Business Studies · Oct / Nov 2023 · Paper 12 · Question 2

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TBX manufactures high-quality steel which is used to build railways. The method of production used allows TBX to benefit from economies of scale. The business holds a high level of inventory 2 including iron ore. The Managing Director knows business activity could have an impact on the environment and is considering ways the business can contribute to sustainable development.

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2(a)[2]
Identify two ways business activity could have an impact on the environment. Award 1 mark per way (max 2). Points might include:
Pollution (or examples e.g. noise, air)/global warming/emission of greenhouse gases
Energy use/use fossil fuels
Congestion/transport of goods
Land use/use up natural resources/deforestation
Waste (disposal)/use single use/non-renewable/non-recyclable materials Other appropriate responses should be credited. 2 Only award the first two responses given.
2(b)[2]
Identify two ways a business could contribute to sustainable development. Award 1 mark per way (max 2). Points might include:
Reduce amount/number of resources used
Reduce number of products made/level of output
Reduce waste
Reuse products/materials
Recycle products/materials
Use renewable energy
Develop environmentally friendly products
Use environmentally friendly production methods/sustainable materials
Use environmentally friendly/sustainable packaging
Replant trees
Use electric vehicles Other appropriate responses should be credited. 2 Only award the first two responses given. Notes
2(c)[4]
Outline two possible economies of scale TBX might benefit from. Award 1 mark for each relevant economy of scale (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include:
Purchasing (economy) [k] for the iron ore [app]
Technical (economy) [k] to manufacture steel [app]
Managerial (economy) [k] helping contribute to sustainable development [app]
Financial (economy) [k] so can have a high level of inventory [app]
Marketing (economy) [k] Other appropriate responses should be credited. 4 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:
Steel
Railways
Iron (ore)
High level of inventory
Sustainable development/impact on environment
High-quality Other appropriate examples can be credited. Notes
2(d)[6]
Explain two possible problems for TBX of holding a high level of inventory. Award 1 mark for each relevant problem (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:
Rent/storage space/large space needed [k] for the steel [app] which can increase fixed costs/expenses [an]
Ties up working capital [k] such as iron ore [app] which could lead to liquidity/cash flow problems/difficult to pay suppliers [an]
Insurance costs [k] which increase cash outflows [an] so less funds to contribute to sustainable development [app]
Opportunity cost/funds could be used for other purposes [k]
Risk of damage/theft/wastage/product could rust [k] leading to higher costs [an] Other appropriate responses should be credited. 6 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:
Steel
Railways
Iron (ore)
High-quality
Sustainable development/impact on environment Other appropriate examples can be credited. Some points can be [k] or [an] but only award once. Notes
2(e)[6]
Do you think quality control is the best method for a manufacturing business to use to achieve quality production? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to whether quality control is the best way for a manufacturing business to use to achieve quality production. Points might include: Quality control (QC):
Tries to eliminate/lower chance of faults before products reaches customer [k] to help maintain reputation [an]
Does not stop production while checking [k] so some output is available [an]
Need to recruit inspectors [k] which increases labour costs [an]
Spots errors at end/does not show where error happened in process [k] which could increase wastage [an] 6 This is a general question so there are no marks for application. Advantages of one method can be presented as a disadvantage of the other, but do not award the same point twice. Only award reference to which stage of production products are checked once – so either [k] of QC or as [an] of QA Some points can be [k] or [an] but only award once. Notes Other method is: Quality assurance (QA) [k]
Errors stopped before happen/spotted earlier in process/products checked throughout [an] so less funds/time spent on rework [an]
Increase employee motivation [an] leading to higher output [an]
Need to train all employees [an] which increases (fixed) costs [an]
Not all workers interested/able to spot problems [an] Other appropriate responses should be credited. Justification might include: With quality control, production workers do not need extra training [k] so no increase in costs [an]. Another method is quality assurance [k] which means mistakes are spotted sooner in the process [an]. Quality assurance is the best way because fewer mistakes is likely to mean fewer resources are wasted [eval] and the funds saved should hopefully cover the additional cost of training [eval]. Notes

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