OCR GCSE (9–1) Business

Sunday February 1st 2026 – Morning

J204/02
Business 2: operations, finance and influences on business

Time allowed: 1 hour 30 minutes

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INSTRUCTIONS
●​ Use black ink.
●​ Write your answers in the spaces provided.
●​ Do not write in the barcodes.
●​ A calculator may be used.

INFORMATION
●​ The total mark for this paper is 80.
●​ The marks for each question are shown in brackets [ ].
●​ Quality of extended responses will be assessed in questions marked with an asterisk
(*).
●​ This document has 20 pages.

ADVICE
Read each question carefully before you start your answer.
Section A:

1) A furniture manufacturer produces one-off, custom-designed wardrobes for

individual customers. Which production process is most appropriate, and why?

A. Batch production, because it allows standardisation while meeting customer needs​

B. Flow production, because it minimises unit costs and maximises output​
C. Job production, because it allows flexibility and skilled labour input​
D. Flow production, because demand is predictable and continuous

2) Which situation is most likely to justify a business investing in robotics?

A. A seasonal business with fluctuating demand​

B. A business aiming to increase labour motivation​
C. A business producing large volumes of identical products​
D. A business focusing on personalised customer service

3) In 2026, a business sold 18 million items at an average price of £1.20 per item.​
Its cost of sales for the year was £14.4 million.​
The business made a gross profit of:

A £7.2 million​
B £21.6 million​
C £36 million​
D £43.2 million

4) Which of the following best describes quality assurance rather than quality
control?

A. Inspecting finished products before they are dispatched​

B. Checking customer complaints after a product recall​
C. Designing systems to prevent faults occurring​
D. Removing defective products from a production line

5) An entrepreneur’s business has annual sales revenue of £150,000.​

The entrepreneur expects a gross profit margin of 10% in each of the first three years
of trading.

Over each of the first three years, the entrepreneur should expect to make:

A gross profit of £15,000 per year​

B gross profit of £45,000 per year​
C total gross profit of £15,000 over three years​
D total gross profit of £45,000 over three years
6) Why can poor product quality have a long-term negative impact on a business?

A. It always increases production costs​

B. It damages reputation and reduces customer loyalty​
C. It prevents a business from using automation​
D. It reduces employee motivation in all cases

7) Which is a key advantage of e-commerce compared to face-to-face selling?

A. Higher levels of personalised customer interaction​

B. Immediate customer feedback during the sales process​
C. Access to a wider market at lower operating costs​
D. Greater control over customer purchasing decisions

8) A business has experienced a fall in its net profit margin from 7.8% to 5.4%.​
This means that:

A every £100 of sales earns £2.40 less net profit than it used to​
B for every £100 of sales the business now earns £2.40 net profit​
C net profit levels have fallen by 2.4%​
D the business has made a net loss of 2.4%

9) How does effective after-sales service most directly benefit a business?

A. It guarantees higher production efficiency​

B. It helps retain customers and encourage repeat purchases​
C. It reduces the need for staff training​
D. It removes the need for product warranties

10) Which aspect of consumer law is most likely to increase costs for a business?

A. Requirements to offer discounts​

B. Obligations to ensure goods are safe and of satisfactory quality​
C. Restrictions on advertising methods​
D. Limits on business opening hours

11) A manufacturer relocates closer to its main suppliers. What is the most likely
reason for this decision?

A. To improve staff motivation​

B. To reduce transport costs and delivery times​
C. To increase customer footfall​
D. To improve brand image
12) The table below shows a company’s total costs over the last four years.

Year 2023 2024 2025 2026

Operating £240,00 £260,00 £300,00 £360,00

costs 0 0 0 0

Other costs £60,000 £40,000 £50,000 £80,000

The percentage change in the company’s total costs from 2023 to 2026 was:

A 25%​
B 33.3%​
C 40%​
D 50%

13) Which source of finance is most suitable for an established business funding
expansion?

A. Owner’s capital​
B. Retained profit​
C. Crowdfunding​
D. Government grants only available to start-ups

14) A market trader invested £4,600 in a business venture.​

Over a period of 4 years, the trader received total returns of £12,500.

The market trader’s average rate of return was approximately:

A 17%​
B 43%​
C 79%​
D 172%
15)Abdul runs a market stall that sells cakes. His most popular product, the Chocolate
Sponge, is currently priced at £3.00.

Abdul is considering changing the price he charges for the Chocolate Sponge.​
The table below shows Abdul’s expected weekly sales of the Chocolate Sponge at
various prices.

Chocolate Sponge Expected weekly

Price sales

£2.40 180

£2.70 140

£3.00 100

£3.30 60

This data is useful to Abdul when making this pricing decision because it shows that:

A changing the price charged for each cake will have little effect on total revenue​
B charging a relatively high price for each cake is likely to increase total revenue​
C reducing the price charged for each cake is likely to increase total revenue​
D the current price should not be changed because it maximises total revenue
16

Premier Inn is a profitable hotel chain with locations across the UK. The managers of
one of its coastal hotels, Liam and Priya, are now considering opening a second
Premier Inn in a town further along the coast. It would cost £2 million to buy the
property and £0.8 million for redecoration.

To fund the £2.8 million expansion, the management team is considering either taking
out a bank loan or partnering with an investor. The hotel chain already has one bank
loan but has calculated that it could afford a second loan as long as borrowing costs
do not rise significantly.

If the team decides to accept a new investor, they are considering approaching Aisha,
a friend of Priya’s, who has recently returned to the UK after travelling. Aisha is
currently unemployed but is a keen foodie and sustainability advocate.

The management team has forecasted the following revenues and costs for the
proposed 30-room Premier Inn hotel:

●​ Selling price: £120 per day per room​

●​ Fixed costs: £7,500 per week​

●​ Variable costs: £50 per day per room​

(a) Identify one reason, other than opening a new hotel, why a business might need
finance.​
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........ [1]

(b) Explain why making a profit is important for the future of a business.​
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................ [2]

(c)(i) Calculate the daily break-even number of rooms for the proposed Premier Inn
hotel. [3]

(ii) Identify two ways a break-even analysis can be useful to a business.

1...............................................................................................................................................
2................................................................................................................................................
[2]​
(iii) Analyse one disadvantage to Liam and Priya if the proposed hotel’s fixed costs
were 10% higher than expected.​
...................................................................................................................................................
...................................................................................................................................................
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....................... [3]

(d) (i) State 2 sources of finance other than bank loan and taking on a new partner.

1…………………………………………………………………………………………………………
2…………………………………………………………………………………………………………
[2]

(ii) Evaluate whether Liam and Priya should fund the proposed Premier Inn hotel by
taking on Aisha as a new partner or by using a bank loan. In your answer, consider
both financial and non-financial factors.​
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[7]
17

Boots UK Ltd is a major health and beauty retailer with over 2,500 stores across the
UK and Ireland. Boots sells a wide range of products including medicines, skincare,
cosmetics, and health supplements. Its headquarters are in Nottingham, England. In
2025, Boots reported sales revenue of £7,850m, from which it made a gross profit of
£3,120m.

Boots has a strong focus on ethical business practices and customer safety, which is
central to its operations. The company employs approximately 45,000 people,
including 5,000 staff in its product development and research teams.

Technology plays a key role in Boots’ operations. The company uses automated stock
management systems, online ordering platforms, and in-store self-checkouts to
provide high-quality service for its customers. These customers include individual
shoppers, healthcare professionals, and pharmacies.

In recent years, Boots has changed the way it sells its products. Previously,
customers mainly shopped in-store; now, Boots offers online ordering through its
website and app, with home delivery and click-and-collect services. Boots reports that
this approach allows it to meet customer needs more efficiently, reduce operational
costs, and maintain high standards of customer service.

(a) Identify two features of a private limited company.​

1 ...............................................................................................................................................​
2................................................................................................................................................
[2]

(b) State two reasons why quality in the production or sourcing of products is
important to Boots.​
1................................................................................................................................................​
2................................................................................................................................................
[2]

(c) Analyse one reason why it is important to Boots that its online and in-store staff
have good product knowledge.​

...................................................................................................................................................​
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...................................................................................................................................................​
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[3]

(d) Calculate Boots’ gross profit margin for 2025.

Show your workings​

Answer ........................................................ [2]
(e) Explain one way technology might affect operations at Boots.​
...................................................................................................................................................​
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[2]

(f) (i) Analyse one advantage and one disadvantage to Boots of operating as a large
retail chain with stores across the UK and online.

Advantage .........................................................................................................................​
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Disadvantage ....................................................................................................................​
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(f) (ii) Recommend whether Boots should focus on expanding its online operations or
opening more physical stores. Justify your answer.​
...........................................................................................................................................​
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........................................................................................................................................... [3]
18

Twist Cubes Ltd​

Twist Cubes Ltd is a British company that designs, manufactures, and sells Rubik’s
Cubes and other twist puzzles. It is one of the largest puzzle manufacturers in the UK
and sells products internationally, with distributors in over 40 countries including the
USA, Germany, and Japan.

Twist Cubes recently launched a new factory and retail outlet in Leicester, located in
an industrial area with easy access to suppliers and transport links. Before this, the
nearest twist puzzle stores were more than 20 miles away.

The company takes ethics and sustainability seriously. Twist Cubes now uses
biodegradable packaging and responsibly sourced plastic to reduce its environmental
impact. All its factories comply with international environmental standards to ensure
sustainable production of puzzles.

To remain competitive, Twist Cubes sells a wide range of products, including 2×2, 3×3,
4×4 cubes, and specialty puzzles. The company constantly invests in research and
development to produce new puzzle designs and improve existing ones. Recently,
Twist Cubes upgraded its computer-aided manufacturing systems and inventory
management software to improve efficiency across its operations, including
production, logistics, and finance.

(a) State two ways why promotion of products are used by businesses.
1 ................................................................................................................................................
2 …………………………………………………………………………………………………………
[2]
(a) State what is meant by logistics to a business.
…………………………………………………………………………………………………………..
[1]

(c) (i) Analyse the impact on two stakeholder groups of Twist Cubes Ltd changing the
way it procures materials for its Rubik’s Cubes (e.g., switching to ethically sourced
plastic and biodegradable packaging).

Stakeholder group 1 ...........................................................................................................​

Impact ....................................................................................................................................​
.................................................................................................................................................

Stakeholder group 2 ...........................................................................................................​

Impact ....................................................................................................................................​
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[6]
(c) (ii) Recommend which stakeholder group will be most affected by the change in
the way it procures materials. Give reasons for your answer.
……………………………………………………………………………………………………………
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(d)(i) Explain one impact on Twist Cubes Ltd employees of the company investing in
upgrading its computer-aided manufacturing systems and inventory management
software.​
..................................................................................................................................................​
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[2]

(d) (ii) Identify two factors that might influence where Twist Cubes Ltd chooses to
locate a factory or retail outlet.

Factor 1 .............................................................................................................................​
Factor 2 .............................................................................................................................​
[2]

(e) Evaluate how promoting Twist Cubes Ltd’s use of ethically sourced materials and
sustainable packaging could impact the company.
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[9] ​ ​ ​ ​ END OF QUESTION PAPER