Business Studies · Oct / Nov 2016 · Paper 21 · Question 4

Identify and explain two reasons why added value is important to P & P. (8)

Knowledge [2 × 1] – award one mark for each relevant reason Analysis [2 × 1] – award one mark for a relevant explanation for each reason Application [2 × 2] – award two application marks for each reason Relevant points might include: Award one mark for each reason (maximum of two), such as:

large limited company;

imports raw materials;

makes tins (cans) of paint;

sells to large retailers;

uses batch production;

150 production workers;

new waterproof paint;

target market professional painters;

new paint for outside of houses;

start exporting paint in 2018;

increase in imports of paint. There may be other examples in context which have not been included here.

P & P is planning to start selling its products in other countries by 2018. Consider each of the three following changes the company could make. Which one of these changes will be most helpful in selling products to other countries? Justify your answer. (12) Relevant points might include: Advantages Disadvantages Take over a retail business in one of the other countries Will own many outlets to sell their paint Expensive to buy shares in the other business Change to a public limited company to raise additional capital So they can sell shares to the public Pay additional costs of exporting/expanding Accounts are public and may be able to be taken over Form joint ventures in the other countries Local knowledge of the overseas market. Have to share information and profit. Knowledge/Analysis/Evaluation – award up to 10 marks using the levels-based mark scheme below. Knowledge/Analysis/ Evaluation Level 3 At least 2 × Level 2 + 9–10 marks for well justified conclusion as to which change will be most helpful when selling products abroad. 7–8 marks for some limited judgement shown in conclusion as to which change will be most helpful when selling products abroad. Level 2 4–6 marks Detailed discussion of advantages and/or disadvantages of each possible change. Level 1 1–3 marks Outline of advantages and/or disadvantages of each possible change. Level 1 – 1 mark for each L1 statement (max of 3 marks) e.g. Remaining a private limited company means the business will keep its accounts private. Level 2 – 1 × L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks) e.g. Changing to a public limited company means the business will not keep its accounts private and so it will be easier for competitors to obtain information about the company. However, it will be able to obtain capital from selling shares as it can now sell shares to more than family and friends and this will enable it to cover the increase in costs from starting to export. (4 marks for L2 answer). Level 3 – for L3 to be awarded there need to be at least two L2 marks awarded and then a justified conclusion as to which change will be most helpful when selling products abroad. Award up to 2 additional marks for relevant application. Possible application marks: paint;

country X;

paint manufacturer;

large limited company;

imports raw materials;

makes tins (cans) of paint;

sells to large retailers;

new waterproof paint;

new paint for outside of houses;

start exporting paint in 2018;

wants to increase output;

increase in imports of paint. There may be other examples in context which have not been included here.