Business Studies · May / June 2024 · Paper 12 · Question 4

0450

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DLT manufactures cups and plates in country X. Its factory uses flow production and has 75 employees. The Human Resources Director is aware that there are many legal controls over 4 employment. DLT exports 30% of its products to country Y where it benefits from lower rates of taxation and no import quotas. DLT’s Managing Director is considering relocating its factory to another part of country X to meet the increased demand for its exports.

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4(a)[2]
Define ‘import quota’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Physical limit on the number/amount of goods that can be imported/allowed into a country [2]
OR Restriction on the quantity of a product than can be imported [2]
Partial definition e.g. limit on number/quantity of goods [1]
OR limit on imports [1]
2 To award both marks the answer must include the idea of limit on number/quantity of goods and the idea of imported/into the country. Do not award:
answers which confuse the term with a tariff.
4(b)[2]
Identify two benefits to a business of lower rates of taxation. Award 1 mark per benefit (max 2). Points might include:
May encourage investment/growth
Increase sales/revenue/income
Lower costs/less cash outflow/lower expenses/cheaper raw materials/cheaper imports
More (retained) profit
Higher profit margin Other appropriate responses should be credited. 2 Only award the first two responses given. Notes
4(c)[4]
Identify four legal controls over employment. Award 1 mark per legal control (max 4). Points might include:
Unfair dismissal
Discrimination/equal opportunities
(Health and) safety/working conditions/working environment
Minimum wage
Contract of employment or examples such as sickness policy / holiday entitlement / notice period / rate of pay/salary / pension entitlement
Redundancy
Working hours/provide breaks
Legal working age/child labour Other appropriate responses should be credited. Only award the first four responses given. Allow examples of discrimination only once. Do not award:
Ethical points such as fair pay. Notes
4(d)[6]
Explain one reason why DLT needs to consider each of the following factors when deciding where to relocate in country X: Award 1 mark for identification of 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: Suppliers:
Distance [k] if closer to the factory [app] may reduce transport costs/may be able to get resources quicker [an]
May need to change supplier/can they still use current supplier [k] leading to delays [an] so cannot meet increase in demand [app]
Quality/range of materials [k] could damage its reputation [an] of its cups/plates [app]
Cost [k] which could lower its profit margin [an] Suitability of land:
May need a large area/space [k] otherwise this could limit production/so able to expand [an] for its exports [app]
Access to power/water/electricity [k] as using flow production [app] so need continuous supply to operate 24 hours a day [an]
Cost of land/rent [k] as may increase fixed costs [an]
Links to transport/accessible [k] to ensure deliveries can be made on time [an]
Environmental impact [k]
Government influence or examples such as taxes [k] 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:
Cups/plates
Flow production
(30%) exported
Factory
75 employees
Increased demand (for its products) Other appropriate examples can be credited. Notes
4(e)[6]
Do you think the advantages for a manufacturing business of using flow production are greater than the disadvantages? 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 advantages to a manufacturing business of using flow production are greater than the disadvantages. Points might include: Advantages:
Benefit from economies of scale [k] lowering unit/average costs [an]
Capital intensive [k] so can lower the labour/wage costs [an]
Output can be produced 24 hours a day/continuous [k]
Workers can specialise/little training may be needed [k] Disadvantages:
Inflexible/difficult to change/cannot customise products [k] so may not meet customer needs [an]
Demotivate employees [k] raises absenteeism/labour turnover [an]
If one machine breaks down the whole production line will stop [k] so delays output [an]
Requires high level of raw materials/inventory [k] increasing storage space/cost [an] Other appropriate responses should be credited. This is a general question so there are no marks for application. Analysis:
Some [an] can be used for different points but only award once.
[An] of economies of scale [k] must be lowers unit/average costs, and not simply lowers costs.
Lower cost can be [an] but only award once unless clearly specify two different costs e.g. labour and training costs. To access [eval] must discuss a valid advantage and a valid disadvantage. Notes Justification might include: One advantage is economies of scale [k] which lowers unit costs [an]. This method is inflexible [k] so the business may not meet customer needs [an]. The advantages are greater, as the lower unit costs could result in lower prices [eval] which can increase demand. If the product has high sales this could reduce the need for flexibility [eval].

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