• Writing only advantages, or only disadvantages, on an evaluate question.
• Rounding part-way through a long calculation.

Frequently asked questions

How do you convert foreign currency into pounds in a business question? When the rate is written as foreign units per £1, divide a foreign-currency amount by the rate to get pounds, and multiply a pound amount by the rate to get foreign currency. Using the wrong operation is one of the most common ways to lose marks on these questions.

What do you need to say about an exchange rate change for the top marks? State whether the pound has strengthened or weakened, then explain whether the change helps or hurts the named business as an exporter or importer, using the figures given. A stated effect without its direction, or without a link to the business, earns few marks.

What topics are covered in the OCR A Level Business global environment questions? The global environment content of OCR A Level Business (H431) includes globalisation, multinationals, international trade and barriers to trade, exchange rates, free trade and trading blocs, the European Union and emerging markets. Questions range from short definitions to longer case-based evaluations.

What support can a business get when trading internationally? Financial support includes export credit insurance or guarantees, bank trade finance such as letters of credit, and government grants where offered. Non-financial support includes official advice and market data, trade fairs and delegations, business associations, and agents and distributors.

Next steps

• Read the study guide and revision notes.
• Visit the OCR A Level Business hub and the printable checklist.
• Try the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

OCR A Level Business (H431), Version 2.1 (January 2026), published by OCR, for first assessment in 2017 with final assessment in summer 2027. Content covered: The global environment of business.