Business Studies · Oct / Nov 2022 · Paper 11 · Question 1

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SSG manufactures mobile (cell) phones using batch production. Quality control is important. SSG has 130 employees who all receive on-the-job training. The Marketing Manager is analysing cost 1 and output data for product X. An extract is shown in Table 1.1. As product X is in the maturity stage of the product life cycle SSG is considering possible extension strategies. Table 1.1 Extract from SSG’s cost and output data for product X $300000 Rent and other expenses per month $80 Variable cost per unit 12000 Output per month

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1(a)[2]
Define ‘on-the-job training’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Training at the place of work, watching or following an experienced employee [2]
OR Training at the place of work–usually the person does the actual job while an experienced employee observes and guides him or her, making corrections as required [2]
Partial definition e.g. training while you are working [1]
2 Do not award answers which clearly relate to induction. Accept: Watching a more experienced worker doing the job [2]
1(b)[2]
Calculate total variable cost per month. Show your working. Correct answer: $960 000 [2]
Method e.g. Variable cost per unit times output [1]
OR $80 × 12 000 [1]
If correct answer given with no working shown award 2 marks. 2 Award only 1 mark if $960 000 is written as part of the answer but is not given as the final answer. $ sign not required. Notes
1(c)[4]
Identify four factors a business should consider when deciding which method of production to use. Award 1 mark for each relevant factor. Points might include:
Amount of capital available / costs (of machinery/production)
Demand / size of the market / how much they are likely to sell / output needed
Nature / type / variety of goods produced
Amount of suitable space / storage
Access to (suitable/skilled) labour / amount of labour needed Other appropriate responses should also be credited. 4 Only award the first four responses given. Award ‘size of business’ [BOD] Notes
1(d)[6]
Explain one advantage and one disadvantage to SSG of using quality control. Award 1 mark for identification of each relevant advantage/disadvantage (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: Advantage:
Tries / may eliminate errors before customers receive the product [k] improving the reputation [an] of its phones [app]
All workers do not need to be trained for quality control [k] reducing costs [an] of its 130 employees [app]
Production is not slowed [k] Disadvantage:
Inspectors / someone needs to be employed to check the product [k] increasing labour costs [an]
Faulty products must be scrapped [k] therefore variable cost is higher [an] than $80 per unit [app]
Does not identify where / why the fault has occurred [k] so vulnerable to repeating the errors
There is less reason for employees to help ensure quality [k] leading to more faults in products [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:
(Mobile/cell) phones
130 employees
On-the-job training
$80
12 000
$300 000
Maturity / extension strategy
Batch production Other appropriate examples in context can still be credited. Notes
1(e)[6]
Do you think adding new features to a product is the best extension strategy for a manufacturing business to use? 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 justified decision as to whether adding new features is the best extension strategy for a large manufacturer to use. Points might include:
Product appears more appealing [k] attracting new / more customers or sales [an] increasing revenue [an]
High cost of development / market research [k] which the business may not be able to afford [an]
Customers may dislike changes [k] reducing sales [an]
Adds value to product [k] therefore can charge a higher price [an] Other strategies might include:
Finding new markets [k] widening customer base [an]
Adapt / change the packaging [k] improving the appeal [an] but existing customers may not recognise the product [an]
Increase advertising / marketing / promotion [k] remind customers that the product still exists [an]
Sell through additional outlets [k] Other appropriate responses should also be credited. Justification might include: Adding new features involves high development costs [k] which the business may not be able to afford [an]. Finding new markets [k] could increase sales revenue [an]. There is a risk that customers may not like the new features [eval] so it’s safer and cheaper to try to find new markets. [eval] 6 This is a general question so there are no marks for application. Some points could be awarded for different options or as [k] / [an], but do not award the same point twice. For evaluation to be awarded justification will usually follow on from relevant analysis of points. USP [k] attracting customers away from competitors [an] Notes

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