OCR GCSE Business: Business activity (J204) – 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, Business activity, of the OCR GCSE (9-1) Business specification (J204), Version 2.0 (January 2026), topics 1.1 to 1.6. All businesses and people are invented. Learn the content first from the study guide and the revision notes. The hub is at OCR GCSE Business and the checklist is printable checklist. For component-wide questions, see the earlier practice set.

The bracketed marks in the answers show where creditworthy points sit. On the longer questions, judge your own answer on the quality of reasoning and balance as well as the number of points.

Questions

1. Identify two characteristics of an entrepreneur. [2]

2. Ingrid Voss leaves her job to start Saffrondale Candles, selling hand-poured candles at craft fairs. She noticed that no shop in her area stocks them. Explain one risk and one reward for Ingrid of starting the business. [4]

3. Ingrid wants a £6 000 bank loan for equipment. Explain one way a business plan could help her to obtain it. [3]

4. Gideon Hallowby is a sole trader who runs Torrenby Signs. The business owes £38 000 and its assets are worth £29 500.

(a) Calculate the shortfall. [2] (b) Explain what unlimited liability means for Gideon. [2] (c) A friend invested £4 000 in a private limited company that has also failed. Explain the most she can lose. [2]

5. Oakmoor Textiles has sales of £0.78 million in a market worth £6.5 million.

(a) Calculate its market share. [2] (b) Explain why a business may aim for survival when it starts, but market share later. [3]

6. A community repair workshop run by volunteers and a plc both operate in the same town. Explain why their objectives may differ. [3]

7. Oakmoor Textiles plans a night shift, which would mean lorries arriving after 10 pm.

(a) Identify one internal and one external stakeholder of Oakmoor Textiles. [2] (b) Analyse the effect of the night shift on the local community. [3] (c) Explain one way employees could affect Oakmoor Textiles. [2]

8. Kelvedon Chutneys raised output from 5 400 jars a month to 6 480 jars a month.

(a) Calculate the percentage increase in output. [2] (b) State two other ways in which Kelvedon Chutneys could grow organically. [2]

9. Kelvedon Chutneys is considering external growth.

(a) It buys a company that makes glass jars. Identify the type of growth. [1] (b) It buys a rival chutney maker. Identify the type of growth. [1] (c) It buys a company that sells garden tools. Identify the type of growth. [1] (d) Explain the difference between a merger and a takeover. [2]

10. Stenmoor Brewing sells £2.4 million a year and holds £0.3 million in cash. A rival brewery is for sale at £1.8 million, and the owners want a bigger market share quickly. Evaluate whether Stenmoor Brewing should grow organically or by taking over the rival. [9]

11. Pruett and Aske, two friends, plan a catering business. Each can invest £15 000, but they will need supplier credit of £50 000 in the first year and a bank loan. They want to protect their personal savings. Recommend whether they should be a partnership or a private limited company. [8]

Answers

1. Any two from creativity, risk taking, determination, confidence [1] [1]. [2] Examiner insight: An identify question usually needs only the name of each characteristic, so a sentence of explanation tends to add nothing and uses time better spent elsewhere.

2. Risk: Ingrid gives up her regular pay and may lose her start-up money if sales at fairs are poor [1] [1]. Reward: she may earn profit from a gap in the market that no local shop fills, and she is her own boss [1] [1]. [4] Examiner insight: Answers tend to gain credit when each point is tied to Ingrid and her candles. A bare “she could lose money” is a weaker response than one that says which money and why.

3. The plan sets out the market, such as craft-fair buyers and expected sales [1]. A bank can then see that demand has been thought through [1], so it is more confident that Ingrid can repay the £6 000 and is more likely to lend [1]. [3] Examiner insight: Stopping at “it helps get finance” repeats the question. The development, which is why the lender cares, is where the extra credit usually sits.

4. (a) Shortfall = 38 000 - 29 500 [1] = £8 500 [1]. [2] (b) Unlimited liability means Gideon’s personal assets, such as savings, can be used [1] to pay the £8 500 the business cannot cover [1]. [2] (c) She can lose no more than the £4 000 she invested [1], because limited liability keeps her personal assets separate from the company’s debts [1]. [2] Examiner insight: Show the subtraction, and keep the £ sign. Part (b) reads best when it uses Gideon’s figure, not a general definition alone.

5. (a) Market share = 0.78 ÷ 6.5 × 100 [1] = 12% [1]. [2] (b) A new business has no customers, so its first aim is to stay in business and cover costs [1]. Once it is established and survival is secure, it can afford to chase more customers [1], so the objective changes as the business evolves towards winning a larger share than rivals [1]. [3] Examiner insight: Both sales figures must be in the same units, here millions. Part (b) needs a reason for the change, not just two objectives listed.

6. The workshop’s objective is likely to be providing a service to the community, not profit [1]. The plc has shareholders who expect profit and growth [1]. Objectives differ because of the ownership, motives and type of business [1]. [3] Examiner insight: Naming two objectives is knowledge. The reason they differ is what turns a list into an explanation.

7. (a) Internal: owners or employees. External: customers, suppliers, government or the local community. [1] [1] [2] (b) Lorries arriving after 10 pm cause noise [1], which can disturb sleep [1], so the community may complain and the business’s image may suffer [1]. [3] (c) Employees could choose to leave if they dislike night work [1], so Oakmoor would face recruitment costs and lost skills [1]. [2] Examiner insight: An analyse answer gains from a chain, with each step leading to the next. Check that part (a) is not both internal or both external.

8. (a) (6 480 - 5 400) ÷ 5 400 × 100 [1] = 20% [1]. [2] (b) Any two from gaining new customers, developing new products, increasing market share [1] [1]. [2] Examiner insight: The increase is divided by the original figure, not the new one. State needs no development.

9. (a) Vertical (backward), because the jar maker is a supplier [1]. (b) Horizontal, because it is a rival at the same stage [1]. (c) Diversification, because it enters an unrelated market [1]. (d) In a merger two firms agree to combine [1]; in a takeover one firm buys another, which may not welcome it [1]. [5] Examiner insight: Give the direction as well as “vertical” where the case shows it, and use the case clue, such as supplier or rival, to support the label.

10. For takeover: gives immediate extra output and customers, so market share rises faster than organic growth [1]; it removes a competitor [1]; it fits the owners’ wish for speed [1]. Against takeover: £1.8 million is far above the £0.3 million cash, so Stenmoor would need loans or investors [1]; combining two businesses can bring clashes of culture and staff worries [1]; the risk is high for a firm with sales of £2.4 million [1]. For organic growth: lower risk and easier to control [1], but it is slow and may not deliver market share quickly [1]. Judgement: with so little cash, a takeover looks too risky now, so organic growth, perhaps with a smaller deal later, is better [1] [9] Examiner insight: Evaluation answers tend to gain credit when they use the figures in the stimulus and end with a decision that follows from the argument.

11. Partnership: easy to set up and shares skills [1]; but liability is unlimited, so the friends’ savings are at risk if the business cannot repay £50 000 of credit [1] [1]. Private limited company: limited liability protects personal savings above the £15 000 each invests [1]; a bank and suppliers may feel safer dealing with a company [1]; but there are more rules to follow and it costs more to run [1]. Recommendation: a private limited company [1], because their stated aim of protecting savings and the size of the credit they need outweigh the extra rules [1]. [8] Examiner insight: A recommend answer needs a clear choice and a reason tied to the stimulus. Listing features of both types without choosing between them leaves the question unanswered.

Where marks are usually lost

• Giving an explanation for an identify or state question, and running out of time.
• Writing “limited liability” without saying what the owner can lose.
• Dividing a percentage change by the new figure instead of the old one.
• Mixing up internal and external stakeholders.
• Confusing horizontal and vertical growth, or merger and takeover.
• Evaluating with only one side and no judgement.
• Ignoring the numbers in the case study.
• Defining a term when the question asks you to apply it.

Frequently asked questions

How much should you write for an “identify” or “state” question in OCR GCSE Business? Identify and state questions need knowledge only, so one short answer with no development is enough. Writing a full explanation for these questions wastes time you need for the longer questions.

How do you calculate a percentage increase in a GCSE Business question? Subtract the old figure from the new one, divide the change by the old figure and multiply by 100. Show the formula and your substitution so that method marks can still be awarded if the final answer is wrong.

What section of the OCR GCSE Business specification do these questions cover? They cover section 1, Business activity, of OCR GCSE (9-1) Business (J204): enterprise and entrepreneurship, business planning, ownership, aims and objectives, stakeholders and business growth.

Next steps

• Revisit the revision notes for any section where you lost marks.
• Re-read the study guide.
• Tick off topics on the checklist and visit the course hub.
• Take the free 10-minute diagnostics.
• Book a free trial class at /trial/.

Official syllabus

OCR GCSE (9-1) Business (J204) specification, Version 2.0 (January 2026), section 1 Business activity. Published by OCR.