2025 Cambridge IGCSE Enterprise (0454) Practice Paper with Answers

Two marks for any two recognized skills of enterprising people. Examples include team building, creative thinking, delegation, communication, or planning.

1 mark for each valid skill identified (up to a maximum of 2 marks). Do not accept general personality traits (such as friendly or hardworking) unless they are clearly specified as skills.

A full definition includes raising small amounts of money (1 mark) from a large number of people or the public, usually online (1 mark).

1 mark for identifying that it involves raising money from a large number of people or the public. 1 mark for mentioning that this is usually done via the internet or online platforms.

Two correct methods to reduce or manage risk, such as purchasing insurance or producing a contingency plan.

1 mark for each correct way identified to reduce or manage risk, up to a maximum of 2 marks.

Benefits include providing a permanent record of what was said or agreed, and allowing the recipient to re-read the message at their own pace.

1 mark for each valid benefit identified, up to a maximum of 2 marks.

Market segmentation involves dividing a market (1 mark) into smaller groups of consumers with similar needs or characteristics (1 mark).

1 mark for mentioning dividing or splitting a market. 1 mark for mentioning doing so based on similar characteristics or needs.

Typical elements of an action plan include tasks, responsibilities, deadlines or timeframes, and resources needed.

1 mark for each correct element identified, up to a maximum of 2 marks.

An entrepreneur can demonstrate resourcefulness by identifying and utilising free or low-cost alternatives to expensive business inputs. For example, instead of renting a dedicated office space, they could work from home or use free co-working spaces. By doing this, they minimise their initial capital outlay, allowing the enterprise to survive the critical start-up phase despite having a very tight budget.

1 mark for showing an understanding of resourcefulness (e.g., finding creative solutions / using alternative resources). 1 mark for applying this to a budget constraint (e.g., substituting an expensive input with a free or cheaper alternative). 1 mark for explaining how this helps the start-up (e.g., reduces start-up costs, allowing the business to launch within budget).

Crowdfunding allows entrepreneurs to pitch their idea to a large online audience. If people like the idea, they contribute small amounts of money. This provides the necessary capital without the need to pay interest on a traditional bank loan. Additionally, it serves as validation of demand, confirming that customers are willing to pay for the product.

1 mark for identifying a valid advantage of crowdfunding (e.g., access to a large pool of investors, no interest payments, free publicity/market validation). 1 mark for explaining how this advantage works. 1 mark for explaining the benefit of this to the new enterprise.

Banks are risk-averse and require evidence that an enterprise will be profitable before lending money. A business plan outlines the market research, marketing strategies, and cash flow forecasts of the business. This document demonstrates to the bank manager that the enterprise has a clear path to profitability and the financial capacity to make regular loan repayments.

1 mark for identifying what banks look for / the role of a business plan (e.g., reducing risk, showing viability). 1 mark for explaining specific content in the plan that helps (e.g., cash flow forecast, market research). 1 mark for explaining how this leads to obtaining the loan (e.g., builds trust and proves the business has the capacity to repay the debt).

Action plans outline the tasks required to set up an enterprise. Including monitoring dates ensures that progress is regularly reviewed rather than waiting until the final deadline. If a task is delayed, the entrepreneur is alerted early and can take action, such as getting extra help, to prevent the entire project from being delayed.

1 mark for explaining what monitoring/review dates are (e.g., points to check progress against the timeline). 1 mark for explaining how they help detect issues (e.g., identifying delays, bottlenecks, or off-track tasks early). 1 mark for explaining the consequence/benefit to the enterprise (e.g., allows corrective action to be taken, ensuring final deadlines are met).

A food-delivery business must adhere to food hygiene and safety standards. Compliance ensures that meals are prepared and transported in a sanitary manner, reducing the risk of illness. This protects the enterprise from being sued or prosecuted by authorities, and prevents negative publicity that could ruin the brand's reputation and lead to business failure.

1 mark for identifying a reason for compliance (e.g., protecting customer health, avoiding legal penalties, maintaining reputation). 1 mark for explaining this in the context of a food-delivery enterprise (e.g., safe food storage, sanitary handling during transport). 1 mark for explaining the impact of compliance or non-compliance on the business (e.g., avoiding fines/closure, or building customer trust).

Using written communication, such as a shared online document or email, creates a clear, permanent record of who is responsible for each task and the deadlines. This minimises confusion compared to verbal instructions, which can be forgotten. Because everyone has access to the same written information, the team can coordinate their efforts more effectively and ensure no tasks are missed.

1 mark for identifying a relevant method of written communication (e.g., email, shared documents, instant messaging). 1 mark for explaining how it coordinates tasks (e.g., provides a permanent record, defines clear deadlines, reduces verbal misunderstandings). 1 mark for explaining the positive outcome for the enterprise (e.g., improved efficiency, task accountability, fewer missed deadlines).

During negotiations, active listening allows an entrepreneur to fully understand the supplier's priorities and limitations. For instance, the supplier might need quick payment rather than high prices. Recognising this allows the entrepreneur to offer rapid payment terms in exchange for a bulk discount, leading to a successful win-win outcome.

1 mark for showing understanding of active listening (e.g., listening to understand the other party's needs or constraints, asking clarifying questions). 1 mark for applying this to a supplier negotiation context (e.g., understanding the supplier's delivery times, payment terms, or minimum orders). 1 mark for explaining how this leads to a successful outcome (e.g., enables proposing a win-win compromise, securing better terms).

An entrepreneur can manage risk by diversifying their product range or target markets. For example, a bakery might expand from selling only bread to offering catering services. If demand for bread drops due to local competition, the catering segment can generate revenue, protecting the business from total failure.

1 mark for identifying/defining diversification (e.g., offering a variety of products, targeting multiple markets). 1 mark for explaining how it reduces dependency (e.g., spreading risk so that failure of one product does not destroy the business). 1 mark for explaining the positive financial impact (e.g., stable cash flow, protecting overall business survival).

An entrepreneur might choose survival because a new business is at its highest risk of failure in the first year. By focusing on survival, the entrepreneur prioritizes covering fixed and variable costs (break-even) rather than maximizing profits. This focus on cash flow management ensures that the business does not run out of money, allowing it to establish its brand, build a customer base, and transition to growth objectives in the future.

1 mark for identifying a valid reason for choosing survival (e.g., high risk of failure, focus on break-even/cash flow). 1 mark for explaining this reason in the context of a new business (e.g., lack of established customer base, unpredictable sales). 1 mark for explaining the outcome/consequence (e.g., keeps the business trading so it can pursue long-term objectives later).

One advantage of visual communication is that it simplifies complex sales data, making it instantly understandable. A bar chart shows trends and comparisons clearly, such as monthly revenue increases. This allows potential investors to quickly grasp the financial health and potential of the enterprise, which makes the presentation more persuasive and increases the chance of securing investment.

1 mark for identifying an advantage of visual communication (e.g., easy to understand, highlights trends, saves time). 1 mark for applying it to sales data (e.g., showing a clear pattern of growth or comparing performance across months). 1 mark for explaining the impact on the investors (e.g., keeps them engaged, aids quick decision-making, increases persuasiveness).

To calculate the break-even point in units: 1. Calculate the contribution per unit: \(\text{Contribution per unit} = \text{Selling price} - \text{Variable cost per unit}\), which is \(\$12 - \$4 = \$8\). 2. Calculate the break-even point: \(\text{Break-even point} = \frac{\text{Fixed costs}}{\text{Contribution per unit}}\), which is \(\frac{\$240}{\$8} = 30\) candles.

Award marks as follows: 1 mark for showing the correct contribution calculation or formula: \(12 - 4 = 8\). 1 mark for correct substitution into the break-even formula: \(\frac{240}{8}\). 1 mark for the correct final answer of 30 (accept '30' or '30 candles'). Note: If the correct final answer is given with no working shown, award all 3 marks.

To identify a viable business opportunity for our school-based juice stall, our team first brainstormed several ideas, including selling handmade stationery or fresh fruit juice. To determine viability, we conducted market research by surveying 50 classmates about their preferences and spending limits. The survey revealed a high demand for healthy beverages during lunchtime and a willingness to pay $2 per cup. Based on this feedback and a SWOT analysis showing low startup costs, we identified the fruit juice stall as our chosen viable enterprise.

Award 1 mark for identifying a relevant method used to generate or identify opportunities (e.g., market research, brainstorming, SWOT, observation). Award up to 3 additional marks for application and explanation showing how this method was used to find a viable opportunity in their own project. Example answer (4 marks): We started by brainstorming different ideas such as selling keychains or doing a bake sale (1 mark). To see if these were viable, we carried out market research by distributing a questionnaire to students in our school (1 mark). This showed that 80% preferred baked goods over keychains (1 mark). Therefore, we identified the bake sale as a viable business opportunity because of high student demand (1 mark).

Level 4 (9-10 marks): Candidate provides a balanced and detailed evaluation of both the benefits (e.g., ensuring accountability, meeting deadlines) and limitations (e.g., inflexibility when unexpected delays occurred) of their action plan. Specific examples from their enterprise project are used effectively to support points. A clear, justified conclusion is provided. Level 3 (7-8 marks): Candidate provides clear analysis of how the action plan helped or hindered progress, using examples. Explains the consequences of following or failing to follow the plan. Level 2 (4-6 marks): Candidate applies concepts to their own enterprise by describing how the action plan was used (e.g., listing specific tasks, assigned roles, and dates). The response is mostly descriptive. Level 1 (1-3 marks): Candidate shows basic knowledge of what an action plan is or lists its typical contents (tasks, dates, resources, monitoring).

AO1 (Knowledge): 2 marks for showing understanding of action plans and their components. AO2 (Application): 2 marks for applying action planning to their own enterprise project. AO3 (Analysis): 2 marks for explaining the benefits and limitations of using the plan to manage the project. AO4 (Evaluation): 4 marks for a justified conclusion on the overall effectiveness of the action plan.

Level 4 (9-10 marks): Candidate provides a detailed evaluation of the importance of preparation compared to other negotiation stages (like bargaining or agreement). Specific examples from their own negotiation are used (e.g., preparing a budget to negotiate with a supplier). A well-justified judgment is made on whether preparation was the critical factor in their success. Level 3 (7-8 marks): Candidate provides analysis of how preparation (or the lack thereof) affected the negotiation process and its outcome. Level 2 (4-6 marks): Candidate describes a negotiation from their enterprise project, including what preparation was done. The response is descriptive rather than analytical. Level 1 (1-3 marks): Candidate shows basic knowledge of the negotiation process or the preparation stage (e.g., setting targets or BATNA).

AO1 (Knowledge): 2 marks for identifying features of negotiation preparation. AO2 (Application): 2 marks for applying negotiation concepts to their own enterprise experience. AO3 (Analysis): 2 marks for explaining how preparation (or lack of it) impacted the later stages of negotiation. AO4 (Evaluation): 4 marks for a justified judgment on the overall importance of preparation.

Candidates should evaluate their use of an action plan in their own enterprise project. Strong responses will discuss: 1. Specific aspects of their action plan, such as task division, setting realistic deadlines, and identifying resources. 2. Positive effects, including how the plan kept the team on schedule, allocated responsibility fairly, and monitored progress towards objectives. 3. Negative effects or limitations, such as a lack of flexibility, failing to update the plan as circumstances changed, or not including contingency plans. 4. A final evaluative judgment summing up the overall effectiveness of the action plan in achieving their project's objectives, supported by their analysis.

Level 4 (11-15 marks): Candidate provides a balanced, two-sided evaluation of their action plan's effectiveness, strongly applied to their own project with specific examples. A justified conclusion is present. Level 3 (6-10 marks): Candidate analyzes how the action plan helped or hindered their project's progress. There is good application to their project, explaining the effects of planning decisions. Level 2 (3-5 marks): Candidate describes their action plan, listing tasks, timelines, or roles. The response is mostly descriptive with limited analysis of effectiveness. Level 1 (1-2 marks): Candidate shows general knowledge of what an action plan is without applying it to their project. Level 0 (0 marks): No creditable response.

Candidates should evaluate a negotiation they undertook in their own enterprise project. Strong responses will discuss: 1. The preparation phase, including setting objectives, gathering evidence, and establishing fallback positions or BATNA. 2. The actual negotiation process, analyzing the communication methods, negotiation strategies used (e.g., compromise, win-win), and how they responded to the other party's concerns. 3. The outcome of the negotiation, both immediate (agreed terms) and long-term (impact on project success). 4. A final evaluative judgment determining how effective the entire process was in achieving a successful outcome, supported by clear reasoning.

Level 4 (11-15 marks): Candidate provides a balanced, two-sided evaluation of their negotiation process (preparation, conduct, and outcome), strongly applied to their own project with specific examples. A justified conclusion is present. Level 3 (6-10 marks): Candidate analyzes how specific parts of the negotiation process helped or hindered the outcome. There is good application to their project, explaining the effects of negotiation strategies. Level 2 (3-5 marks): Candidate describes a negotiation from their project, detailing who was involved, what was discussed, and what was agreed. The response is mostly descriptive. Level 1 (1-2 marks): Candidate shows general knowledge of negotiation concepts without applying it to their project. Level 0 (0 marks): No creditable response.