Business Studies · Oct / Nov 2021 · Paper 11 · Question 2

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NSN is a multinational company. It makes cars. Over the years, technology has changed production methods. NSN uses just-in-time inventory control in all its factories. NSN plans to open a new 2 factory in country Z creating 7000 jobs. Country Z’s Government has offered an $80m grant to NSN. A spokesperson for NSN said: ‘Governments should support business activity. There were also other factors that influenced our decision to build the new factory there including the possible effects of economic growth.’

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2(a)[2]
Define ‘multinational company’. Award 2 marks for a full definition. Award 1 mark for a partial definition. A business with factories, production, or service operations in more than one country [2]
OR A business with production or service operation in another country outside its normal area of operation [2]
Partial definition e.g. has businesses everywhere [1]
OR works/operates in more than one country [1]
2 Do not award ‘sells in other countries’ as this could equally apply to an exporter.
2(b)[2]
Identify two reasons why a government might support business activity. Award 1 mark per reason. Points might include:
Create jobs
Increase competition / develop a market
Increase output / economic growth/GDP
Benefit society (small) businesses can grow into large/ important ones in the future
Generate new ideas
Can produce (a future source of) tax revenue Other appropriate responses should also be credited. 2 Only award the first two responses given. Notes
2(c)[4]
Outline one advantage and one disadvantage to NSN of using just- in-time inventory control. Award 1 mark for each relevant advantage/disadvantage. Award 1 mark for each relevant reference to this business. Points might include: Advantages:
Less warehouse space [k] needed to store parts for cars [app]
Less inventory held [k] in its factories [app]
Lower storage costs [k] for the multinational company [App]
Improve working capital [k]
Improve cash flow [k]
Lower risk of obsolete/damaged stock [k] Disadvantages:
Very reliant on suppliers to deliver stock when needed / if parts not available / late it will have a major impact on production [k] as technology has changed how production is carried out [app]
May not be able to meet sudden/unexpected order [k]
Little room for mistakes (as minimal stock available for rework) [k]
Less (purchasing) economies of scale [k] Other appropriate responses should also be credited. 4 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Car
Factory
Multinational company
Technology changed production Other appropriate examples in context can still be credited. Notes
2(d)[6]
Explain two ways in which an increase in economic growth might affect NSN’s decision to build a new factory in country Z. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:
Could lead to increased demand [k] for cars [app] increasing revenue [an]
Shortage of skilled workers [k] may make it more difficult to recruit workers [an] for the 7000 jobs[app]
Employees may ask for higher wages [k] increasing costs [an]
Increased rent costs / less choice of location [k] increasing fixed costs [an] for the factory[app]
Increased competition [k] so may gain few customers / low market share [an] Other appropriate responses should also be credited. 6 Note: To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Car
$80m (grant)
7000 jobs
Just-in-time inventory control
Multinational company Other appropriate examples in context can still be credited. Notes
2(e)[6]
Do you think the ways technology has changed production methods benefits all employees? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to whether the way technology has changed production methods has benefited all employees. Points might include:
Need for retraining / learn new skills [k] leading to opportunities for promotion [an]
Safer conditions [k] so less risk of injury [an]
The job is more repetitive [k] so lower job satisfaction [an]
Fewer workers needed / workers may lose their jobs / redundancy [k] so lower standard of living [an]
More job insecurity / fear of change [k] so could reduce motivation [an]
More skilled workers may be needed [k] leading to higher pay [an] Other appropriate responses should also be credited. Justification might include:
Less job security [k] could reduce workers motivation [an]. However, more skilled workers may be needed [k] leading to higher pay. [an] No, it will not benefit all employees as it depends on the individual worker. Those who lose their jobs will not see the benefit from technology [eval] whereas those who keep their job can benefit from learning new skills. [eval] 6 This is a general question so there are no marks for application. Note: Answer must focus on the benefit or not to the workers so do not accept points such as ‘more efficient’ or ‘better quality/ less mistakes’ unless clearly link issue to employees. Do not award work is easier/less work as this is too vague. Notes

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