Fuzz Buzz Ltd (FBL) FBL is a small private limited company with 10 shareholders. Its unique selling point is that its toys are handmade. They are aimed at children aged 4 to 10. Its latest product, a hand-held soft spinning toy, called Tommy Turner, has become a fashion item amongst young children. Demand for these toys exceeds the ability of FBL to supply them. Stores are desperate to secure more inventory in order to make the most of the high demand. FBL sells these toys for $6 each. If FBL increases the price of the Tommy Turner then the price elasticity of demand is estimated to be –2. The quantity demanded at the current price is 120000. If FBL increases the supply of Tommy Turners it would require investment. The new machinery would cost $100000 and allow mass customisation. The concern is that this fashion may not last. The work will be a lot less skilled, although a design team will still be required to develop future toys. FBL's employees take great pride in their work and are very loyal to the company and their co-workers. Most of the employees have been with the company for over 10 years and enjoy good relationships with all the directors. Anindita, the Marketing Director, thinks FBL should make the most of the fashion for the Tommy Turner by extending the product life cycle.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. [2] (a)(i) A correct definition
2. [1] (a)(i) A partial, vague or unfocused definition
3. (a)(i) Content: Different / differentiates about a business's product / service, Factor or feature
4. [1] (a)(ii) Award one mark for each point of explanation: Understanding of customisation, i.e. the use of techniques to create differentiated products, unique products, to customer orders etc.
5. [1] (a)(ii) Award one mark for each point of explanation: Understanding of 'mass', i.e. understanding of the use of production lines / flow production / assembly line etc.
6. [1] (a)(ii) Award one mark for each point of explanation: Example or some other way of showing good understanding, i.e. can involve the use of IT, low cost solution to making etc.
7. (a)(ii) Note: the C mark is dependent on gaining both A and B marks first because otherwise a wrong understanding of mass customisation (e.g. mass production) could gain the majority of the marks.
8. (a)(ii) Content: Using production lines to make a variation in products. Using mass production techniques to produce differentiated products. Can add value to a product by adding differences and customisation. Make products unique to each customer but with low cost.
9. [4] (b)(i) Correct answer with or without correct working or units
10. [3] (b)(i) Correct calculation of change in QD (24 000) with or without direction
11. [2] (b)(i) Correct calculation of percentage change in QD (-20%)
12. [1] (b)(i) Correct formula*
13. (b)(i) *Formula can be implied through the use of figures
14. (b)(i) Formula: % change in QD = PED % change in P
15. (b)(i) % change in QD = -2 / 10%
16. (b)(i) So % change in QD = -20%
17. (b)(i) So, change in QD = -24 000 units (a decrease of 24 000 units)
18. (b)(i) 120 000 – 24 000 = 96 000 units
19. [2] (b)(ii) Explanation of a factor influencing supply in context
20. [1] (b)(ii) Explanation of a factor influencing supply
21. (b)(ii) Content may include: Changing costs, Number of producers, Investment, Supply of a related good, Technology, Productivity, Taxes and subsidies, Weather, Availability of factors of production, Production time.
22. (b)(ii) Context may include: Capacity - FBL working at full capacity, Ability to invest – requires $100 000, Productivity - can this be increased?
23. [4] (c) Shows understanding of two methods to extend the PLC in context
24. [4] (c) Developed analysis of two methods to extend the PLC in context
25. [3] (c) Shows understanding of one method to extend the PLC in context
26. [3] (c) Developed analysis one method to extend the PLC in context
27. [2] (c) Shows knowledge of two methods to extend the PLC
28. [2] (c) Limited analysis of two methods to extend the PLC
29. [1] (c) Shows knowledge of one method to extend the PLC
30. [1] (c) Limited analysis of one methods to extend the PLC
31. (c) Content / context: Extension strategies extend the life of the product before it goes into decline may include: Advertising - try to gain a new audience or remind the current audience. Extend range – add new designs / features to the current product e.g. other named characters (other than ‘Tommy Turner'). Price reduction more attractive to customers / favoured by Aninditad. Explore new markets – try selling abroad. New packaging – brightening up old packaging, or subtle changes such as changing the colour or font used or new name for the range.
32. [7] (d) Justified evaluation based on arguments in context
33. [6] (d) Developed evaluation based on arguments in context
34. [5] (d) An evaluative statement based on arguments in context
35. [3-4] (d) Shows understanding of staff morale and welfare in context
36. [4] (d) Arguments (two-sided) based on the impact of an increase in supply on FBL's employees morale and welfare
37. [3] (d) Argument (one-sided) based on the impact of an increase in supply on FBL's employees morale and welfare
38. [1-2] (d) Shows knowledge of staff morale and welfare
39. [1-2] (d) Limited analysis of the impact of an increase in supply on employee's morale and welfare
40. (d) Employee morale and welfare would include job satisfaction, outlook, feelings of wellbeing, good work relationships, engaged / take pride in work, good workplace culture. One of the cornerstones of business which has been shown to have a direct effect on productivity. Low morale leads to reduced concentration, absenteeism, missed deadlines, fall in productivity, high staff turnover etc.
41. (d) Context / content: Increased supply requires a production change to CAM, machinery rather than hand produced toys which would mean lower skilled work and could lead to a fall in morale. Also might change payment system. FB's employees: Take great pride in their work. Very loyal to the company and their co-workers. Most of the employees have been with the company for over 10 years. Enjoy good relationships with all the directors.
42. (d) If morale falls employees might: Look for other jobs, Find it hard to concentrate, Resent the directors for the change, Cause conflict with management and even co-workers, Produce less, Be absent more frequently, Lower quality of work.