A fashion retailer, TrendyThreads, is considering expanding its operations by opening new stores in different countries. This expansion would involve significant investment.

Mark scheme

Marking points from the official mark scheme. The mark or mark type is shown in brackets.

1. **(a)**
2. Award 1 mark for each valid benefit (max 2).
3. e.g. Access to new markets/customers (1), Increased sales/revenue (1), Diversification of risk (1), Economies of scale (1), Spreading fixed costs (1).
4. **(b)**
5. Award 1 mark for identifying a challenge, 1-2 marks for developing the challenge, and 1-2 marks for discussing its impact on TrendyThreads specifically (max 8 marks).
6. Level 1 (1-2 marks): Identifies one or more challenges with minimal or no development.
7. Level 2 (3-5 marks): Identifies challenges and provides some development/explanation, with some attempt to link to TrendyThreads or international expansion. May lack depth or balance.
8. Level 3 (6-8 marks): Identifies several relevant challenges and provides clear, well-developed explanations. Discussion includes a clear impact on TrendyThreads, showing a good understanding of the complexities of international expansion. May include a balanced perspective.
9. Possible challenges:
10. • **Cultural differences**: Different fashion tastes, marketing approaches, or consumer behaviour (1). This could mean TrendyThreads' existing product lines might not appeal to local customers (1), requiring costly adaptation or new product development (1), potentially leading to low sales if not addressed (1).
11. • **Legal and regulatory barriers**: Different laws on employment, product safety, taxation, or advertising (1). TrendyThreads would need to incur costs for legal advice to ensure compliance (1), and failure to comply could lead to fines or business closure (1), hindering their ability to operate effectively (1).
12. • **Language barriers**: Communication difficulties with local staff, suppliers, or customers (1). This could lead to misunderstandings, poor customer service, or inefficient operations (1), requiring investment in translation services or local recruitment (1), increasing operational costs (1).
13. • **Logistical challenges**: Managing supply chains across international borders (1). This involves increased shipping costs, potential delays, and customs duties (1), which can increase overall costs and impact delivery times, affecting customer satisfaction (1).
14. • **Competition**: Facing established local or international competitors (1). TrendyThreads might struggle to gain market share (1) without aggressive pricing or extensive marketing campaigns (1), which would require significant investment (1).