Business Studies · May / June 2020 · Paper 12 · Question 1

0450

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The question as text

DWT makes solar panels in country Y. This is a low-cost country which is experiencing rapid economic growth. DWT’s production method makes use of specialisation. All 120 of DWT’s 1 employees know that ensuring quality production is important. DWT imports some of its raw materials. The Government of country Y plans to introduce import tariffs of 50%. DWT’s Managing Director said: ‘This decision will affect all of our stakeholders. Why do governments introduce trade restrictions such as import controls?’

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1(a)[2]
Define ‘specialisation’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Way in which work is divided so each worker concentrates on a specific task so become expert at it [2]
When people and businesses concentrate on what they are best at [2]
Partial definition e.g. workers do only one job [1]
1(b)[2]
Identify two reasons why a government might introduce import controls.
Award 1 mark per reason.
Points might include:
Protect jobs from cheap labour in other countries
To improve trade deficit
Protect newly started/infant industries
To earn more revenue from tariffs
Protect local businesses from low priced competition
Protect important national or strategic industries
Other appropriate responses should also be credited.
1(c)[4]
Outline two ways DWT could try to ensure quality production. Award 1 mark for each relevant way.
Award 1 mark for each relevant reference to this business.
Points might include:
Quality control [k] so check products before they are exported [app]
Quality assurance [k] when making solar panels [app]
Training/recruit skilled employees [k] to make full use of specialisation [app]
Use better quality materials [k] which could afford to pay for as it is a low- cost country [app]
Use new technology/CAM/CAD [k]
Other appropriate responses should also be credited.
1(d)[6]
Explain one objective of each of the following stakeholder groups of DWT.
Award 1 mark for identifying the objective of each stakeholder group (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2).
Points might include:
Customers
would want high quality products [k] to achieve value for money [an] which is why quality production is important [app]
may want affordable prices [k]
Pressure groups
encourage the use of sustainable methods [k] such as solar panels [app] to protect the environment [an]
reduce/limit amount of pollution/environmental damage [k]
Other appropriate responses should also be credited.
1(e)[6]
Do you think that all businesses will benefit from operating in a country which is experiencing rapid economic growth? Justify your answer. Award up to 2 marks for identification of relevant issues.
Award up to 2 marks for relevant development of points.
Award 2 marks for justified decision as to whether all businesses will benefit from operating in a country which is experiencing rapid economic growth. Points might include:
Economic growth increases consumer incomes [k] which increases demand for most goods [an]
Rapid economic growth can lead to higher rate of inflation [k] which raises firms’ costs/reduces profit margin [an]
Patterns of consumer demand might change [k] reducing revenue for some businesses [an]
Could lead to shortage of skilled workers [k] so have to offer pay to attract/retain employees leading to higher costs [an]
Justification might include:
No - unlikely all businesses will benefit as it depends on what they sell as if they sell basic goods, customers may switch to more expensive items as their incomes increase leading to fewer sales for some businesses and higher sales for others. [eval] [eval]
Other appropriate responses should also be credited.

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