Business Studies · Oct / Nov 2023 · Paper 12 · Question 3

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Country X has a mixed economy with both private and public sector organisations. These organisations are involved in different sectors of economic activity. In the last 20 years the primary 3 sector has become less important to country X’s economy. A summary of the changes is shown in Table 3.1. The government is planning to encourage multinational companies to set up factories in country X. Table 3.1 Economic sectors in country X as a percentage of GDP Tertiary Secondary Primary Year 25% 15% 60% 2000 50% 30% 20% 2020

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3(a)[2]
Define ‘public sector’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Government/state owned businesses [2]
Partial definition e.g. run/operated/controlled by government [1]
2
3(b)[2]
Define ‘gross domestic product’ (GDP). Award 2 marks for a full definition. Award 1 mark for a partial definition. The total value of output of goods and services in a country in one year [2]
OR The monetary value of all goods and services produced by an economy during a specific period (of time) [2]
Partial definition e.g. value of goods produced by a country [1]
2 First mark for idea of value of goods and services in the country. Second mark for the time period (one year/period of time).
3(c)[4]
Identify four types of business organisation in the private sector. Award 1 mark per type (max 4). Answers might include:
Sole trader
Partnership
Private limited company
Public limited company
Joint venture
Franchise
Social enterprise Other appropriate responses should be credited. 4 Only award the first four responses given. Only award unincorporated company if no specific examples given (e.g. sole trader/partnership). Only award limited company if no specific examples given (e.g. private limited company/public limited company). Notes
3(d)[6]
Using the data from Table 3.1, explain two possible reasons for the changing importance of the primary sector in country X. Award 1 mark for each relevant reason (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:
Fewer/depletion of natural resources [k] leading to a decrease in primary sector of 40% [app] so workers must find jobs in other sectors/may need to import resources [an]
Increased use of machinery/technology in primary sector [k] reduces the need for employees [an] which is why primary sector is only 20% in 2020 [app]
Industrialisation/setting up of factories [k] which creates jobs in the secondary sector [an] which has increased by 15% [app]
Better/increased education [k] so workers seek higher paid jobs [an] which is why tertiary sector has increased to 50% [app]
Fewer grants/less government support for primary sector OR more grants for secondary/tertiary sector businesses [k]
Import (more)/cheaper raw materials [k] Other appropriate responses should be credited. 6 To access application must refer to the data in Table 3. The following data is likely to be appropriate for this question:
Primary sector is 60% in 2000
Primary sector is 20% in 2020
Primary sector decreased by 40%
Secondary sector is 15% in 2000
Secondary sector is 30% in 2020
Secondary sector has increased by 15%
Tertiary sector is 25% in 2000
Tertiary sector is 50% in 2020
Tertiary sector has increased by 25% Other appropriate examples from the table can be credited. Analysis can either be a development of point or reason why it would lead to a fall in primary sector. Some points can be [k] or [an] but only award once. Do not award:
Deindustrialisation Notes
3(e)[6]
Do you think the benefits to a country of having a multinational company located there are always greater than the drawbacks? 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 the benefits to a country where a multinational company is located are always greater than the drawbacks. Points might include: Benefits:
Increase number/availability of jobs [k] reduces unemployment [an]
Increase taxes [k] which can be used to improve public services [an]
Increase reputation of country [k] could encourage other businesses to set up/invest in the country [an]
Increasing orders for local suppliers [k] increasing income for local businesses/GDP [an]
Wider choice/quality of goods [k]
Improve infrastructure/new investment/new technology [k]
Knowledge-sharing/new ideas [k] 6 This is a general question so there are no marks for application. Some points can be [k] or [an] but only award once e.g. lower sales for local businesses Can award the following as [an] only:
Force local businesses to close down
Increase GDP
Reduce unemployment Do not award:
Definition of multinational company (MNC)
Advantages/disadvantages to business Notes Drawbacks:
Increased competition [k] reducing sales for local businesses [an] which can force them out of business/reducing revenue [an]
Use up scarce resources [k] so less resources for other uses [an]
Repatriation of profits/send profits back to home country [k] so country does not receive expected amount of tax revenue [an]
Often only unskilled jobs created / may offer low wages/ poor working conditions / exploitation of labour [k]
Often try to avoid/reduce amount of tax paid (in host country) [k]
Power to influence government decisions/local economy [k] Other appropriate responses should be credited. Justification might include: Multinational companies create employment opportunities [k] which reduces unemployment [an]. However, they can try to avoid taxes [k] so less funds to provide public services [an]. Countries do benefit from multinationals operating there even if the full amount of tax is not paid, the amount paid can be used to develop the country [eval] which could improve living standards [eval]. Notes

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