Pamela is a sole trader. She started her successful photography business 30 years ago. She specialises in taking pictures of people and places for use in posters, calendars and fashion 1 magazines. It is a niche market. Pamela uses cost-plus pricing as part of her marketing mix. Offering a high quality service is important to Pamela and her 2 employees. Define ‘cost-plus pricing’. (a) … … … … [2] Define ‘marketing mix’. (b) … … … … [2] Outline two reasons why offering a high quality service might be important for Pamela’s business. (c) Reason 1: … … … … Reason 2: … … … … [4] Explain two advantages to Pamela of operating as a sole trader. (d) Advantage 1: … … Explanation: … … … … Advantage 2:… … Explanation: … … … … [6] Do you think operating in a niche market will help a small business have a better chance of success than operating in a mass market? Justify your answer. (e) … … … … … … … … … … … … [6]

1(a) Define ‘cost-plus pricing’. Award 2 marks for a full definition. Award 1 mark for a partial definition. The price is based on the cost of making a product and the addition of a fixed percentage for profit [2] OR The cost of manufacturing the product plus a (profit) mark-up [2] OR Formula e.g. [total cost / total number of units] + % mark up [2] Partial definition e.g. profit added to the cost [1] 2 First mark is for explaining what the ‘plus’ is e.g. profit. Second for reference to / description of mark-up. Price is based on / related to cost of product [0] (reordering only). 1(b) Define ‘marketing mix’. Award 2 marks for a full definition. Award 1 mark for a partial definition. All activities that go into the marketing of a product or service. These activities are often summarised as the four P’s – product, promotion, place and price [2] OR Four marketing decisions needed for the effective marketing of a product [2] OR The combination of product, price, promotion and place (distribution) that determines how a firm markets itself to its customers and potential customers [2] Partial definition e.g. (combine) price, product, promotion and place [1] OR Different strategies a business can use to help market / sell its products [1] 2 For 2 marks candidates must understand that it involves four elements AND what it is used for (e.g. help sell products / attract customers / make marketing decisions / market a product). Do not award answers such as 4P’s or 7P’s these do not define the term. 1(c) Outline two reasons why offering a high quality service might be important for Pamela’s business. Award 1 mark for each relevant reason. Award 1 mark for each relevant reference to this business. Points might include: • Increase sales / maintain sales / attract customers [k] of calendars / poster [app] • Helps maintain / increase customer loyalty [k] for this sole trader business [app] • Maintain reputation / improve brand image [k] built up over 30 years [app] • Set/maintain high prices [k] which helps as use cost- plus pricing [app] • Way to add value [k] as operates in a niche market [app] • To reduce complaints [k] for the 2 employees [app] • No need to replace faulty work [k] • Gain competitive advantage [k] which can help her business remain successful [app] Other appropriate responses should also be credited. 4 Note: 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: • Sole trader • 30 years • Photography / posters / calendars / (fashion) magazines / pictures / camera • Niche market • Cost-plus pricing • 2 employees • Successful business Other appropriate examples in context can still be credited. Do not award 2 employees as application where answer refers to sharing profit or using profit to pay wages. 1(d) Explain two advantages to Pamela of operating as a sole trader. Award 1 mark for identification of each relevant advantage (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: • Keeps all the profit [k] from photography business [app] so has an incentive to (continue to) work hard [an] • Has complete control / makes all the decisions / does not need to consult with anyone [k] such as the 2 employees [app] so able to take decisions more quickly [an] • Own boss [k] • Freedom to choose her own holidays / schedule / work time [k] so can choose time off when the business is less busy so does not miss out on sales [an] • Able to keep (financial) information private / do not need to produce annual accounts [k] so competitors cannot use information to take away her customers / market share [an] which can help her stay successful [app] • Has close contact with customers / able to offer a more personal service [k] as it’s a niche market [app] which can help encourage customer loyalty [an] Other appropriate responses should also be credited. 6 Note: 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: • 30 years • Photography / posters / calendars / (fashion) magazines / pictures / camera • Niche market • Cost-plus pricing • 2 employees • High-quality (service) • Successful business Other appropriate examples in context can still be credited. Do not award points about start-up as business has been operating for 30 years e.g. quick/easy to set up [0], requires little capital [0], few legal requirements [tv] 1(e) Do you think operating in a niche market will help a small business have a better chance of success than operating in a mass market? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to whether operating in a niche market will help a small business have a better chance of success than operating in a mass market. Points might include: Niche market: • Able to focus more closely on customer’s needs [k] leading to customer loyalty / good customer relations [an] • Less competition [k] less pressure to lower prices / easier to attract customers [an] • May be able to set higher prices (for a high status, exclusive product) [k] so able to have high / increase profit margin [an] • Can become expert in the segment [k] • Small size of market means will not benefit from economies of scale [k] leading to higher average costs [an] • Less potential for growth / low potential demand [k] • Over dependence on single product / less able to spread risk / vulnerable to changes in consumer spending patterns [k] • Likely to attract competition if successful [k] 6 This is a general question so there are no marks for application. To access evaluation marks, candidates must identify points for both types of markets. To gain both evaluation marks, answer must clearly relate to a small business. Do not award definitions of terms as this is NAQ. Advantages of operating in one type of market can be presented as disadvantages of the other option but do not award the same point twice as mirror answers are not accepted. 1(e) Mass market • More (potential) customers/sales [k] leading to higher (potential) revenue [an] • Increased / high level of competition [k] so might have high level of customer loyalty [an] Other appropriate responses should also be credited. Justification might include: In a niche market a business can focus more closely on customer’s needs [k] leading to higher levels of customer loyalty [an]. In a mass market, there are more potential customers [k] which could mean higher revenue [an]. However, I do think a small business has a better chance of success in a niche market because it can continue to charge high prices [eval] as large companies will not see the market as worthwhile because of potentially low sales. [eval] (a) To earn marks, you need to define cost-plus pricing as setting a price based on the cost of making a product and then adding a fixed percentage for profit, or by providing a formula showing this calculation. A partial definition, such as 'profit added to the cost,' earns one mark. (b) To earn marks, you need to define the marketing mix as all activities involved in marketing a product or service, often summarized as the four P's (product, promotion, place, price), or as the four marketing decisions needed for effective marketing. A partial definition, such as listing the four P's, earns one mark.

After identifying a gap in the soft drinks market, Jerome developed a low sugar drink. He borrowed $5000 from family and friends to start-up a business and to provide working capital. Jerome operates 1 as a sole trader. To promote his product, Jerome handed out free samples in the town centre. In the first year, Jerome’s business sold 10000 units. This is 200 units more than his break-even output. Jerome is considering ways to increase added value. Identify two features of a sole trader. (a) Feature 1: … … Feature 2: … … [2] Define ‘working capital’. (b) … … … … [2] Outline two ways that break-even information can help Jerome’s business. (c) Way 1: … … … … Way 2: … … … … [4] Explain how each of the following can help Jerome increase added value: (d) Change the packaging: … … … … … … Use cheaper materials: … … … … … … [6] Do you think giving out free samples is the best method of sales promotion for a business to use when promoting a new food product? Justify your answer. (e) … … … … … … … … … … … … [6]

1(a) Identify two features of a sole trader. Award 1 mark per feature. Points might include: • Keeps all the profit • Unlimited liability • Unincorporated / no separate legal identity • Takes all decisions / own boss • Has total ownership of business / owned by one person • Few legal requirements Other appropriate responses should also be credited. 2 Do not credit in private sector as this applies to many forms of business organisation. 1(b) Define ‘working capital’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Amount of capital available to a business to pay its day-to-day expenses/costs [2] OR The capital needed to finance the day to day running expenses (and pay the short-term debts of the business) [2] OR Current assets – current liabilities [2] Partial definition e.g. funds used to buy inventory [1] 2 Do not credit examples. 1(c) Outline two ways that break-even information can help Jerome’s business. Award 1 mark for each relevant way. Award 1 mark for each relevant reference to this business. Points might include: • He knows the level of output needed to make a profit / cover costs [k] for his (low sugar) drink [app] • Helps planning/forecasting/decision-making [k] such as how best to increase added value [app] • Help apply for finance [k] as so far only borrowed from friends and family [app] • Can see what will happen if costs/prices change [k] • Helps identify the expected level of profit/loss at different levels of output [k] • Help identify the margin of safety [k] based on the 10 000 units sold [app] Other appropriate responses should also be credited. 4 Note: 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: • (low sugar) drinks • 200 units above break-even • 10 000 / 9800 units sold • Added value • Family and friends Other appropriate examples in context can still be credited. Do not award points such as shows costs/sales/revenue/profit on own as this is too vague. 1(d) Explain how each of the following can help Jerome increase added value: • Change the packaging • Use cheaper materials Award 1 mark for identification of each relevant point (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: Change the packaging: • This will allow Jerome to be able to increase the price [k] of his drink [app] increasing the gap between price and costs [an] • Customers can perceive the product to be worth more [k] so may be prepared to pay more for the same product [an] Use cheaper materials: • This will help lower input costs [k] when making 10 000 units [app] increasing the gap between cost and price [an] • Lower costs [k] can lead to higher profit per unit sold [an] Other appropriate responses should also be credited. 6 Note: 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: • (low sugar) drinks • 200 units above break-even • 10 000 units sold • 9800 (break-even) Other appropriate examples in context can still be credited. 1(e) Do you think giving out free samples is the best method of sales promotion for a business to use when promoting a new food product? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to whether free samples are the best method of sales promotion for a business to use when promoting a new (food) product. Points might include: Free samples: • Encourages potential customers to try something [k] which can persuade them to buy [an] • Trying is likely to be more effective than just telling someone about it [k] as the taste is an important part of the buying process [an] • Tempts existing customers to buy more [k] which can increase revenue [an] • Cost of providing samples [k] can decrease profit margin [an] • Way to use up inventory [k] • No guarantee people will buy [k] Other options could include: • Buy one get one free [k] would generate some income [an] • Point of sale displays [k] raise awareness of the product [an] Other appropriate responses should also be credited. Justification might include: • Encourages potential customers to try something new [k] which can persuade them to buy [an]. However, the cost of providing samples [k] can decrease the profit margin. [an] Free samples are the best method despite the cost [eval] as taste is important when buying food [eval]. 6 This is a general question so there are no marks for application. Candidates can discuss other options, but evaluation must focus on whether free samples is the best method of sales promotion to use.

SWB is in the secondary sector. It produces 150000 wooden bookcases each week using batch production. SWB sells all its output to one customer. Quality control is important. SWB has 240 1 employees, of which 100 are part-time workers. SWB’s managers use noticeboards around the factory and meetings with employees every month to help reduce communication barriers. The Operations Manager is considering introducing just-in-time inventory control to reduce the amount of waste. Define ‘secondary sector’. (a) … … … … [2] Identify two factors a business should consider when deciding whether to introduce just-in-time inventory control. (b) Factor 1: … … Factor 2: … … [2] Outline one advantage and one disadvantage to SWB of using quality control. (c) Advantage: … … … … Disadvantage: … … … … [4] Explain two possible communication barriers that might exist at SWB. (d) Communication barrier 1: … … Explanation: … … … … Communication barrier 2: … … Explanation: … … … … [6] Do you think it is a good idea for a business to have only one customer? Justify your answer. (e) … … … … … … … … … … … … [6]

1(a) Define ‘secondary sector’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Firms that process and manufacture goods from natural resources [2] OR Manufacture goods using the raw materials provided by the primary sector [2] OR Uses manufacturing to transform the raw materials generated in the primary sector into a product [2] Partial definition e.g. makes products [1] 2 Do not award examples. 1(b) Identify two factors a business should consider when deciding whether to introduce just-in-time inventory control. Award 1 mark for each factor identified. Points might include: • Reliability of suppliers / time / speed of delivery / availability of inventory at suppliers / distance from suppliers • Whether there is steady production / predictable demand • Efficient system of ordering materials / good communication systems • Whether discounts are available for bulk purchases • Cost/availability of storage space Other appropriate responses should also be credited. 2 Only award the first two responses given. 1(c) Outline one advantage and one disadvantage to SWB of using quality control. Award 1 mark for each relevant advantage/disadvantage. Award 1 mark for each relevant reference to this business. Points might include: Advantages: • Tries to eliminate faults before customer receives products / reduces likelihood that customers get faulty products [k] as only has one customer [app] • Not all workers need to be trained (as inspectors employed to check quality) [k] which is important as has 240 employees [app] Disadvantages: • Cost/need to recruit inspectors/employees to check [k] the bookcases [app] • Does not find out how/where fault occurred [k] in each batch [app] • High cost if products must be scrapped / reworked / service repeated [k] which clashes with its objective to reduce waste [app] Other appropriate responses should also be credited. 4 Note: 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 may be appropriate for this question: • 150 000 / bookcases or related words such as wood • Batch production • 240 employees / 100 or part-time employees / 140 full time • Factory • One customer • Just-in-time inventory control • Objective is to reduce waste Other appropriate examples in context can still be credited. 1(d) Explain two possible communication barriers that might exist at SWB. Award 1 mark for identification of each relevant communication barrier (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: • Technical language / jargon / different language spoken [k] so workers do not understand [an] so make wrong number of bookcases [app] • Lack of feedback / no opportunity for feedback [k] so do not know / cannot check if message received / understood (correctly) [an] so not able to help reduce waste [app] • Noise [k] so employees may not hear / mishear orders [an] in the factory [app] • Employees may not be at work [k] as 100 work part-time [app] so not able to obtain the information [an] • Too much information / detail [k] so not possible to absorb / take it all in [an] • Employees may not see/read message [k] on the noticeboard [app] • Not listening / not paying attention [k] in the meeting [app] • Wrong communication method/medium used [k] • Receiver may not trust the sender [k] Other appropriate responses should also be credited. 6 Note: 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 may be appropriate for this question: • 150 000 / bookcases or related words such as wood • Batch production • 240 employees / 100 or part-time employees / 140 full-time • Factory • Reducing waste • Meetings (every month) • Noticeboards • Just-in-time inventory control Other appropriate examples in context can still be credited. 1(e) Do you think it is a good idea for a business to have only one customer? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to whether it is a good idea for a business to have only one customer. Points might include: • Only one source of revenue / sales [k] so if the customer does not buy, the business could fail / experience cash flow issues [an] • Can focus / specialise on the needs of that customer [k] increasing customer loyalty [an] • Can help planning / know what need to order [k] reduces amount of wastage [an] • No need to advertise [k] leading to lower marketing costs [an] • Can give customer too much power to influence prices [k] • Less administration (compared to several customers) [k] Other appropriate responses should also be credited. Justification might include: Having a single customer can make it easier to focus on the needs of that customer [k] so more likely to build customer loyalty [an.] However, can spread the risk if more than one customer [k] so if one stops buying they can rely on the other customers [an]. I think having a single customer is too high a risk as the business is totally dependent on one other business for its own success [eval] as it ties its success to the other business over which it has little control. [eval] 6 This is a general question so there are no marks for application. (a) To earn 2 marks, define the secondary sector as firms that process and manufacture goods from natural resources or raw materials provided by the primary sector. A partial definition, such as 'makes products,' earns 1 mark. (b) To earn 1 mark for each, identify two distinct factors a business should consider, such as supplier reliability, demand predictability, communication systems, bulk purchase discounts, or storage costs.

VDN is a private limited company. One of VDN’s objectives is to be ethical. VDN produces office products including pens and paperclips. All raw materials are imported. The Managing Director 1 plans to introduce new machinery to help lower average costs. This will require training for VDN’s 380 employees. The Managing Director also wants to introduce Kaizen into the factory. Define ‘private limited company’. (a) … … … … [2] Define ‘average cost’. (b) … … … … [2] Outline two ways VDN could be ethical when producing its products. (c) Way 1: … … … … Way 2: … … … … [4] Explain one advantage and one disadvantage to VDN of introducing Kaizen. (d) Advantage: … … Explanation: … … … … Disadvantage: … … Explanation: … … … … [6] Do you think off-the-job training is the best method for a large business to use when introducing new machinery? Justify your answer. (e) … … … … … … … … … … … … [6]

1(a) Define ‘private limited company’ Award 2 marks for a full definition. Award 1 mark for a partial definition. A business owned by shareholders, but they cannot sell shares to the public. [2] OR A business owned by shareholders, but they can only sell shares to friends or family. [2] OR Often a small to medium-sized business owned by shareholders who have limited liability. The company cannot sell its shares to the general public. [2] Partial definition e.g. have limited liability [1] OR can sell shares [1] 2 1(b) Define ‘average cost’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Total cost of production divided by total output [2] OR The cost of producing a single unit of output [2] Partial definition e.g. cost per unit [1] 2 1(c) Outline two ways VDN could be ethical when producing its products. Award 1 mark for each relevant way. Award 1 mark for each relevant reference to this business. Points might include: • Pay fair wages [k] to its 380 employees [app] • Source environmentally friendly products / buy local / recycle / reduce waste [k] in its factory [app] • Not use child labour / not buy from producers using child labour [k] when importing materials [app] • Pay suppliers a fair price [k] for pens/paper clips [app] • Pay suppliers on time [k] Other appropriate responses should also be credited. 4 Note: 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: • Factory • Office equipment or examples such as pens/paperclips • Import all its raw materials • 380 employees • Kaizen • Average cost Other appropriate examples in context can still be credited. Do not award answers which outline legal factors such as pay minimum wage. 1(d) Explain one advantage and one disadvantage to VDN of introducing Kaizen. Award 1 mark for identification of each relevant advantage/disadvantage (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: Advantages: • Increase productivity [k] which helps lower average costs [app] and could improve its profit margin [an] • Work in progress is reduced [k] reducing inventory costs [an] • Can reduce amount of space needed for production [k] decreasing rent costs [an] • Improved layout / combining of jobs [k] in the factory [app] can release some employees to do other jobs [an] • Help motivate employees (as involved in change) [k] leading to less absenteeism / higher productivity [an] of its 380 employees [app] Disadvantages: • Only designed to produce small changes / no radical changes [k] so will not gain any significant increase in output [an] of office equipment [app] • Over time it is difficult to identify (extra) improvements [k] which can demotivate employees [an] • Workers may need training [k] which increases costs [an] • Not all employees may want/able to implement Kaizen [k] • Meetings take time [k] which could decrease output [an] Other appropriate responses should also be credited. 6 Note: 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: • Factory • Office equipment or examples such as pens/ paperclips • 380 employees • Reduce average costs • Ethical (objective) Other appropriate examples in context can still be credited. 1(e) Do you think off-the-job training is the best method for a large business to use when introducing new machinery? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for a justified decision as to whether off-the-job training is the best method of training for a large business to use when introducing new machinery. Points might include: Off-the-job • Can focus on training [k] so less likely to make mistakes [an] • Access to up-to-date knowledge [k] • May have to pay more / high cost of specialists [k] • Business may not have the skills to train its workers [k] On-the-job [k] • Still work while training so output / production does not stop [an] • Cheaper than off-the-job [an] • Workers might not have the skills to train others (as its new machinery) [an] • Employees learn way the business want them to / can control what is taught [an] so standards are easier to maintain [an] • Slows down work of experienced worker [an] 6 This is a general question so there are no marks for application. To gain both evaluation marks response must clearly relate to a large business. 1(e) Other appropriate responses should also be credited. Justification might include: Off-the-job is helpful as workers can focus on training [k] so less likely to make mistakes [an]. This is likely to be better than on-the-job training [k] even though some output is still produced [an]. This is because existing employees may not have any knowledge of the new equipment so off-the- job training is worth the extra cost [eval] to make sure workers use machinery correctly and as a result avoid costly mistakes. [eval]

PJA make fashion clothing for 16-25 year olds. Many of its competitors are multinational companies. PJA produce new products every 3 weeks. All PJA’s products are made in a local factory because 2 of import quotas. The Managing Director is reviewing PJA’s financial statements using ratio analysis. An extract is shown in Table 2.1. Table 2.1 Extract from PJA’s financial statements for 2020 7400 Revenue ($m) 3330 Gross profit ($m) 1100 Profit ($m) 1.5 Current ratio 8% Return on Capital Employed (ROCE) Define ‘import quota’. (a) … … … [2] Calculate PJA’s gross profit margin. Show your working. (b) … … … [2] Outline one benefit and one limitation to PJA of developing new products. (c) Benefit: … … … … Limitation: … … … … [4] Explain two ways PJA’s managers can use ratio analysis. (d) Way 1: … … Explanation: … … … … Way 2: … … Explanation: … … … … [6] Do you think multinational companies always benefit the countries they operate in? Justify your answer. (e) … … … … … … … … … … … … [6]

2(a) Define ‘import quota’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Limit on the number of goods into a country [2] Partial definition e.g. limit on number of imports [1] 2 2(b) Calculate PJA’s gross profit margin. Show your working. Correct answer 45(%) [2] Correct method but incorrect answer [1] e.g. gross profit / revenue ×100 OR 3330 / 7400 *100 2 0.45 alone = 0 2(c) Outline one benefit and one limitation to PJA of developing new products. Award 1 mark for each relevant benefit/limitation. Award 1 mark for each relevant reference to this business. Points might include: Benefit: • Attract new customers / sales / growth [k] for its clothes [app] • Need to replace products in decline / keep up with changing customer tastes [k] of 16–25-year-olds [app] • Retain customers / to maintain market share [k] • Spread risk / attract new markets / have other products to rely on for sales [k] • Charge a higher price [k] • Improve reputation [k] • Can create a unique selling point [k] Limitations: • No guarantee customers will like the new product [k] as fashion changes [app] • Competitors might introduce rival products / reduce prices [k] as most of competitors are multinational companies [app] • High cost [k] • Production issues, e.g. is there sufficient capacity [k] within factory [app] • Having access to suitable materials [k] as trying to avoid import quotas [app] Other appropriate responses should also be credited. 4 Note: 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: • Correct use of data from table 2.1 • Clothes • Fashion • 16–25-year-olds / young customers • Local • Factory • Multinational companies • 3 weeks / 21 days. Other appropriate examples in context can still be credited. 2(d) Explain two ways PJA’s managers can use ratio analysis. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: • Able to see trends over time [k] for its clothing [app] to see where / whether performance has improved or not [an] • See trends between competitors [k] such as whether revenue is higher than $7400m [app] to assess how / whether they are as competitive as they think [an] • Able to measure financial performance / profitability / success [k] as if last year ROCE was lower than 8% [app] profitability has improved [an] • Help make investment/expansion decisions [k] such as developing new products [app] • Check / manage liquidity OR working capital [k] as if last year the current ratio was higher than 1.5 [app] then they know liquidity has got worse [an] Other appropriate responses should also be credited. 6 Note: 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: • Correct use of data from table 2.1 • Clothes • Fashion • 16-25-year-olds / young customers • Local or factory • Multinational companies • Develop new products. Other appropriate examples in context can be credited. 2(e) Do you think multinational companies always benefit the countries they operate in? Justify your answer. Award up to 2 marks for identification of relevant issues. Award up to 2 marks for relevant development of points. Award up to 2 marks for justified decision as to whether multinational companies always benefit the countries, they operate in. Points might include: • Creates jobs / provides income [k] so improving living standards [an] • Technical knowhow increased [k] which could help improve production methods / efficiency / output [an] • Orders for local suppliers [k] increasing local incomes / GDP [an] • Improve international reputation of country [k] • Increased investment / infrastructure development in country [k] • Companies pay taxes [k] which increases government income [an] • Competition for local businesses [k] leading to lower demand / lower prices [an] which could lead to the closure of local businesses [an] • Profits are often repatriated [k] limiting the countries growth [an] • Offer higher wages [k] reducing supply of workers for local business [an] • Use up limited resources [k] so there is less available for other local businesses [an] • Jobs created may be unskilled [k] Other appropriate responses should also be credited. Justification might include: Companies pay taxes [k] which increases government income [an]. However, reduced sales for local businesses [k] may lead to lower revenue [an]. A multinational always benefits a country to some extent, because of the money invested. [eval] The overall impact depends upon the effect on local businesses. [eval] 6 This is a general question so there are no marks for application. Analysis should focus on the impact on the country.