OxfordAQA A-Level Business: Strategic positioning: Choosing how to compete (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 3.4.2, Strategic positioning: Choosing how to compete, in the 9725 specification for OxfordAQA International AS and A-level Business, Version 1.1 (International AS exams May/June 2027 onwards, International A-level exams May/June 2028 onwards). All of it is International A-level only and belongs to Unit 4: Business strategy. They are set on 9725 content; if you are finishing the older 9625 course, check every topic against your own specification. Every business named below is invented.

Before you start: 9725 checklist · teaching in the study guide · condensed revision notes · OxfordAQA A-level Business hub · Free 10-minute diagnostics

Case A: Orvelle Sleep. Orvelle makes mid-priced mattresses sold through furniture stores. Two large rivals run automated factories and sell at lower prices. Orvelle’s managers are considering repositioning as a premium brand: hand-finished springs, natural fillings, a ten-year guarantee, and sales through its own showrooms and website. Incomes in its home market are rising slowly, and more buyers now research mattresses online before buying.

Case B: Kestrun Express. Kestrun runs intercity coaches on one busy route. Its newest coaches have reclining seats and Wi-Fi, and it has the best on-time record on the route. A passenger survey scored each operator’s comfort out of 10.

Operator	Fare per trip	Comfort score
Kestrun Express	£31	8.2
Marrowind Travel	£29	6.4
Stoatley Coaches	£24	6.0
Hopwell Coaches	£18	4.5

Questions

1. State the purpose of market mapping. [2]

2. State two benefits to a business of having a competitive advantage. [2]

3. Explain why a business following a low cost strategy does not have to charge the lowest price in its market. [3]

4. Use the Case B table.

(a) Calculate the fare per comfort point for each operator, to 2 decimal places. [3] (b) Using your answers, identify one operator that looks vulnerable and one gap in the market. [2]

5. Orvelle currently sells 9,000 mattresses a year at £520, with a variable cost of £310 per mattress and fixed costs of £1,400,000. If it repositions, it expects to sell 6,500 a year at £760, with a variable cost of £430 and fixed costs of £1,650,000.

(a) Calculate Orvelle’s current annual profit. [2] (b) Calculate its expected annual profit after repositioning. [2] (c) Calculate the percentage change in profit. [2]

6. Explain two influences on whether Orvelle should choose a differentiation strategy. [4]

7. Analyse the implications of the premium repositioning for Orvelle’s operations and human resources. [6]

8. Explain why a business offering the same or fewer benefits than rivals at a higher price is unlikely to keep its customers. [3]

9. Kestrun’s comfort features allow it to charge £4.50 more per trip than it could otherwise charge, and it carries 120,000 passengers a year. Marrowind then buys new coaches with reclining seats and Wi-Fi. Kestrun’s premium falls to £2.00, although passengers rise to 126,000 as the route grows.

(a) Calculate the annual revenue Kestrun earned from its premium before Marrowind’s change. [2] (b) Calculate the revenue from the premium afterwards and the percentage fall. [3]

10. Using Case A and your answers to questions 5 and 6, evaluate whether Orvelle should reposition as a premium mattress brand. [12]

11. Using Case B and your answers to questions 4 and 9, evaluate how far Kestrun Express can maintain its competitive advantage. [10]

Answers

1. A market map shows where competing brands or businesses are positioned on two features that matter to customers [1], so that a business can identify its closest rivals and any gaps to target when planning its own position [1]. Examiner insight: A definition of what a map looks like, with no purpose, answers only half the question; add what a manager would use it for.

2. Any two, one mark each: higher margins and profit; customer loyalty and steadier sales; greater bargaining power with suppliers or retailers; retained profit to reinvest; a stronger base for growth [1] [1]. Examiner insight: On a “state” question, two distinct benefits are needed; “more profit” and “more revenue” are close enough that they may be treated as one point.

3. A low cost strategy means having lower costs than rivals for a similar product [1]. The business can choose to match rivals’ prices instead of undercutting them [1], which gives it a wider margin per unit and avoids starting a price war that would reduce profits for everyone [1]. Examiner insight: The key is separating cost from price; answers that treat them as the same thing miss the point the question is testing.

4. (a) Fare ÷ comfort score for each operator [1]. Kestrun 31 ÷ 8.2 = £3.78; Marrowind 29 ÷ 6.4 = £4.53 [1]; Stoatley 24 ÷ 6.0 = £4.00; Hopwell 18 ÷ 4.5 = £4.00 [1]. (b) Marrowind looks vulnerable: it charges almost as much as Kestrun but scores much lower, so it gives the worst value per point [1]. Gap: no operator offers a comfort score of 7 or more for a fare in the low to mid twenties [1]. Examiner insight: Show the division for each operator; a list of final figures with no method leaves nothing to credit if one value is wrong.

5. (a) (520 − 310) × 9,000 − 1,400,000 [1] = 1,890,000 − 1,400,000 = £490,000 [1]. (b) (760 − 430) × 6,500 − 1,650,000 [1] = 2,145,000 − 1,650,000 = £495,000 [1]. (c) (495,000 − 490,000) ÷ 490,000 × 100 [1] = 1.0% rise [1]. Examiner insight: Remember to deduct the higher fixed costs after repositioning; comparing contribution alone overstates the gain.

6. Any two influences, each identified and then explained in Orvelle’s context: customers: incomes are rising only slowly, so many buyers may stay price-sensitive and not pay £760 [1] [1]; competitors: the two automated rivals have lower costs, so Orvelle cannot beat them on cost and differentiation avoids a contest it would lose [1] [1]; resources and finance: showrooms and hand-finishing need £250,000 more fixed costs a year, which Orvelle must be able to fund. Credit any two, up to four marks. Examiner insight: Generic influences such as “competition” gain little until they are tied to evidence in the case, such as the rivals’ automated factories.

7. Operations: hand-finished springs and natural fillings need slower, more skilled production and tighter quality assurance [1], so capacity per worker falls and unit variable cost rises from £310 to £430 [1]; the ten-year guarantee means faults are costly, so quality must be built in, not inspected at the end [1]. Human resources: Orvelle needs skilled craft workers, which may mean retraining current staff or recruiting [1]; skilled staff may need higher pay and stronger retention policies, as losing them would weaken the product [1]; showroom staff must be trained to explain the product’s benefits to customers [1]. Examiner insight: For each function, link the change to its effect on cost, quality or staff; an unconnected list of changes rarely reaches the higher levels on an “analyse” question.

8. Customers compare what they get for the price [1]. If rivals offer at least the same benefits for less, customers gain nothing by paying more and switch [1]. Such a position only survives where customers lack choice or information, for example a sole supplier in a remote area, and that rarely lasts [1]. Examiner insight: Strong answers mention the exception (little competition or poor information), which shows understanding beyond the basic idea.

9. (a) 4.50 × 120,000 [1] = £540,000 [1]. (b) 2.00 × 126,000 = £252,000 [1]; fall = 540,000 − 252,000 = £288,000 [1]; 288,000 ÷ 540,000 × 100 = 53.3% [1]. Examiner insight: State which figure is the base for the percentage; dividing by the new value instead of the original gives a different, wrong answer.

10. For repositioning: profit rises slightly, from £490,000 to £495,000 [1], because contribution per mattress rises from £210 to £330 [1], so fewer sales are needed: break-even falls from about 6,667 to 5,000 mattresses [1]. Orvelle cannot match the automated rivals on cost, so a differentiated position avoids a price war it would lose [1]. Against: the gain is only 1.0%, so the extra risk earns very little [1]; the margin of safety falls from 25.9% to 23.1%, so profit is more exposed if sales disappoint [1]; if sales reach only 6,000, profit would be £330,000, well below today’s [1]; slowly rising incomes may limit how many buyers pay £760, and showrooms and a brand take time and money to build [1]. Judgement: On these forecasts the financial case is weak, because the change in profit is small and the downside is large [1]. The decision turns on whether customers will value hand-finished, natural mattresses enough to hit 6,500 sales [1]. Orvelle could test demand first, for example selling a premium line online alongside its current range [1], before committing to showrooms; if early sales confirm demand, full repositioning becomes a stronger choice [1]. Examiner insight: Use the calculated figures in the evaluation; a judgement that rests on numbers you have already worked out is more convincing than one that ignores them.

11. Reasons it can maintain the advantage: On the survey Kestrun had the best value on the route at £3.78 per comfort point [1] and the best on-time record, which depends on operating skill and is harder to copy than equipment [1]; the route is growing, so passengers rose to 126,000 even after Marrowind’s upgrade [1]; it can reinvest profit in new features to stay ahead [1]. Reasons it may not: reclining seats and Wi-Fi can be bought by any rival, so the advantage was always easy to imitate [1]; revenue from the premium fell 53.3%, from £540,000 to £252,000, showing how fast it eroded [1]; Stoatley and Hopwell may upgrade too, and an entrant could target the gap for high comfort at mid-range fares [1]. Judgement: The equipment-based part of the advantage is fading and cannot be protected [1]. Kestrun’s lasting edge is reliability and brand, so it should invest there, for example in punctuality guarantees or loyalty rewards [1]. It can keep an advantage, but a smaller one, unless it keeps innovating faster than rivals copy [1]. Examiner insight: Separate advantages that can be bought from those built on skills or reputation; that distinction is what lets a judgement go beyond “it depends”.

Where marks are usually lost

• Describing a market map without saying what decision it supports.
• Treating low cost and low price as identical.
• Forgetting fixed costs when comparing the profit from two positions.
• Listing functional changes without linking cause and effect to the case.
• Claiming an advantage will last without asking how easily rivals could copy it.
• Ending an evaluation without a clear, case-specific decision and the factor it depends on.

Next steps

• Revise the key points: revision notes
• Re-learn anything you missed: study guide
• Linked topics: Porter’s five forces practice and SWOT practice
• OxfordAQA A-level Business hub and the 9725 checklist
• Book a free trial class
• Spot gaps in other topics: all free 10-minute diagnostics

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.