OxfordAQA A-Level Business: Mission, objective and SWOT analysis (9725) – 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 3.3.1 Mission, objective and SWOT analysis of the OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, for International AS exams May/June 2027 onwards and International A-level exams May/June 2028 onwards. All of it is International A-level only content, assessed in Unit 3: Business analysis. If you are finishing the older 9625 specification, use your own specification instead. All businesses are invented.

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Questions

1. State two purposes of a mission statement. [2]

2. Orchard Point Hotels plc has 125 million shares in issue. Its share price is £1.84. Calculate its market capitalisation. [2]

3. Orchard Point paid total dividends of £9.6 million last year on 80 million ordinary shares (before a later share issue). The share price at the time was £2.40. Calculate the dividend yield. [4]

4. A furniture maker sets an objective to cut its carbon emissions by 30% within four years. Explain how this objective could affect its operations function. [4]

5. Penrowan Print had an average of 56 employees last year, and 14 left. It completed 8,400 print jobs against a maximum potential output of 10,500. The industry averages are labour turnover 15% and capacity utilisation 85%.

(a) Calculate Penrowan’s labour turnover. [2] (b) Calculate Penrowan’s capacity utilisation. [2] (c) State whether each result is a strength or a weakness, giving a reason. [2]

6. A market grew from £80 million to £92 million in a year. A firm’s sales in that market rose from £10.4 million to £11.5 million.

(a) Calculate the market growth rate. [2] (b) Calculate the change in the firm’s market share, in percentage points. [3]

7. A firm has fixed costs of £90,000. It sells each unit for £45 and variable cost is £27 per unit. It sells 6,200 units. Calculate the break-even output and the margin of safety. [4]

8. A bakery chain finds that:

(a) when a rival raised its prices by 8%, the chain’s quantity demanded rose by 6%. Calculate the cross-price elasticity and state what it shows. [2] (b) when local incomes fell by 3%, the chain’s quantity demanded rose by 1.5%. Calculate the income elasticity and state what it shows. [2]

9. An online retailer finds a correlation of −0.72 between average delivery time and the rate of repeat orders. Explain what this shows and one limitation of using it in a SWOT analysis. [3]

10. Brockhall Quarry Ltd wants to extend its quarry towards a village. Analyse how stakeholder mapping could help Brockhall manage this decision. [6]

11. Analyse why the objectives of shareholders and employees in a public limited company may both overlap and conflict. [6]

12. Tallowfield Tiles plc (£000): revenue 12,500; operating profit 975; non-current liabilities 4,200; total equity 3,300; current assets 2,100 including inventory 1,300; current liabilities 1,400. Industry averages: ROCE 10%, gearing 40%, acid test 0.8. Labour turnover is 9% against an industry 14%. The directors want a growth objective of opening a second factory.

(a) Calculate Tallowfield’s ROCE and gearing. [4] (b) Evaluate whether a SWOT analysis based on this data is enough for the directors to decide on the growth objective. [12]

Answers

1. Any two: to communicate the business’s purpose and values to stakeholders [1]; to guide objectives and strategy, or to motivate staff and shape culture [1]. [2] Examiner insight: “State” questions reward brief, distinct points; two versions of the same idea tend to gain credit only once.

2. Market capitalisation = 125,000,000 × £1.84 [1] = £230 million [1]. [2] Examiner insight: Show the formula with the figures substituted; a bare final number risks losing the method credit if it is wrong.

3. Dividend per share = 9,600,000 ÷ 80,000,000 [1] = £0.12 [1]. Dividend yield = 0.12 ÷ 2.40 × 100 [1] = 5% [1]. [4] Examiner insight: Find dividend per share first; going straight from total dividends to a percentage is the usual way the method is lost.

4. Operations may need new, lower-emission machinery or energy sources [1], which raises short-term costs and may disrupt production while it is installed [1]. It may switch to recycled or locally sourced timber [1], which can cut transport emissions but may limit supplier choice or raise unit costs [1]. [4] Examiner insight: Each point needs a consequence for operations; naming “greener machines” alone earns less than explaining what changes in production.

5. (a) 14 ÷ 56 × 100 [1] = 25% [1]. (b) 8,400 ÷ 10,500 × 100 [1] = 80% [1]. (c) Labour turnover is a weakness: 25% is well above the 15% average, raising recruitment and training costs [1]. Capacity utilisation is a weakness: 80% is below 85%, so fixed costs are spread over fewer jobs [1]. Examiner insight: A strength/weakness label gains credit only when it is tied to the benchmark given in the question.

6. (a) (92 − 80) ÷ 80 × 100 [1] = 15% [1]. (b) Share before = 10.4 ÷ 80 × 100 = 13% [1]; share after = 11.5 ÷ 92 × 100 = 12.5% [1]; change = −0.5 percentage points [1]. Examiner insight: Sales rose, yet share fell; say “percentage points”, not “per cent”, for a difference between two shares.

7. Contribution per unit = 45 − 27 = £18 [1]. Break-even output = 90,000 ÷ 18 = 5,000 units [1]. Margin of safety = 6,200 − 5,000 [1] = 1,200 units [1]. [4] Examiner insight: Give units with the answer; a margin of safety stated in pounds when the question works in units can lose credit.

8. (a) XED = +6 ÷ +8 = +0.75: the products are substitutes [1], with a fairly weak relationship (below 1) [1]. (b) YED = +1.5 ÷ −3 = −0.5: an inferior good [1], so demand rises in a downturn, a possible strength in recession [1]. Examiner insight: The sign carries the meaning; a correct number with the wrong interpretation of the sign gains little.

9. A strong negative correlation: longer delivery times go with fewer repeat orders [1], so slow delivery is a likely weakness [1]. Limitation: correlation does not prove causation; other factors such as price or product range may explain repeat orders [1]. [3] Examiner insight: Comment on both sign and strength; “negative” alone earns less than “strong negative”.

10. Mapping places groups by power and interest so Brockhall can prioritise [1]. The planning authority has high power and high interest, so Brockhall should involve it early to avoid refusal and delay [1]. Villagers have high interest; their power rises if they organise or gain media coverage [1], so keeping them informed and offering dust and noise controls may prevent a campaign [1]. Lenders may have high power but lower interest, so they need to be kept satisfied about costs and returns [1]. However, the map is a judgement that can quickly change, so Brockhall must review it as opposition develops [1]. [6] Examiner insight: Answers that apply the grid to named groups in the case score more highly than ones that describe the four quadrants in general.

11. Overlap: both groups gain when the company grows profitably [1], because higher profits fund dividends and job security or pay rises [1]. Productivity gains from well-trained staff can raise both wages and returns [1]. Conflict: shareholders may want higher dividends now, which leaves less for pay [1]. Cost-cutting through automation or relocation can lift returns while cutting jobs [1]. The degree of conflict depends on time horizon: over the long term the overlap is usually greater [1]. [6] Examiner insight: Analysis questions reward developed chains of reasoning; a list of stakeholder wants with no cause and effect gains limited credit.

12. (a) Capital employed = 4,200 + 3,300 = 7,500 [1]; ROCE = 975 ÷ 7,500 × 100 = 13% [1]. Gearing = 4,200 ÷ 7,500 × 100 [1] = 56% [1]. (b) SWOT gives a structured view of the internal position before a strategic decision [1]. ROCE of 13% beats the 10% average, a strength that suggests the new factory could earn a good return [1]. Labour turnover of 9% against 14% suggests a stable workforce that could train new staff [1]. However, gearing of 56% is well above 40% [1], so borrowing for a second factory would raise interest costs and risk [1]. The acid test is (2,100 − 1,300) ÷ 1,400 = 0.57, below 0.8, so liquidity is a weakness if building costs overrun [1]. The data covers strengths and weaknesses only; it says nothing about demand, competition or the economy [1], which are the opportunities and threats [1]. It is also a snapshot, and the factors are not weighted [1]. Judgement: the data supports growth on profitability but not on how it is financed [1]. The directors also need market research and a forecast of returns before deciding [1]. Overall, the SWOT is a useful starting point but not enough on its own [1]. Examiner insight: Evaluation answers that use the calculated figures and reach a supported judgement tend to gain more credit than balanced lists with no conclusion.

Where marks are usually lost

• Dividing total dividends by market capitalisation instead of finding dividend per share first.
• Leaving out non-current liabilities from capital employed.
• Calling a figure a strength or weakness without comparing it to the benchmark given.
• Writing “per cent” for a change in market share when the answer is in percentage points.
• Reversing the meaning of a negative income or cross-price elasticity.
• Describing the stakeholder grid in general instead of placing the groups in the case.
• Treating opportunities and threats as internal factors.
• Ending an evaluation without a clear judgement.

Next steps

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Official syllabus

OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, for International AS exams May/June 2027 onwards and International A-level exams May/June 2028 onwards. Published by OxfordAQA.