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Business Studies · Oct / Nov 2023 · Paper 21 · Question 4

0450

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  • 4(a)[8]

    Explain two benefits of PH’s employees becoming members of a trade union. 1 mark for each benefit (max of 2). Award a maximum of 3 additional marks for each explanation of the benefits of PH's employees becoming members of a trade union – one of which must be applied to this context. Relevant answers might include:

    More likely to be listened to as strength in numbers – employee’s views are represented in grievances with managers – so more likely to get their demands actioned
    Provides advice to members – such as if they feel they have been dismissed unfairly/unfairly treated by the business – then employees will know if they have a case against the business/whether to take action
    The communication between employers and employees is better – as there is a channel through which points from employees can be raised – it is more likely that problems are sorted without causing disputes between employers and employees
    Possibly improved pay – as there is strength in numbers to make wage demands for a pay rise more likely to be successful – employees more satisfied with work/happier
    Improved working conditions – as trade union can put forward a case to the employer if conditions are not good
    Provides services to members – reduced rates of insurance making it more affordable
    Helps to protect legal rights of employees – may improve job security For example: Provides advice to members (1)

    if they feel they have been dismissed unfairly by the business (1)

    then the 100 employees (app) will know if they have a case against the business to take action (1). Application could include: protective hats;

    construction sites;

    construction workers on building sites;

    mining workers;

    100 employees;

    flow production;

    same tasks every day;

    paid minimum wage;

    working conditions are bad.

  • 4(b)[12]

    Consider three possible benefits for PH of becoming a multinational company. Which benefit is likely to be the most important? Justify your answer. Level Description Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of two or more benefits of becoming a multinational company. Well-justified conclusion. Candidates discussing in detail all three benefits of becoming a multinational company, in context and with a well-justified conclusion, including why the other benefits of becoming a multinational company will be less important to PH, should be rewarded with the top marks in the band. 9–12 Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one benefit of becoming a multinational company. Judgement with some justification / some evaluation of choice made. Candidates discussing in detail two or more benefits of becoming a multinational company and applying them to the case should be rewarded with the top marks in the band. 5–8 Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the benefits of becoming a multinational company with little/no explanation. Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining three benefits of becoming a multinational company in context should be rewarded with the top marks in the band. 1–4 No creditable response. Relevant benefits might include: Produce goods in countries with low costs

    Low rents will reduce the total costs of producing goods – may lead to lower prices – increases sales as more competitive
    Low production costs may allow higher profit margins than 16% in 2022 if prices remain the same
    May produce protective hats in countries with low labour costs – leading to lower unit costs – may be able to reduce prices – become more competitive in other markets/increases sales in other markets Easier access to raw material source
    Reduced transport costs in other countries – lower total costs
    Quicker delivery of raw materials to produce construction hats – reduces the time from development to the market
    Access to raw materials that stops/reduces competitors access to these supplies Produce nearer the market
    Reduces transport costs and quicker delivery to customer - improves customer satisfaction
    Nearer to the market for protective hats may be more familiar with customer needs in that market – therefore more likely to meet customer needs – increasing revenue
    Markets may be quite spread out across the globe as there may not be mines in all countries – however, near to one market may not be near to other markets – limiting the advantage from lower transport cost Avoid trade barriers
    Do not pay tariffs – reduces price of goods to customers
    Do not have quotas – no restrictions on quantity of goods supplied to the market – increases sales Increase market share
    Able to expand into more markets in the mining and construction industries more easily in other countries – increases revenue/encourages growth of the business
    Spreads risk of selling protective headwear – if demand falling in one market can be compensated for by increasing demand in other countries Receive government grants
    Reduces investment required to set up the factory to produce protective hats – less borrowing required – lower interest payments/lower expenses
    The government may require the business to undertake certain activities such as locating in an area of high unemployment – may not always be the best location for the hat factory as other areas may have more factors to attract the business - may not lead to lower costs Remain competitive
    Competitors producing safety equipment are expanding into more markets abroad - may lead to falling sales of protective hats – needs to compete in all markets to retain sales Benefit from economies of scale
    Selling protective hats on a larger scale may allow for reduced average costs – for example marketing economies when advertising globally and products ordered through its website May be able to raise prices
    A globally recognised brand may give a better reputation to the already leading supplier of protective products – leading to higher prices being charged and increased revenue Conclusion Justification might include:
    Reduced production costs are likely to be the most important as unit costs can be reduced which will make the hats cheaper to produce and can be sold at a lower price. They will be more competitive, and it will be easier to increase sales in many countries. It may be that competitors are also locating in low-cost countries and so if PH doesn’t do this then it may not be able to compete. As PH is a multinational it will produce and sell in many countries around the world and so locating near to just one market will not have significant savings in transport costs. Government grants are a one-off payment when setting up in a country and are not likely to have much impact on the business in future years.
    Producing protective hats nearer to the market is likely to be most important as not only will transport costs be reduced, helping to increase profit, but improved knowledge of the market will help to increase sales and hence revenue will increase. Increased revenue and lower transport costs together could lead to a higher profit.
    Government grants could be substantial which means a much smaller bank loan is required. This will lower borrowing costs by reducing interest payments and therefore costs may be reduced significantly and profit from the manufacture of hats to protect employees’ heads whilst working will increase for many years whilst the smaller loan is being paid off.
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