Analyse two impacts on SCC of the changing external influences in country Z.

Mark scheme

Marking points from the official mark scheme (May/June 2024). The mark or mark type is shown in brackets.

1. [K1] Definition of external influences – factors outside the control of the business, inflation, unemployment and currency depreciation.
2. [K] Generic impacts of rising inflation, rising unemployment and currency depreciation, such as falling real incomes, cheaper exports and more expensive imports.
3. [APP] SCC is based in an island country in Asia, but exports mass produced clothing to developed countries.
4. [APP] The work in SCC's factories is sewing garments and employees are paid above the local minimum wage.
5. [APP] Consumers are concerned about unethical business practices so may be looking out for reports of 'sweat shop' conditions.
6. [APP] Skilled clothing workers are likely to be in high demand in Country Z.
7. [APP] SCC is highly reliant on business customers (B2B) in other countries, budget clothing brands.
8. [AN] Development of application points, in terms of the likely impacts on SCC of the rising inflation and unemployment and depreciating currency.
9. [AN] Rising inflation will lead to an increase in input prices. Employees may ask for higher wages as their cost of living increases, leading to higher costs and lower profitability.
10. [AN] Local customers of bespoke items may not be able to pay high prices for exclusive designs, due to lower real incomes. All this could lead to lower demand, lower revenue and profits.
11. [AN] Rising unemployment may mean more consumers without wages and unable to pay high prices for exclusive designs. However, SCC may be able to employ sewing machinists on lower wages. This could lead to lower costs, but also less sales. (2-sided analytical point)
12. [AN] Currency depreciation of 10% is quite a big change and will mean that SCC's exported clothing will seem 'cheap' in terms of currencies in developed countries, leading to greater competitiveness and higher export sales. However, imported resources will be more expensive in terms of local currency, leading to higher cost. (2-sided analysis)
13. [AN] Pressure groups could cause problems with government and negative media coverage, which could impact sales to 'ethical' consumers, leading to lower demand.
14. Accept all valid responses.