Cambridge IGCSE · Business Studies (0450)

Enterprise, business growth and size: Practice Questions

5 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Enterprise, business growth and size.

10 questions32 marksFree, no account

Question 1

1 mark

What term describes a business growing by opening new outlets using its own retained profits?

Question 2

1 mark

An entrepreneur is planning to launch a new eco-friendly cleaning service. According to the six stages of the enterprise process, which activity should be performed immediately after identifying a problem, need, or want?

Question 3

1 mark

Which of the following is a common diseconomy of scale that occurs as a business expands into a large enterprise?

Question 4

1 mark

A government uses the number of employees to measure business size. Why might this method be inaccurate when comparing a highly automated factory to a traditional handmade clothing workshop?

Question 5

1 mark

A multinational corporation experiences diseconomies of scale that lead to 'silo mentality,' where different departments refuse to share information or work together. Which specific type of diseconomy does this represent?

Question 6

3 marks

Distinguish between internal (organic) growth and external (inorganic) growth for a retail business.

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Question 7

5 marks

A retail company's sales revenue increased by \(25\%\) over the last year, yet its market share decreased. Analyze how this scenario is possible in a growing market.

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Question 8

4 marks

Why might using capital employed as a measure of business size be misleading when comparing a labor-intensive handmade furniture shop to a capital-intensive automated car plant?

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Question 9

7 marks

'TechNova' is a large software company that has recently acquired a chain of fitness centers. This is an example of conglomerate integration.

a) Define conglomerate integration and distinguish it from horizontal integration.
b) Explain two reasons why a business like 'TechNova' might choose to grow through external growth (takeovers) rather than internal (organic) growth.
c) Discuss whether market share is a better measure of business size than profit for a company like 'TechNova' when comparing it to its competitors. Justify your answer.

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Question 10

8 marks

A national bakery chain has grown rapidly through external growth by acquiring several smaller local bakeries (horizontal integration).

a) Explain two benefits the bakery chain might gain from horizontal integration.
b) As the business continues to grow, it may encounter diseconomies of scale. Discuss how communication problems and poor motivation can lead to higher average costs for a large business.

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