- Mark Scheme /

Question Answer Marks AO Element Notes Guidance

1 Define ‘import quota’. 2 Do not award answers

which confuse the term
Award 2 marks for a full definition. with a tariff.
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 of goods [1] OR limit on
imports [1]
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Question Answer Marks AO Element Notes Guidance

2 Define ‘import tariff’. 2 First mark for

understanding it is a
Award 2 marks for a full definition. tax.
Award 1 mark for a partial
definition. Idea of from another/into
the country is +1 only.
A tax placed on imported goods
when they arrive into a country
[2]
OR
A specific form of tax imposed on
imported goods [2]
Partial definition e.g. type of tax [1]
OR tax on imported goods [1]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

3 2
Define ‘globalisation’.
Award 2 marks for a full definition.
Award 1 mark for a partial
definition.
Increase in worldwide trade and
movement of people and capital
between countries [2]
OR
Increasing trend for businesses to
trade across international
boundaries and for people to
live/travel to countries that are not
their own [2]
OR
The process by which countries are
connected with each other because
of the trade of goods and services
[2]
Partial definition e.g. (increase in)
trade of goods and service [1]
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Question Answer Marks AO Element Notes Guidance

4 Identify four potential benefits to 4 Only award the first four

a country’s economy of a responses given.
multinational company locating
there.
Award 1 mark per benefit (max
4).
Points might include:
• Jobs created
• Increased/new
investment/infrastructure
• Increased/more exports
• Fewer imports
• Taxes paid to government
• Increased customer
choice/quality
• Improves/increased
competition / lower prices
• Improves country’s
reputation
Other appropriate responses should
also be credited.
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Question Answer Marks AO Element Notes Guidance

5 Identify two reasons for 2 Only award the first two

globalisation. responses given.
Award 1 mark per reason (max 2).

Points might include:

• Free trade agreements / economic
trading blocs / reduction in trade
barriers • Improved/cheaper
transport/travel links • Improved
communication
networks/technology • Emerging
markets are quickly expanding /
rapid economic growth in
developing countries • Change in
government economic policy /
allowing foreign company to set
up
operations in own country •
Increased labour migration
Other appropriate responses should
also be credited.
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Question Answer Marks AO Element Notes Guidance

6 Define ‘depreciation of an 2
exchange rate’.
Award 2 marks for a full definition.

Award 1 mark for a partial

definition.
A currency’s value falls against
another currency [2]
OR The value of the currency goes
down with respect to another
(currency) [2]
OR When the value of a currency
falls – it buys less of another
currency than before [2]
Partial definition e.g. currency is
weaker/falling [1]
OR can buy less with currency
[1]
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Question Answer Marks AO Element Notes Guidance

7 Explain one reason why the 6 Note: To use words from

following factors might be the stem as application,
important to BEF when deciding the reference must be
whether to export to country Y. appropriate (i.e. make
sense) in relation to the
point being made.
Award 1 mark for identification of
each relevant reason (max 2). The following words are
likely to be appropriate
Award 1 mark for each relevant
for this question:
reference made to this business
(max 2). • Toothpaste/shampoo •
Wide range of products •
Award 1 mark for each relevant
310 000 units • Flow
explanation (max 2).
production • Correct use
Points might include: of data from Table 4.1 •
Large business
Import tariffs:
Other appropriate
• Higher import prices / products
examples in context can
become more expensive [k] leading
still be credited.
to lower demand / so less
competitive [an] when selling its
toothpaste / shampoo [app] •
Business may decide to maintain
prices / not pass on price increase
to customers [k] reducing profit
margin [an]
Language:
• May need to translate/change
wording on the packaging (so
customers understand) [k] on
some
of its 310 000 units [app]
which
increases costs [an] •
Communication problems with
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

retailer / agent in other country [k]

leading to wrong orders / decisions
being taken [an] especially as have
a wide range [app] • Potentially
fewer sales as customers may not
understand what is written on the
packaging [k] leading to less
revenue [an]
Other appropriate responses should
also be credited.

8 Define ‘multinational company’. 2

Donotaward‘selsinothercountrie
s’asthiscould
Award2marksforafuldefinition.Award1markforapart equally apply to an
ialdefinition. exporter.
A business
withfactories,production,orserviceoperationsinmorethan
one country [2]
ORAbusinesswithproductionorserviceoperationinanothercountry
outside its normal area of operation
[2]
Partialdefinitione.g.hasbusinesseseverywhere[1]ORworks/operates
in more than one country [1]
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Question Answer Marks AO Element Notes Guidance

9 Do you think 6 This is a general

the question
introduction of so there are no
import tariffs marks for
is likely to have application.
a
greater effect To access
evaluation
than the
marks must
introduction
of import have at least
quotas on identified
an exporting relevant points
business? for both tariffs
Justify and
your answer. quotas.

Award up to 2
marks for
identification of
relevant points.
Award up to 2 To gain both evaluation
marks for marks, response must
relevant clearly relate to an
development of exporting business.
points.
Award 2 marks
for justified
decision as to
whether the
introduction of
import tariffs is
likely to have
greater effect
than the
introduction of
import quotas
on an
exporting
business.
Points might include:
Tariffs
• May lead to an increase in the
price of goods / makes goods more
expensive [k] which makes the
products less competitive [an]
leading to fewer sales / less revenue
[an] • Business may decide to
maintain prices / not pass on price
increase to customers [k] reducing
profit margin [an]
Quotas
• Will limit the amount of goods
that can be brought into a country
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

[k] which will reduce the supply

[an] reducing potential sales /
revenue [an] • May have to find
new market for remaining products
/ store leftover inventory [k]
increasing storage costs [an]
increasing total cost [an]
Other appropriate responses should
also be credited.
Justification might include:
Quotas will limit the amount of
goods that can be brought into a
country [k] which reduces the
supply [an]. Whereas tariffs could
increase the price of goods [k]
leading to lower demand [an]. I
think tariffs are likely to have less
effect as at least you can still export
the amount you want [eval] and
customers may still be prepared to
pay the extra whereas quotas could
reduce or restrict the possibility of
any sales. [eval]
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Question Answer Marks AO Element Notes Guidance

10 Do you think reliability of the 6 This is a general question

supplier is the most important so there are no marks for
factor for a large manufacturing application.
business to consider when
Candidates can discuss
deciding whether to import
other factors, but
materials? Justify your answer.
evaluation must focus on
whether reliability of
Award up to 2 marks for supplier is the most
identification of relevant points. important factor.
Award up to 2 marks for relevant For both evaluation
development of points. marks response must be
linked to a large
Award 2 marks for justified
manufacturing
decision as to whether reliability of
business.
supplier is the most important factor
for a large manufacturing business Do not award general
to consider when deciding whether factors such as demand /
to import materials. competition / cost of
transport as these would
Points might include: be affected whether
Reliability of supplier: import or not.
• Need to ensure materials can
be delivered on time [k] so
there is no delay / stop
production [an] otherwise not
able to meet orders on
time[an]
• Supplier must be able to
respond to changes in orders
so business can adapt to
changes in customer needs
quickly [k] or customers may
switch to competitors [an]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

leading to lower revenue

[an]
Other factors:
• Import tariffs [k] would
increase the price of imports
[an]
• Import quotas [k] could limit
amount of goods able to bring
into country [an]potentially
restricting amount of output
[an]
• Different (legal/quality)
standards in other country [k]

• Exchange rates [k] as an

increase/appreciation in own
country could mean imports
are cheaper [an] which would
lower costs [an]
Other appropriate responses should
also be credited.
Justification might include:
A business needs materials to be
delivered on time [k] otherwise this
could delay production [an] so not
able to meet orders [an]. Other
factors could include tariffs [k].
However, I think having a reliable
supplier is the most important factor
especially as a large business will
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

need high levels of inventory to

make sure orders can be met
customers may be willing to pay
more to guarantee orders which
protects reputation [eval] which
may be more important than other
factors such as tariffs as customers
may be willing to pay extra to
obtain the goods they require.
[eval]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

11 Explain two factors RJJ’s 6 To use words from the

Finance Director should consider stem as application the
when deciding on a source of reference must be
finance for the expansion. appropriate (make sense)
in relation to the point
Award one mark for identification
being made.
of each relevant factor (max 2).
The following words are
Award one mark for each relevant
likely to be appropriate
reference made to this business
for this question:
(max 2).
• Shoes
Award one mark for each relevant
explanation (max 2). Points might • Niche market
include:
• Public limited company
• Amount of money required [k] as / limited liability
operate in a niche market [app] they
• Takeover (a competitor)
may not have enough retained
profits, so have to borrow / look for
external sources [an] • Profit decreased / $50
000
• Length of time / how long to
repay / how long the finance is Other appropriate
needed for [k] as a long-term examples can still be
project such as the takeover [app] credited.
would need to use a long-term
source [an] Do not award purpose as
[k] as this is stated in the
• Level of existing borrowing [k] question.
particularly as profit fallen by $50
000 [app] so if have a high level of
debt lenders may not be willing to
lend any more money [an]
• Type of business [k] because they
are a public limited company [app]
may be seen as lower risk so offer
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

lower interest rates [an]

• Credit history / financial status /
amount of assets the business has /
liquidity [k] as lenders will want to
know if you have the ability to
repay [an]
• Security / collateral [k]
• Interest / cost of finance [k]
• How quickly the business needs
the money [k]
Other appropriate responses should
also be credited.
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Question Answer Marks AO Element Notes Guidance

12 Explain how 6 Note: To use

each of the words from
following the stem as
external application,
influences the reference
might affect must be
LFP: appropriate (i.e.
make
Award 1 mark
sense) in
for each
relevant relation to the
affect (max 1 point being
for each made.
influence).
The following words are
Award 1 mark
likely to be appropriate
for each
for this question:
relevant
reference made
to this business
(max 2).
• Furniture • wood • 5
Award 1 mark
(production workers) •
for each
40%
relevant
explanation
(max 2).
Points might include: Other appropriate
Lower employment levels: examples in context can
still be credited.
• Wider pool of potential
employees [k] for the 5 workers
[app] possibly
at lower wage rates/better able to
find quality candidates [an] •
Lower
incomes [k] lower demand/lower
sales [an] for its furniture [app]
Import quotas: • Limit amount of
products that a business can bring
into a country [k] so have access to
less wood [app] so may be unable
to fulfil all its orders [an] • Could
force LFP to find new suppliers
[k]
as 40% imported [app] which
could
increase costs of sales/selling
price
[an]
Other appropriate responses should
also be credited.
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

13 I dentify two reasons why a 2

government might introduce
import controls.

Award 1 mark per reason.

Points might include:
• Protect jobs from cheap labour in
other countries • To improve trade
deficit • Protect newly started/infant
industries • To earn more revenue
from tariffs • Protect local
businesses from low priced
competition • Protect important
national or strategic industries
Other appropriate responses should
also be credited.
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Question Answer Marks AO Element Notes Guidance

14 Do you think the exchange rate 6

is the most important factor for
a business to consider when
deciding whether to import parts
for a high quality product?
Justify your answer.
Award up to 2 marks for
identification of relevant issues.
Award up to 2 marks for relevant
development of points.
Award 2 marks for justified
decision as to whether the exchange
rate is the most important factor for
a business when deciding whether
to import parts for a high quality
product.
Points might include:
Exchange rates • Appreciation in
own exchange rates would mean
have to pay less to import materials
[k] which lowers costs [an] so may
be able to lower prices or improve
profit margin [an] • Changing rates
are difficult to plan for [k] may
result in having much higher costs
than budget [an] • Exchange rate
depreciate [k] lead to higher cost of
imported materials [an] could mean
have to increase prices which could
lower sales [an]
Other factors might include:
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

• The quality of parts/materials [k]

as it may not be possible to obtain
the resources locally [an] • Import
tariffs [k] this would increase the
price [an] • Import quotas [k] this
could limit the amount of parts that
can be brought into the country [an]

Justification might include:

• As it is for a high-quality product,
exchange rate is not as important as
the materials because customers
may be willing to pay the higher
price to get the right quality which
could cover the financial impact of
any changes in the exchange rate.
[eval] [eval]
Other appropriate responses should
also be credited.
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Question Answer Marks AO Element Notes Guidance

15 Define ‘multinational company’. 2

Award 2 marks for a full definition.

Award 1 mark for a partial

definition.
A business with factories,
production or service operations in
more than one country [2]
A business with production or
service operation in another
country
outside its normal area of
operation
[2] Partial definition e.g.
works/operates in more than one
country [1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

16 Explain two advantages to PCS 6

of being a multinational
company.
Award 1 mark for identification of
each relevant advantage (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:
• Access to new markets/increase
sales [k] as people might want their
500 brands [app] which will
increase revenue [an] • Spread
risk
[k] when selling soft drinks [app]
so fall in demand in one market
can
be balanced out by rising sales in
other countries [an] • Better access
to raw materials [k] such as plastic
for bottles [app] so able to
maintain
output [an] • Benefit from
economies of scale e.g. purchasing,
financial [k] lowering average costs
[an] • Reduce transport costs/help
distribution (as produce goods
nearer market) [k] • Avoid barriers
to trade [k] • Reduce tax
liability/take advantage of
favourable laws [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

Other appropriate responses should

also be credited.

17 Define ‘globalisation’. 2
Award two marks for a full
definition. Award one mark for a
partial definition.
The process by which countries are
connected with each other because
of the trade of goods and services
[2]
OR The process of countries
becoming more interconnected [2]

OR Increase in worldwide trade and

movement of people between
countries [2]
OR Freer movement of people and
capital between countries [2]
Partial definition e.g. increase in
trade around the world [1] OR
increased movement of capital
around the world [1]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

18 Outline two ways VKW might be 4 Application marks may

affected by increased import be awarded for
controls. appropriate use of the
following:
Award one mark for each relevant
way. • trying to reduce total
costs
Award one mark for each relevant
reference to this business. • phones
Points might include: • 40 per cent exported
• Increased import costs/more • (Most) raw materials
expensive to import [k] at a time are imported
when trying to reduce total costs
[app] • quotas
Do not award examples.
• Can export less products/fewer
sales in other countries [k] which
is a problem as export 40% of its Do not award lower
phones [app] prices or increased sales
in other countries.
• May not be able to obtain
sufficient number/range of parts so For knowledge must
delay/halt production [k] so difficult identify the effect of
to use just-in-time [app] import control.
• May have to spend time finding
local suppliers [k] as currently most
raw materials are imported [app]

• Might have to charge higher prices

[k]
• Domestic sales might rise [k]
Other appropriate responses should
also be credited.
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Question Answer Marks AO Element Notes Guidance

19 What is meant by ‘exchange 2

rate’?
Clear understanding [2]:
Value/price of one currency in
terms of another
Accept textbook definition [2]: The
rate at which one country’s
currency can be exchanged for that
of another
Some understanding [1]: The
change OR buying of one country’s
currency with another country’s
currency
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Question Answer Marks AO Element Notes Guidance

20 Do you think NBV’s decision to 6 Application marks may

set up a factory will only bring be awarded for
drawbacks to other businesses in appropriate use of the
country B? Justify your answer. following:
• multinational
Knowledge [1] – award max 1 mark company
for identification of relevant
point(s) • capital employed OR
$144 bn
Application [1] – award 1 mark for
• 18 countries
a relevant reference made to this
business • 400 000 (workers)
Analysis [2] – award up to 2 • diseconomies of scale
marks
for relevant development of
point(s)
• building products OR
Evaluation [2] – justified decision bricks
made as to whether NBV’s decision
to set up a factory will only • raw materials (are
drawbacks for other businesses in bought in country of
country B operation)
Points might include: Note: answers should
refer to the impact on
Drawbacks other businesses, not the
country or NBV
• Use up scarce resources [k] to
make bricks [app] so fewer Note: increased
resources available for other uses competition [k] can also
[an] create benefits to other
businesses so relevant
• Increased competition [k] so local
businesses may make a loss OR be development of
advantages of this for
forced out of business [an] as local
other businesses can be
businesses cannot compete against
credited
(possible) lower prices [an]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

• Could lead to a potential shortage

of suitable applicants for other
businesses [k] as people may prefer
to work for a multinational
company [app] reducing the
competitiveness of local businesses
[an]
Benefits
• Lead to improvements in
infrastructure/better transport links
[k] which can also speed up
delivery times for other businesses
[an]
• Increased sales for local suppliers
[k] as all raw materials are
purchased from the country [app]
leading to higher revenue [an]
• Access to wider range of materials
for other local businesses [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

21 Identify and explain two possible 6 Application marks may

problems for BVC when be awarded for
exporting its products. appropriate use of the
following:
Knowledge [2 × 1] – award 1 mark
for each relevant problem • paint
Application [2 × 1] – award 1 mark • correct use of data from
for each relevant reference made to the Table
this business
• 60%
Analysis [2 × 1] – award 1 mark for
each relevant explanation • chemicals
• new legal controls
Relevant points might include:
• return on capital
• Different tastes [k] e.g. different
employed
countries might prefer different
paint colours [app] adding to • cash-flow forecast
production costs [an]
• Different standards/legislation [k]
so may not be able to use certain
chemicals [app] stopping possible
sales [an]
• Effect of exchange rates [k] as an
appreciation in own currency
would
mean its products are more
expensive [an] so not able to
export
as much as 60% [app]
• Knowledge of market OR
competition [k]
• Tariffs [k]
• Quotas [k] will restrict numbers
of products that can be sold [an]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

• Increased costs of transport/

increased risk of delay [k]
• Increased competition [k]

22 Identify and explain how each of 4 Application marks may

the following might affect CYN’s be awarded for
exports. appropriate use of the
following:
Knowledge [2 × 1] Award 1 mark
for each effect identified • family owned
Application [2 × 1] Award 1 mark • children OR toys
for each explanation in context
• revenue increased by
Points might include: Quotas: 15% for last 10 years •
competitive market
• (physical) limits on the number of
imports [k] which may become a • stop promotion for 6
problem as CYN exports 10% [app] months
Tariff:
• correct use of data from
• increase the price [k] so toys the Figure
become more expensive [app]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

23 Explain how each of the

following 6
Application marks may
factors might affect SJD’s
be awarded for
business.
appropriate use of the
following:
Award 1 mark for each relevant
point
• steel • iron • ethical
issues
Award 1 mark for each relevant
competitors plan to close
reference made to this business
factories • construction
Award 1 mark for each relevant
businesses • private
explanation
sector • producer • (other)

countries • government
Relevant points might include:
support • employees
redundant
High business tax rates:
• reduces profit [k] so may need Do not award reference
to to cheap imports / high
make more workers redundant business tax rates, as
[app] application. This is in the
• increase prices [k] so may lead question.
to
lower demand [an] from
construction businesses [app] •
increases costs [k] leading to
less
profit [an] for this private sector
business [app]
Cheap imports:
 • reduced demand [k] for steel [app]
as its customers are able to buy
from rivals [an] • may reduce prices
[k] so revenue is reduced [an] •
lower costs of production [k] as this
is a producer [app] as raw materials
may be cheaper [an] • reduce
market share [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

24 What is meant by ‘import 2 Do not award answers

quota’? which confuse term with
tariff.
Clear understanding [2]: limit on
the number of goods allowed into
a country
Some understanding [1]: limit on
number of imports
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

25 Identify and explain two

benefits 6
Application marks may
to PShirts of selling in other
be awarded for
countries.
appropriate use of the
following:
Knowledge (2 × 1) – award 1
mark
for each relevant benefit (Max 2)
• private limited company

• shirts • men and women

•
Application (2 × 1) – award 1
mark
competitors • sales have
for each relevant reference made
to
fallen • legal controls •
this business
relevant
Analysis – (2 × 1) – award 1
mark
data in table • economic
for each relevant explanation
boom
Relevant points may include: Do not accept fewer legal
restrictions as stem states
• Access to more markets [k] MD is worried about
which legal controls.
can increase revenue OR market
share [an] for its shirts [app] •
Spread risk [k] as more men and
women to sell to [app] so less
reliant on sales for one country
[an]
• Lower demand in home market
[k] where sales have fallen
despite
the economic boom [app] •
Greater
recognition OR brand awareness
[k] leading to more (sales)
revenue
[an] • Possible economies of
scale
[k] so able to lower prices
further
[app] allowing business to
remain
competitive [an]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

26 What is meant by ‘multinational 2 Do not award ‘sells in

company’? more than one country’
as could equally apply to
Clear understanding [2] – a
exporter
business with factories, production
or service operations in more than
one country
OR a business with production or
service operation in another country
outside its normal area of operation.

Some understanding [1] – e.g. has

businesses everywhere OR
works/operates in more than one
country
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

27 Identify and explain two 4 Application marks may

opportunities for CFE of be awarded for
globalization appropriate use of the
following: Shipbuilding
Knowledge [2×1]: award 1 mark
or related words such as
for each opportunity identified
shipyards, High quality,
Application [2×1]: award 1 mark Steel or related words
for each explanation in context such as iron ore, Correct
use of numbers e.g. 40%
Points might include: • Lower
exported; 1200 or 2100
variable costs [k] as access to
Skilled employees,
cheaper iron ore [app] • Access Reduced demand,
larger market [k] as 40% exported Recession in some
[app] • Build reputation [k] for its economies, Reduce costs,
steel [app] • Easier to find suitable Trade unions, Equipment
workers [k] as need to be skilled old and often breaks
[app] • Access better or quicker
down.
distribution networks [k] to other
ship yards [app] • Share ideas OR
skills OR technologies between
countries [k] • Benefit from reduced
legal controls [k] • Quicker
communications networks [k] •
Able to spread risk [k] as recession
in some economies [app] • Easier
to import materials needed [k]
 - Mark Scheme /

Question Answer Marks AO Element Notes Guidance

28 The Finance Director thinks 6 Application marks may

QCH’s expansion into country C be awarded for
could be good for other appropriate use of the
businesses there. Do you agree? following: Multinational,
Justify your answer. cars, luxury, use of
numbers, factory,
Knowledge [1] : award 1 mark for
equipment, joint venture,
identification of relevant point (s)
meet customer needs,
start producing, fast
Application [1] : award 1 mark if growing economy,
relevant reference made to this $800m, $700m.
business The focus of the answer
Analysis [2]: award up to 2 marks must be on other
for relevant development of point(s) businesses not country
C
or QCH.

Evaluation [2]: justified decision

made as to whether QCH's
expansion into country C will be
good for other businesses in
country
C. Either viewpoint is possible.
Points might include:
• Increased competition [k] can
lead
to lower prices [an] which could
mean some car makers [app] go
out
of business [an] • Suppliers (local)
may gain orders [k] leading to
increased revenue [an] • Lose
skilled employees [k] as attracted
to work for the multinational [app]
so become less competitive [an] •
Gain new ideas [k] • Increased
sales
(for local businesses) [k] as more
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Question Answer Marks AO Element Notes Guidance

people are employed [an]

29 Identify and explain two possible 6 Application marks may

advantages of importing for Dipta be awarded for
and Ravi’s business. Knowledge appropriate use of the
[2 × 1] – award 1 mark for following: chocolate,
advantage identified local markets, $500,
primary market research,
Application [2 × 1] – award 1 mark
business plan, no
for each way if relevant reference
business experience, new
made to this business
business, cocoa beans or
Analysis [2 × 1] – award 1 mark for ingredients, ethical
each relevant explanation (sources of supply)
Relevant points might include:
• Resources not available /grown in
own country [k] as must be ethical
[app] in order to make its products
[an] • Access to exclusive
resources
[k] for new business [app] helping
it be competitive [an] • Access to
cheaper resources [k] of cocoa
beans [app] could help improve
profit margin / lower costs [an] •
Wider choice [k] of ingredients
[app] could attract more
customers
/ sales [an] • Access to better
quality materials [k] for its
chocolates [app] so could charge
higher prices [an]
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Question Answer Marks AO Element Notes Guidance

30(a) What is meant by ‘globalisation’? 2 Note: Do not accept

answers that clearly
relate to a business /
Clear understanding [2]: e.g. – the
businesses
growth in worldwide trade [2]
Freer movement of people and
capital between countries [2]
The process of countries becoming
more interconnected [2]
Some understanding [1] or
identification of one of these
features:
trade around the world,
rise of multinationals
movement of capital around the
world

31(a) Identify two possible threats to 2 Note: Do not accept

C&C from globalisation. selling abroad
Application [2 × 1] award one mark
per way
Points might include:
• increased competition / increasing
imports,
• exchange rates,
• skilled workers leave for jobs
elsewhere
• loss of individualised products
• wages increased to match
multinational wage rates
• increasing investment from
multinationals setting up in home
market
• unable to meet demand
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Question Answer Marks AO Element Notes Guidance

32 Identify and explain two ways an 4

appreciation of country B’s
exchange rate might affect UDig.

Knowledge [2] – award up to 2

marks for each relevant point
Application [2 × 1] – award 1 mark
for each explanation in context
Points might include: If assume
UDig based in country B, •
Imported products cheaper/ have
lower prices [k] so local businesses
might go elsewhere for the 30%
[app] • Not as competitive [k} so
may have to close more mines [app]
• UDig’s exports more expensive/
prices rise [k] • May have to reduce
its profit margin [k] for its coal
[app] If assume UDig based outside
B: (they will be an exporter so) •
UDig’s Products become cheaper /
lower prices [k] • Increase in profit
margin (if don’t lower prices) [k]
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Question Answer Marks AO Element Notes Guidance

33 Identify and explain two 4

advantages to APQ of being a
multinational company.
Knowledge [2 × 1] – award 1 mark
for each relevant advantage
Application [2 × 1] – award 1 mark
for each explanation in context
Relevant points might include: •
Access to new market/increase
sales/market share [k] as people
need food [app] • Reduce
production costs, e.g. lower labour
costs OR lower health and safety
costs OR land costs [k] as X is a
developing country [app]; • Spread
risk [k] when selling chemicals
[app] • Easier access to raw
materials [k] for all its factories
[app] • Avoid barriers to trade
[k]
• Remain competitive [k] •
Reduce
transport costs (as can produce
goods nearer market) •
Economies
of scale, e.g. purchasing,
finance
[k] (only once) • Reduce tax
liability/take advantage of
favourable tax laws • Access
government grants [k]
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Question Answer Marks AO Element Notes Guidance

34 Identify and explain two ways an 4

appreciation of country B’s
exchange rate might affect UDig.

Knowledge [2] – award up to 2

marks for each relevant point
Application [2 × 1] – award 1 mark
for each explanation in context
Points might include: If assume
UDig based in country B, •
Imported products cheaper/ have
lower prices [k] so local businesses
might go elsewhere for the 30%
[app] • Not as competitive [k} so
may have to close more mines [app]
• UDig’s exports more expensive/
prices rise [k] • May have to reduce
its profit margin [k] for its coal
[app] If assume UDig based outside
B: (they will be an exporter so) •
UDig’s Products become cheaper /
lower prices [k] • Increase in profit
margin (if don’t lower prices) [k]
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Question Answer Marks AO Element Notes Guidance

35 Identify and explain two 4

advantages to APQ of being a
multinational company.
Knowledge [2 × 1] – award 1 mark
for each relevant advantage
Application [2 × 1] – award 1 mark
for each explanation in context
Relevant points might include: •
Access to new market/increase
sales/market share [k] as people
need food [app] • Reduce
production costs, e.g. lower labour
costs OR lower health and safety
costs OR land costs [k] as X is a
developing country [app]; • Spread
risk [k] when selling chemicals
[app] • Easier access to raw
materials [k] for all its factories
[app] • Avoid barriers to trade
[k]
• Remain competitive [k] •
Reduce
transport costs (as can produce
goods nearer market) •
Economies
of scale, e.g. purchasing,
finance
[k] (only once) • Reduce tax
liability/take advantage of
favourable tax laws • Access
government grants [k]
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Question Answer Marks AO Element Notes Guidance

36 What is meant by ‘import tariff’? 2 For 2 marks must have

idea of what a tariffAND
import is.
Good knowledge [2] – tax on goods
brought into a country. Do not accept import as
this is stated in question.
Some knowledge [1] – e.g. Tax on
goods/imports OR increases cost of
a product.
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Question Answer Marks AO Element Notes Guidance

37 Explain how a change in 4 Application might

exchange rates might affect KLG include appropriate use
when exporting. of the following: parts for
washing machines,
Knowledge [2] – award up to 2
washing machine
marks for each relevant
manufacturers, new
point/knowledge of exchange rates
factory, few legal
[max 2].
controls, health and
Application [2] – award up to 2 safety, low wages,
marks for relevant explanation in references to country X
context. or Y. Note: references to
either positive or
Points might include: negative effects can be
Depreciation: accepted (if correctly
explained).
• Good if KLG exports as other
countries’ currencies are worth Candidates can identify
and explain two points or
offer an extended
development of one
point.
more/lower prices [k] could
increase factory sales [app] • Could
benefit from higher profit margin
if choose not to drop the price when
currency of home country
depreciates [k].
Appreciation:
• Exports become more
expensive/prices rise [k] so fewer
(overseas) washing machine
manufacturers place orders [app] •
May have to reduce profit margins
[k] as prices rise so reducing
benefit
of paying low wages [app].
General:
• Fluctuations make it difficult to
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Question Answer Marks AO Element Notes Guidance

plan/budget [k] so difficult to set

prices for its electrical parts [app].
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Question Answer Marks AO Element Notes Guidance

38 Do you think the Government of 6

country T should help businesses
such as Grimshaw set up in its
country? Justify your answer.
Knowledge [1] – award 1 mark for
identification of relevant point(s)
[max 1]
Application [1] – award 1 mark if
relevant reference made to the
benefit of the country
Analysis [2] – award up to 2 marks
for relevant development of point(s)

Evaluation [2] – justified decision

as to whether the Government of
country T should help businesses
such as Grimshaw to set up in its
country Points might include: •
jobs
created [k] as build factory there
[app] so reduces unemployment
[an] • investment in infrastructure
[k] to transport parts to/from
factory
[app] so locals benefit from new
roads [an] • new ideas [k] which
could improve local business
practices [an] • taxes paid [k]
which
Government could use to pay for
public services [an] • more choice
for consumers [k] as will have
access to new model [app] • more
competition [k] so consumers could
benefit from lower prices/force
local businesses to close [an] •
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Question Answer Marks AO Element Notes Guidance

exploitation of resources [k] • lack

of respect for local customs and
cultures [k] • flow of profits out of
a country [k]
Application marks may be awarded
for appropriate use of the following:
mobile phones, mass market,
factory, new model, can build
anywhere, multinational.
Note: Candidate’s final decision
can be either for or against the
statement.
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Question Answer Marks AO Element Notes Guidance

39 I dentify and explain two 6

opportunities that globalisation
might offer BRZ.
Knowledge [2 × 1] – award 1 mark
for identification of each relevant
opportunity [max 2]
Application [2 × 1] – award 1 mark
if relevant reference made to this
business
Analysis [2 × 1] – award 1 mark for
each relevant explanation
Relevant points might include: •
Wider variety of goods [k] as
new
clothing / fabrics available [app]
leading to better sales [an] •
Cheaper labour costs [k] as buy
from low wage countries [app]
improves profit margin [an] •
Access larger market [k] for
outdoor clothing [app] so spread
risk if sales fall in own country
[an]
• Build reputation [k] • Reduce
legal controls [k] • Access to
better
/ quicker distribution networks
[k]
so able to obtain latest designs
quicker [app] • Quicker
communications networks [k]
Application marks may be awarded
for appropriate use of the following:
clothing such as coats, waterproofs,
trousers, designs, fabrics, imports
from low wage countries
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Question Answer Marks AO Element Notes Guidance

40 What is meant by a 2
‘multinational company?’
Clear Understanding [2] – a
business with factories, production
or service operations in more than
one country OR a business with
production or service operation in
another country outside its normal
area of operation
Some Understanding [1] – e.g. has
businesses everywhere / works or
operates in more than one
country
Do not accept ‘sells in more than
one country’as could equally apply
to exporter
Do not accept examples

[Total: 158]