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Business Studies · Oct / Nov 2024 · Paper 11 · Question 4

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FSW is a multinational company with operations in 6 countries. It manufactures steel for use in the construction industry. Quality assurance is used to ensure quality production. FSW has many 4 stakeholder groups who are interested in its activities. The Managing Director knows FSW’s business creates external costs. She is aware that pressure groups try to influence business decisions.

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  • 4(a)[2]

    Define ‘external costs’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Costs paid for by (the rest of) society, other than the business, as a result of business activity [2]

    OR Costs paid for by (the rest of) society as a result of business actions [2]

    OR Costs/disadvantages that fall on third parties that is not directly involved in the production process [2]

    OR Negative effect on a third party/society due to business actions [2]

    Partial definition e.g. costs that society/third party must pay [1]

    OR Costs incurred by people who do not take part in the production process [1]

    2 Do not award examples. Notes

  • 4(b)[2]

    Identify one objective each of the following stakeholder groups might have: Award 1 mark per objective (max 2). Points might include: Employees:

    Increased pay/wages/fair wages/regular pay
    Better/safe working conditions
    Access to training
    Job security
    Have contract of employment
    Work provides motivation / opportunities for promotion / improved status / job satisfaction Customers:
    Safe/reliable products
    Value for money/reasonable prices
    Well-designed/good quality products
    Reliable/good service Other appropriate responses should be credited. 2 Only award first response given for each stakeholder group. Notes

  • 4(c)[4]

    Identify four ways a pressure group might try to influence business decisions. Award 1 mark per way (max 4). Points might include:

    (Organise) customer boycotts
    Raise awareness or examples such as cause negative publicity / publish information / write to newspaper
    Lobby/send letters to government
    Demonstrations/protests
    Arrange petitions
    Legal action Other appropriate responses should be credited. 4 Only award the first four responses given. Notes

  • 4(d)[6]

    Explain one possible benefit and one possible drawback to a country of having FSW (a multinational company) operating there. Award 1 mark for identification of each relevant benefit/drawback (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: Benefits:

    Creates jobs/provides income [k] for those making the steel [app] improving living standards [an]
    Orders for local suppliers [k] from its 6 factories [app] increasing local incomes/GDP [an]
    Technical knowhow increased [k] which could help improve production methods/efficiency/output [an] such as new ways to maintain quality [app]
    Companies pay taxes [k] increasing government income / government able to provide more services to society [an]
    Improve international reputation of country [k] which can attract other businesses to a country [an]
    Increased investment/infrastructure development in a country [k]
    Introduces new products to the country [k] Drawbacks:
    Competition for local businesses [k] leading to lower demand/prices [an] for construction businesses [app] 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 or related words e.g. iron
    Construction industry
    Manufacturer
    Quality assurance/quality production
    (6)

    countries

    500/3000 workers
    Stakeholder groups
    External costs
    Pressure groups Other appropriate examples can be credited. Notes
    Uses limited resources [k] which may upset pressure groups [app] as there is less available for other local businesses [an]
    Profits are often repatriated [k] limiting the country’s growth [an]
    Jobs created may be unskilled [k]
    Creates pollution [k]when producing steel [app] Other appropriate responses should be credited. Notes

  • 4(e)[6]

    Do you think quality assurance is the best way for a business 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 assurance is the best way for a business to achieve quality production. Points might include: Quality assurance:

    Errors are spotted earlier in process [k], so less money/time spent on rework [an]
    Increased motivation of employees [k] leading to higher output [an]
    Need to train all workers [k] which increases training costs [an]
    Time taken to train all workers [k] who may ask for higher wages [an]
    Slows down production/time consuming [k] therefore productivity will fall [an]
    Not all workers might be interested/able to spot problems [k] Quality control [k]
    Does not stop production while checking [an] so some output is made [an]
    Not all workers need to be trained [an] which can help reduce fixed costs [an]
    Need to recruit quality inspectors [an] increasing labour cost [an]
    Does not find out how/where fault occurred [an]
    Products will need to be scrapped/reworked [an] 6 This is a general question so there are no marks for application. Some points can be presented as an advantage or a disadvantage of different methods but do not award the same point twice. Quality assurance: Accept – reduces wastage as either [k] or [an] but only once. Notes
    Does not encourage all workers to be responsible for quality [an]
    Does not improve quality as only reduces chance of selling poor quality products [an]
    Not possible to check all products [an] damaging reputation [an] Other appropriate responses should be credited. Justification might include: Quality assurance allows for errors to be spotted earlier in the process [k], so less time is spent on rework [an]. An advantage of quality control [k] is not everyone needs to be trained to check quality [an]. Quality assurance is the best way because the extra training provided is also likely to motivate employees leading to fewer mistakes anyway, and this should hopefully cover the additional cost of training. [eval] [eval].
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