Lesson 1.2.4b

1.2.4b Impact of competition on business decision making Quiz: Pearson Edexcel Business, Unit 2

20 questions

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Lesson 1.2.4b, Impact of competition on business decision making: 20 multiple choice questions for the Pearson Edexcel GCSE Business (1BS0), Unit 2: Spotting a business opportunity, written with Revision Ninja.

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The 20 questions

  1. Which is an example of competition affecting a business's pricing decisions?

    • Keeping a product's price unchanged for ten years regardless of the market
    • Lowering a product's price after a rival launches a cheaper version
    • Raising a product's price because the owner wants a larger personal income
    • Setting a price only after the government has published its tax rate

  2. How can competition influence a business's decision about product range?

    • Competition has no effect on decisions about which products to sell in any market
    • Competition only affects decisions about where to place staff in the shop
    • A rival's wider range may push the business to add products to stay attractive
    • A rival's range always forces the business to stop selling all of its products

  3. Why might a business respond to competition by improving customer service?

    • To give customers a reason to choose it over competitors
    • Because the government requires all businesses to change their service each month
    • Because customer service has no influence on whether customers return
    • Because customer service is always more expensive than any other business cost

  4. A business decides to open a second shop after a competitor expands into the same town. What effect is competition having?

    • It is influencing the business's decisions about the colour of its logo only
    • It is influencing the business's location decisions
    • It is having no effect because the business had already planned to expand
    • It is influencing the business's tax payments to the government each year

  5. Which statement best describes the impact of competition on business decisions?

    • Competition means a business should always copy its competitors' every decision
    • Competition never affects business decisions because each firm works in isolation
    • Competition only affects the decisions of government bodies, not of businesses
    • Competition can make a business change its prices, products or service to survive

  6. Which action could a business take in response to a rival's lower prices?

    • Emphasising quality or service to show customers the extra value of its offer
    • Closing its doors until the rival's price rise is announced by the government
    • Cutting staff training so that more money can be spent on new products
    • Ignoring the rival and assuming its customers will not notice the lower price

  7. A business finds that a new rival is offering free delivery. Which decision is the rival's move most likely to affect?

    • Whether to introduce or change its own delivery service
    • The colour of the packaging used for its products on the shelves
    • How many hours its staff must work at the till each week
    • The number of years it must keep its accounts before filing them

  8. Which of these is a risk of ignoring competition when making decisions?

    • Always having to lower prices, even when the business is strongly positioned
    • Having too many customers and being unable to serve them all each day
    • Losing customers to rivals who better meet their needs
    • Paying more tax than is required by the government on its profits

  9. Why might strong competition lead a business to focus on a niche market?

    • A niche market always has more competitors than the wider market does
    • A niche can reduce direct competition and allow the business to serve a specific need
    • A niche market is always larger and easier to win than the mass market
    • A niche market removes the need to consider any competitors at all

  10. A business sets its opening hours to match a rival's but keeps its own prices. What does this show?

    • The business is being forced by law to match its rival's opening hours
    • The business is ignoring competition completely in all of its decisions
    • The business has no competitors because its prices are different
    • The business is responding to competition in some decisions but not others

  11. Which factor is most likely to limit how much a business can respond to a rival's price cut?

    • The age of the rival's founder, which affects the market's pricing
    • The colour of the rival's shop front and its signage on the high street
    • The number of letters the rival sends to customers each year by post
    • The business's own costs, which determine how low its price can go

  12. Which is the best description of a competitive environment?

    • A market where prices are set by the government for all businesses
    • A market where a single firm controls all the sales of a product
    • A market where customers never change the products they buy each year
    • A market where several firms compete for the same customers

  13. How might competition from online retailers affect a local shop's decisions?

    • It may lead the shop to improve its online presence or add delivery services
    • It may lead the shop to stop all contact with its customers completely
    • It may lead the shop to avoid any decisions about its product range
    • It may lead the shop to raise its prices by a large amount with no change

  14. A business chooses to stock products not sold by its main rival. Which decision is this?

    • A staffing decision to recruit more people for the sales team
    • A legal decision to register the business with the government each year
    • A financial decision to borrow money from a bank at a fixed interest rate
    • A product range decision influenced by the presence of a rival

  15. Which of these shows competition affecting a business's marketing decisions?

    • Changing its bank account to one that charges no fees for transactions
    • Moving its office to a different floor in the same building
    • Running an advertising campaign to highlight its advantages over a rival
    • Hiring a new accountant to prepare the firm's annual tax return

  16. Why is it important for a business to monitor its competitors regularly?

    • Because competitors' results are always published by the government each year
    • Because monitoring competitors removes the need for the business to set any prices
    • Because a business is legally required to copy every change a rival makes
    • Because changes in competitors' prices and products can require quick responses

  17. A business's sales fall after a rival opens nearby. What is the most sensible first step?

    • Ignoring the rival because the business has always been successful in the past
    • Closing the business immediately so that the rival is not able to win more sales
    • Doubling the price of every product in the shop to recover lost revenue
    • Investigating what the rival offers that the business does not

  18. Which of these is an example of a business using competition to improve its own offer?

    • Raising its prices after a rival announces a sale on the same products
    • Adding extended opening hours after seeing that a rival's shop is open later
    • Reducing its product range after seeing that a rival offers a much larger range
    • Closing its customer helpline after a rival introduces a free phone service

  19. Which of these is the most likely effect of intense competition on profit margins?

    • Profit margins become guaranteed by government policy for all firms in the sector
    • Profit margins may fall because firms are pushed to reduce prices
    • Profit margins always rise because customers become more loyal to every firm
    • Profit margins are unaffected because prices never change in competitive markets

  20. A business with a strong brand decides not to cut its prices when a rival does. Why might this be sensible?

    • The business must always match the rival's price by law in every market
    • Customers may value the brand enough to stay, so a price cut is not needed
    • The business will lose all of its customers if it keeps its price unchanged
    • Customers always prefer the cheapest product regardless of its brand or quality

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