A-level Business (7132) · Paper 3: Business 3
RA10 predicted paper · June 2027 · Set B · Mark scheme · Time allowed: 2 hours · Maximum mark: 100
Written by RA10 from a question-by-question analysis of the AQA 7132 papers 2020-2025 and the v2.0 specification. This is not an official AQA paper and does not contain real exam questions.
Orchard & Vine Ltd
Question 01 [12 marks]
With reference to the Tannenbaum Schmidt continuum, analyse why Harriet's leadership style may have contributed to Orchard & Vine Ltd's success.
Indicative content
- Harriet 'sells' decisions - makes them herself but explains them: towards the manager-centred end but not purely 'tells'; paternalistic (looks after employees' welfare).
- Explaining decisions builds understanding and trust - smoother implementation and fewer misunderstandings.
- Welfare benefits (above-average pay, staff bus, hampers) meet security and social needs - loyalty; labour turnover only 4% keeps skilled cooks and recipe knowledge in the business.
- Fast decisions suit a family-owned business dealing with demanding supermarket buyers.
- Low turnover reduces recruitment/training costs, protecting margins.
- BUT limited delegation may slow innovation and create dependence on Harriet; a democratic style might use staff ideas more.
Levels of response (AO1 3 / AO2 3 / AO3 6)
| Level | Marks | Descriptor |
|---|
| 3 | 9-12 | Well-developed, relevant analysis applied throughout to the case. One fully developed line of argument can reach this level. |
| 2 | 5-8 | Reasonably developed analysis with some application to the case. |
| 1 | 1-4 | Limited knowledge and generic or undeveloped points. |
Why we predicted this: Spec 3.2.1: last tested as an extended question in Paper 3 in 2021; most recently elsewhere in 2023. Leadership appeared in Paper 3 in 2020 and 2021 using styles now replaced by Tannenbaum Schmidt.
Question 02 [12 marks]
Using Appendix A, analyse how the buyer power of supermarkets affects Orchard & Vine Ltd's profitability.
Indicative content
- Supermarkets' share of revenue rose from 21% to 64% - dependence gives buyers strong bargaining power.
- Annual price cuts and promotion/shelf fees reduce revenue per jar - operating margin fell from 14% to 7% as supermarket share rose.
- 60-day payment terms delay cash and may increase overdraft interest costs.
- Supermarkets' own-label chutneys are substitutes they control - threat of delisting.
- BUT supermarkets give volume and economies of scale; strong brand/premium recipes reduce buyer power somewhat; online and deli channels give some independence.
Levels of response (AO1 3 / AO2 3 / AO3 6)
| Level | Marks | Descriptor |
|---|
| 3 | 9-12 | Well-developed, relevant analysis applied throughout to the case. One fully developed line of argument can reach this level. |
| 2 | 5-8 | Reasonably developed analysis with some application to the case. |
| 1 | 1-4 | Limited knowledge and generic or undeveloped points. |
Why we predicted this: Spec 3.7.7: never set as an extended question in Paper 3 (2020-2025); most recently elsewhere in 2021.
Question 03 [16 marks]
Should Orchard & Vine Ltd launch the 'Fire & Honey' range?
Use calculations from Appendix B and other information to justify your view.
Indicative content
- Contribution per bottle £2.40 - £1.15 = £1.25; break-even = £150,000 / £1.25 = 120,000 bottles.
- Year 1: 110,000 bottles is below break-even - loss of £12,500. Year 2: 160,000 bottles - profit £50,000; margin of safety 40,000 bottles.
- Capacity 200,000 - Year 2 utilisation 80% leaves room for growth.
- For: fast-growing market; new, younger customers reduce reliance on chutney and supermarkets (could sell online/delis); innovation strengthens the brand.
- Against: forecasts may be optimistic; cash flow already under pressure (Appendix C) - launch marketing and inventory worsen cash; supermarkets may demand promotion fees.
- Judgement should use the calculations and weigh short-term loss and cash risk against long-term growth; may suggest launching online first or delaying until after Christmas.
Levels of response (AO1 2 / AO2 3 / AO3 4 / AO4 7)
| Level | Marks | Descriptor |
|---|
| 4 | 13-16 | Well-developed, balanced analysis applied to the context, with a well-supported judgement that weighs the arguments and considers what the answer depends on. |
| 3 | 9-12 | Reasonably developed analysis, some balance, and a judgement with some support. |
| 2 | 5-8 | Some analysis, possibly one-sided; judgement is asserted rather than supported. |
| 1 | 1-4 | Limited knowledge and analysis; little or no judgement. |
Why we predicted this: Spec 3.5.2: never set as an extended question in Paper 3 (2020-2025); most recently elsewhere in 2025.
Question 04 [16 marks]
Using Appendix C and other information, to what extent is Orchard & Vine Ltd at risk of overtrading?
Indicative content
- Closing balances: £40k, -£35k, -£95k, -£125k, -£115k, -£85k - the balance turns negative in August and reaches -£125k in October, close to the £150k overdraft limit (only £25k headroom).
- Outflows exceed inflows for four months while sales grow - classic overtrading: cash tied up in inventory and receivables (60-day terms).
- Inflows rise strongly from October (pre-Christmas sales) and the balance improves to -£85k by December - suggests a seasonal timing problem rather than a permanent one.
- Risks: any delay in supermarket payment, ingredient price rise or Fire & Honey launch costs could breach the limit.
- Solutions: negotiate supplier terms, debt factoring, delay launch, increase the overdraft, invoice discounting.
- Judgement: significant short-term risk, manageable if forecasts are accurate - but forecasts are estimates.
Levels of response (AO1 2 / AO2 3 / AO3 4 / AO4 7)
| Level | Marks | Descriptor |
|---|
| 4 | 13-16 | Well-developed, balanced analysis applied to the context, with a well-supported judgement that weighs the arguments and considers what the answer depends on. |
| 3 | 9-12 | Reasonably developed analysis, some balance, and a judgement with some support. |
| 2 | 5-8 | Some analysis, possibly one-sided; judgement is asserted rather than supported. |
| 1 | 1-4 | Limited knowledge and analysis; little or no judgement. |
Why we predicted this: Spec 3.9.1 / 3.5.2: last tested as an extended question in Paper 3 in 2025. Overtrading is named in 3.9.1 but has never been examined; cash-flow forecasts have not appeared in Paper 3.
Question 05 [20 marks]
Should Orchard & Vine Ltd choose Option 1 or Option 2?
Use quantitative and qualitative information to justify your view.
Indicative content
- Option 1 contribution: 900,000 x (£1.55 - £1.05) = £450,000 a year for £600,000 investment; payback on contribution about 16 months.
- Option 2 contribution: 250,000 x (£2.10 - £1.25 - £0.20) = £162,500 a year for £120,000; payback about 9 months.
- Option 1: much larger contribution but low margin per jar (£0.50), even greater dependence on supermarkets (buyer power), 6-month notice risk, own-label may cannibalise its branded sales; uses capacity and could worsen cash flow (investment + 60-day terms).
- Option 2: builds the brand and diversifies channels/markets (market development) - reduces supermarket dependence; premium positioning protected; BUT exchange rate risk (euro), smaller scale, distributor control, shipping and regulations.
- Fit with father's view: Option 2 protects recipes/brand; Option 1 turns O&V into a contract manufacturer.
- Answers analysing only one option capped at Level 3. Judgement weighs scale of return v risk and strategic fit.
Levels of response (AO1 4 / AO2 3 / AO3 5 / AO4 8)
| Level | Marks | Descriptor |
|---|
| 5 | 17-20 | Both options analysed in depth using quantitative and qualitative evidence; a clear, well-supported recommendation that weighs risks and returns. |
| 4 | 13-16 | Both options analysed with good use of evidence; judgement supported but may not fully weigh the options. |
| 3 | 9-12 | Reasonable analysis, possibly focused mainly on one option (answers analysing only one option are capped here). |
| 2 | 5-8 | Some relevant points; limited use of data; weak judgement. |
| 1 | 1-4 | Limited, generic points. |
Why we predicted this: Spec 3.9.1 / 3.9.3: last tested as an extended question in Paper 3 in 2025.
Question 06 [24 marks]
To what extent is it more difficult for small businesses than large businesses to maintain a competitive advantage?
Indicative content
- Small businesses: fewer resources for R&D, marketing and legal protection; weaker bargaining power with buyers/suppliers; dependent on key people (Harriet).
- Large businesses: economies of scale, brand recognition, finance and data - can copy small firms' innovations quickly.
- BUT small businesses have advantages: flexibility, speed, closeness to customers, niche focus, distinctive culture and craftsmanship that large firms cannot copy (O&V's recipes, low turnover).
- Large businesses face diseconomies, bureaucracy and strategic drift; their advantages are also contested (disruptive entrants).
- Depends on the source of advantage (cost-based favours large; differentiation/focus can favour small), the market's rate of change and barriers like patents.
- Levels 4-5 need contrasting contexts and a judgement about the conditions under which size matters.
Levels of response (AO1 5 / AO2 4 / AO3 6 / AO4 9)
| Level | Marks | Descriptor |
|---|
| 5 | 21-24 | Precise knowledge; contrasting business contexts used effectively; well-developed balanced analysis; judgement flows from the arguments and identifies key factors. |
| 4 | 16-20 | Good analysis with some contrasting contexts; supported judgement. |
| 3 | 11-15 | Reasonable analysis; context mainly the case business; judgement partly supported. |
| 2 | 6-10 | Some analysis, largely one-sided or generic. |
| 1 | 1-5 | Limited knowledge; little analysis. |
Why we predicted this: Spec 3.8.2: last tested as an extended question in Paper 3 in 2024; most recently elsewhere in 2025.