ENTRY LEVEL CERTIFICATE
IN
BUSINESS STUDIES
COURSEWORK
UNIT 2
BUSINESS AND ITS CUSTOMERS
How does a business decide what to sell?
Entry Level Certificate in Business Studies – Unit 2
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HOW DOES A BUSINESS DECIDE WHAT TO SELL?
Activity 1
When you and your friend leave school, you want to set up your own business.
Before deciding what kind of business to set up you will need to do some
research.
A
Suggest TWO types of desk research you can do.
(i) ________________________________________________________
(ii) ________________________________________________________
B
Suggest TWO types of field research you can do.
(i) ________________________________________________________
(ii) ________________________________________________________
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Activity 1
HOW DOES A BUSINESS DECIDE WHAT TO SELL?
Buffalo Fashions is an American company which sells fashion clothing for
young people. They want to start selling their products in this country.
They ask you to find out what price young people are prepared to pay to buy the
brand name Wrangler.
C
Ask TEN young people the questions provided in the questionnaire below.
QUESTIONS
TRAINERS
How often to you buy?
 once per year
 twice per year
 more than twice per year
How much do you pay?
 under £30
 £30-£50
 more than £50
What brand do you buy?
 Nike
 Adidas
 Other makes
D
Draw THREE graphs to show the results of your survey. This can be done
using a computer if you wish.
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How does a business set its price?
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HOW DOES A BUSINESS SET ITS PRICE?
A
Activity 2
MOST BUSINESSES ARE RUN TO MAKE A PROFIT.
When Buffalo Fashions open their shop a decision will have to be made on
the prices they will charge for the items they sell.
They will not be able to sell them at the same price they pay for them
because they will have costs to pay for the running of the shop. They will
also want to make a profit.
Make a list of FOUR expenses Buffalo Fashions will have when the shop is
open.
(i) ________________________________________________________
(ii) ________________________________________________________
(iii) ________________________________________________________
(iv) ________________________________________________________
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Activity 2
B
HOW DOES A BUSINESS SET ITS PRICE?
Buffalo Fashions opened their shop and sold jeans for £40 a pair. Twenty
pairs a week were sold.
The Manager then noticed that similar
jeans were being sold in other shops
for £45.
Buffalo Fashions put up the price of
their jeans to £45 but only sold 16
pairs a week.
(i) How much did the shop take by
selling 20 pairs at £40?
20 pairs @ £40 a pair
20 × 40 = £
(ii) How much did the shop take by
selling 16 pairs at £45?
16 pairs @ £45 a pair
16 × 45 = £
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HOW DOES A BUSINESS SET ITS PRICE?
C
Activity 2
The prices that Buffalo Fashions charge for the items they sell must be
more than the cost price. Cost price is the price Buffalo Fashions buy
their goods at from the wholesaler or warehouse. An amount is added to
cover costs and make a profit. This is called the MARK UP.
(i) Buffalo Fashions buy jeans for £10 a pair. They decide to MARK
UP the £10 by 100% to cover costs and make a profit. Work out the
price the jeans will be sold at.
(ii) T-Shirts brought by Buffalo Fashions for £2 are marked up 150%.
What is the selling price?
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Activity 2
D
HOW DOES A BUSINESS SET ITS PRICE?
If the jeans cost the business £10 per pair, how much profit would they
make if they sold 20 pairs @ £40 each?
PROFIT = TOTAL SALES - TOTAL COST
TOTAL SALES = Quantity Sold × Price
Total Sales = 20 × £ _______
Total Sales = £ _______ (A)
TOTAL COST = Quantity × Cost Price
Total Cost = 20 × £ _______
Total Cost = £ _______ (B)
PROFIT = Total Sales – Total Cost
Profit = £ _______ (A) – £ _______ (B)
Profit = £ _______
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HOW DOES A BUSINESS SET ITS PRICE?
E
Activity 2
If Buffalo Fashions sold 16 pairs of jeans at £45 each, how much profit
would they make?
PROFIT = TOTAL SALES - TOTAL COST
TOTAL SALES = Quantity Sold × Price
Total Sales = 16 × £ _______
Total Sales = £ _______ (A)
TOTAL COST = Quantity × Cost Price
Total Cost = Total Sales = 16 × £ _______
Total Cost = £ _______ (B)
PROFIT = Total Sales  Total Cost
Profit = £ _______ (A)  £ _______ (B)
Profit = £ _______
F
Which price would you recommend?
The price set in A or the price set in B?
Give a reason for your answer.
___________________________________________________________
___________________________________________________________
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How does a business promote its products?
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HOW DOES A BUSINESS PROMOTE ITS PRODUCTS?
A
Activity 3
In order to tell their customers about their products/services, businesses
need to ADVERTISE.
There are many different types of advertising.
Research methods of advertising then complete the chart below.
TYPES OF ADVERTISING
LOCAL ADVERTISING
NATIONAL ADVERTISING
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Activity 3
B
HOW DOES A BUSINESS PROMOTE ITS PRODUCTS?
Draw lines from each of the products or services in Column 1 to the best
means of advertising the product listed in Column 2.
Column 1
Column 2
An expensive perfume
Local newspaper
A second-hand bike
C
Local Radio
A school play
National television
A new chocolate bar
Poster
Bank services
Leaflets
Local tourist attraction
National newspapers
Mobile phone details
National magazine
SALES PROMOTION
Special offers are used to encourage customers to purchase goods, e.g. 10%
off.
10% Off
Buy One Get
One FREE!
End of Season
SALE
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HOW DOES A BUSINESS PROMOTE ITS PRODUCTS?
Activity 3
Buffalo Fashions are worried that fashions may be changing and that they will
be left with clothes they cannot sell.
(i) Suggest TWO ways in which people could be encouraged to buy clothes
from Buffalo Fashions.
1.
________________________________________________________
2.
________________________________________________________
(ii) Find TWO examples of advertisements for special offers. Attach them
below.
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Activity 3
D
HOW DOES A BUSINESS PROMOTE ITS PRODUCTS?
List THREE examples of SPONSORSHIP in sport.
(i) ________________________________________________________
(ii) ________________________________________________________
(iii) ________________________________________________________
E
Give ONE reason why companies are involved in sponsorship.
____________________________________________________________
____________________________________________________________
____________________________________________________________
F
Why do people complain about tobacco companies sponsoring sporting
events?
____________________________________________________________
____________________________________________________________
____________________________________________________________
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HOW DOES A BUSINESS PROMOTE ITS PRODUCTS?
G
Activity 3
What is meant by a "brand name"?
____________________________________________________________
____________________________________________________________
____________________________________________________________
H
Draw lines to connect the brand name in Column 1 with the product in
Column 2.
Column 1
Column 2
Cadbury's
Baked beans
Nescafé
Cornflakes
Kellogg's
Cat food
PG Tips
Chocolate
Daz
Coffee
Heinz
Tea
Fairy
Washing powder
Kit-e-Kat
Washing-up-liquid
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Activity 3
I
HOW DOES A BUSINESS PROMOTE ITS PRODUCTS
Buffalo Fashions has asked a famous pop star to open their first shop in
this country. Using a computer, design a poster advertising the event.
Include the following:
 date of opening;
 time of opening;
 name of famous pop star;
 special offers;
 name and address of business.
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HOW DOES A BUSINESS PROMOTE ITS PRODUCTS?
J
Activity 3
Why do you think Buffalo Fashions would ask someone famous to open
their shop?
____________________________________________________________
____________________________________________________________
____________________________________________________________
K
Write a short newspaper article about the opening of Buffalo Fashions' first
shop by your favourite famous person. This may be word processed.
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Activity 3
HOW DOES A BUSINESS PROMOTE ITS PRODUCTS?
Competitions encourage people to buy products.
L
Collect information on TWO competitions which are running at the
moment. Put the information in your folder.
M Buffalo Fashions is planning to give free gifts to its customers on opening
day. Suggest TWO suitable free gifts.
(i) _________________________________________________________
(ii) _________________________________________________________
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How does a business sell its products?
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HOW DOES A BUSINESS SELL ITS PRODUCTS?
Activity 4
Businesses sell their goods/services through a variety of outlets.
A
Make a list of the different ways a business can sell goods and services,
e.g. door-to-door.
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
B
Name your nearest market.
_________________________________
C
Give TWO examples of what is sold in the market.
(i) _________________________________________________________
(iii) _________________________________________________________
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Activity 4
D
HOW DOES A BUSINESS SELL ITS PRODUCTS?
Goods can be ordered, bought and sold without leaving your home.
Discuss this in a group and make a list of THREE ways in which this can be
done.
(i) _________________________________________________________
(ii) _________________________________________________________
(iii) _________________________________________________________
E
Write down the name of THREE well known mail-order catalogues.
(i) _________________________________________________________
(ii) _________________________________________________________
(iii) _________________________________________________________
F
What is the name given to a person who "runs a catalogue"?
_________________________________________________________
G
Give ONE reason why someone would want to "run a catalogue".
_________________________________________________________
_____________________________________
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WHERE DOES A BUSINESS SELL ITS PRODUCTS?
Activity 4
Many goods sold in the shops are bought in other countries and brought into this
country.
These goods are called IMPORTS.
H
Look at the labels on TWO items of clothing. Where were the clothes made?
(i) _________________________________________________________
(ii) _________________________________________________________
I
Write a paragraph saying why countries IMPORT goods and services.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
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Activity 4
WHERE DOES A BUSINESS SELL ITS PRODUCTS
Other countries buy goods and services from this country.
When these goods are sent out of the country they are called EXPORTS.
J
Make a list of THREE goods exported from this country.
(i) __________________________________________________________
(ii) __________________________________________________________
(iii) __________________________________________________________
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How does the business look after its customers?
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HOW DOES THE BUSINESS LOOK AFTER ITS
CUSTOMERS?
A
Activity 5
Buffalo Fashions want their customers to come back again. They have
decided to train their sales staff in customer care. Give TWO rules to be
followed by staff when dealing with customers.
(i) _________________________________________________________
(ii) _________________________________________________________
B
Customers of Buffalo Fashions may need information on the clothes they are
buying. Give TWO pieces of information which might be on the labels of
the clothes.
(i) _________________________________________________________
(ii) _________________________________________________________
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Activity 5
C
HOW DOES THE BUSINESS LOOK AFTER ITS
CUSTOMERS?
Bigger shops have Customer Service desks. Some customers are angry
when they approach Customer Services.
Imagine that Buffalo Fashions has a Customer Service desk and an angry
customer is returning a pair of jeans that have shrunk in the wash.
Work in pairs, one person being the customer and the other the sales
assistant. Prepare what each person may say to the other and write it down.
Your teacher may ask you to role-play this scene for the class.
D
Word process a guidance sheet for staff to follow when dealing with difficult
customers.
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HOW DOES THE BUSINESS LOOK AFTER ITS
CUSTOMERS?
Activity 5
Some items that we buy require an after-sales service.
E
Choose TWO pictures, from a magazine, of products that would require an
after-sales service and state the type of after-sales service which may be
needed.
(i) Product __________________________________________________
Type of after sales service ___________________________________
_________________________________________________________
(ii) Product __________________________________________________
Type of after sales service ___________________________________
_________________________________________________________
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Activity 5
F
HOW DOES THE BUSINESS LOOK AFTER ITS
CUSTOMERS?
Some goods are too heavy and big for people to carry home from the shops
themselves. Make a list of THREE items which would have to be delivered
to your home.
(i) _________________________________________________________
(ii) _________________________________________________________
(ii) _________________________________________________________
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What are the safeguards for customers?
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WHAT ARE THE SAFEGUARDS FOR CUSTOMERS?
A
Activity 6
The Manager of Buffalo Fashions knows that there are laws which look
after customers so it is important that all the products they sell are of a high
quality. Below are two laws that protect the consumer.
 SALE OF GOODS ACT
This Act states that goods sold must be of good quality, do what they
were made to do and must be the same as they are described.
 TRADE DESCRIPTIONS ACT
Goods must not be falsely described.
Goods must only be marked "reduced" if they have been selling at a
higher price for a certain amount of time.
B
Say which of the two laws, Sale of Goods Act or Trade Descriptions Act,
apply in the following cases.
(i) A jumper with a big hole in the sleeve.
_______________________________
(ii) A label on a shirt with "Pure Wool" on it. The jumper is actually
made of acrylic fibres.
_______________________________
(iii) A price label marked "Reduced from £25 to £20". The price has
always been £20.
_______________________________
(iv) A zip on a pair of jeans breaks after three weeks' wear.
_______________________________
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Activity 6
C
WHAT ARE THE SAFEGUARDS FOR CUSTOMERS?
Find out what a customer is entitled to if faulty goods are returned to a
shop. Write a short paragraph on your findings.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
D
Why is it important to keep the receipt when goods are bought?
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
E
Write down the number of the paragraph which matches the safety label.
1.
Kite-mark. The product has been checked by the British Standards
Institution and is a quality product.
2.
Safety Mark. The product has been checked by the British Standards
Institution and is safe for its purpose.
3.
Shows that a firm doing electrical work does the job to a high standard.
Number ____________
Number ____________ Number ___________
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WHAT ARE THE SAFEGUARDS FOR CUSTOMERS?
F
Activity 6
Name THREE items which should carry the Kitemark.
(i) _________________________________________________________
(ii) _________________________________________________________
(iii) _________________________________________________________
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Activity 6
WHAT ARE THE SAFEGUARDS FOR CUSTOMERS?
Design an A4 size leaflet about "The Citizens Advice Bureau". Make it suitable
for a young person. In the leaflet, give THREE examples of the types of
problems it can help with.
IH/MEW48(05)
24 May 2005
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