Crafty Toys (CT) CT is a co-operative that produces and sells a range of wooden toys, such as puzzles, cars and dolls. The co-operative was formed in 2020 by a group of 12 people who share a passion for making toys. They wanted to work together to create quality products that would appeal to children and parents. No one person takes on the role of manager; instead, they share the traditional manager functions between them. CT operates from a large workshop in a rural area of country Z, making toys using labour-intensive techniques. CT uses locally sourced wood that is certified as eco-friendly. CT also uses natural paints and finishes that are safe and non-toxic for children. Table 1.1 shows CT's output in 2024. Table 1.1 Output data for CT in 2024 Number of people | Average hours worked per person per year | Output --|---|--- 12 | 1800 | 54000 units CT sells its products online through its own website and social media platforms, as well as through some independent retailers who specialise in ethical products. The co-operative also attends various trade fairs and exhibitions to showcase its products and network with potential customers and suppliers. CT has never researched customer wants. CT faces some challenges in its current operations. These challenges include: • high costs of production • a long lead time • a requirement for skilled workers. CT is considering changing to flow production to overcome these challenges.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [1] Owned/controlled by members
2. [1] Shared decision making
3. [1] Shared profits/losses
4. [1] Run for the mutual benefit of members
5. [1] All members contribute/participate
6. [1] Mutual objectives
7. [1] Planning
8. [1] Organising
9. [1] Directing
10. [1] Controlling
11. [1] Planning - involves setting objectives and determining the best course of action to achieve them.
12. [1] Organising - the process of arranging resources and tasks to achieve the organisation's goals.
13. [1] Directing - leading and motivating employees to achieve organisational goals
14. [1] Controlling - the process of monitoring and evaluating performance to ensure that organisational goals are met.
15. [1] Without these management functions businesses may not survive/thrive/achieve success
16. [1] Examples of businesses/types of businesses/types of managers.
17. [1] Formula for productivity: Output per person per hour / Output / total labour hours
18. [1] Labour hours = 12 × 1800
19. [1] = 21 600
20. [2] 54 000 / 21 600 = 2.5 OR (54 000 / 1800) / 12 = 2.5 OR (54 000 / 12) / 1800 = 2.5
21. [3] Answer = 2.5 units or 2.5
22. [1] OR Formula for productivity: Productivity = output in a given time period/total workers
23. [1] 54 000 / 12 = 4500
24. [3] Answer = 4500
25. [2] OR 54000 / 1800 = 30
26. [1] OR 30 (no formula)
27. [1] customised products easier to make
28. [1] less capital investment required
29. [1] employees can use own initiative
30. [1] employees can offer new ideas
31. [1] flexibility/adaptability
32. [1] high quality products
33. [1] employees can build up relationship with customers
34. [1] sustainability
35. [1] customised products easier to make so can satisfy customer requirements
36. [1] less capital investment required – lower machinery costs/set-up costs
37. [1] employees can use own initiative so employees can problem solve
38. [1] employees can offer new ideas – help increase growth/demand
39. [1] flexibility/adaptability – firms can more easily adjust the number of employees/reassign tasks
40. [1] higher quality products – more attention to detail/quality control
41. [1] employees can build up relationship with customers – retain customer loyalty
42. [1] sustainability – less emissions
43. [1] Use of answer to 1bi (OFR)
44. [1] Employee co-operative
45. [1] Hand-made products
46. [1] Competitive market
47. [1] Low level of demand
48. [1] Aim to produce high quality toys
49. [1] Ethical/eco-friendly materials
50. [1] surveys
51. [1] questionnaires
52. [1] internet forums
53. [1] tracking online behaviour/website analytics/e-commerce data
54. [1] product sampling
55. [1] focus groups
56. [1] interviews
57. [1] observations
58. [1] social media
59. [1] CT could use own website/social media to survey customers
60. [1] Ask for customer ratings/feedback on website
61. [1] Get feedback at trade fairs / exhibitions
62. [1] Use loyal customer base e.g. face to face interviews
63. [1] Ask the independent retailers on trends/best-selling items/how children interact with the toys
64. [1] Surveys - help gather information on customer preferences, satisfaction levels, and specific needs – to develop products
65. [1] Questionnaires - can be structured, semi-structured, or unstructured – allowing for detailed feedback
66. [1] Internet forums/tracking online behaviour/website analytics/e-commerce data – helps understand customer preferences and purchasing patterns – so can satisfy those wants/needs.
67. [1] Product sampling – immediate feedback from customers about the product's feel, quality, and overall appeal.
68. [1] Focus groups – provides qualitative insights into customer attitudes, motivations, and perceptions- but are toys suitable for focus group of adults?
69. [1] Interviews - can be structured, semi-structured, or unstructured, allowing for detailed feedback
70. [1] Observations – helps identify usage patterns – and areas for improvement
71. [1] Social media – provides real-time insights into customer opinions and trends – current/up-to-date opinions
72. [1] Primary research methods – could help identify likely customer wants – but expensive
73. [1] Niche markets have low demand – less secondary information available
74. [1] Loyal customers more likely to provide answers may give biased answers
75. [1] continuous/mass production
76. [1] involves the continuous movement of items through the production process
77. [1] usually on an assembly line/using repetitive process
78. [1] capital intensive
79. [1] fewer workers required/uses less-skilled labour
80. [1] standardised products
81. [1] artisanal or craft production
82. [1] involves the creation of products by hand
83. [1] minimal use of machinery
84. [1] requires skilled labour
85. [1] Reputation for ethical products
86. [1] Long lead time
87. [1] Requires skilled workers
88. [1] High costs of production
89. [1] 4500 per year per worker/2.5 units produced per worker per hour
90. [1] Quality products
91. [1] Change of working practices -De-skilling
92. [1] Long term futures assured can increase productivity/reduce lead time
93. [1] Business expands – increase profitability
94. [1] Increased ability to compete – through lower costs/could lower prices
95. [1] Lose USP – customers go to other businesses
96. [1] Low level of demand – change will not impact this unless lower prices
97. [1] Reduce costs – lower skilled labour required/paid less
98. [1] Requires investment – finance might be difficult to source
99. [1] Lower quality – less attention to detail
100. [1] Some members may be unhappy with the change – could cause conflict
101. [1] Market competition – CT will face higher competition than in a niche market
102. [1] Expensive - Will require investment in capital/machinery which CT may not have the finance to do
103. [1] Costs increase – Initial costs very high but in the long-run could lower unit costs
104. [1] Brand reputation – Might damage the brand reputation for ethical, high quality toys
105. [1] Loyal customers – Might lose loyal customer base including the independent retailers
106. [1] A recommendation whether growth is a suitable objective
107. [1] Scale of production – If CT needs to produce large quantities of standardised products, flow production is highly beneficial due to its efficiency and economies of scale.
108. [1] Investment capacity – Can CT afford the high initial setup costs and ongoing maintenance of automated systems?
109. [1] Product type – Flow production is ideal for products that do not require customisation and can be produced in large volumes, which is not CT's current situation.
110. [1] Market demand – If there is consistent high demand for the product, flow production can meet this demand effectively, but CT faces low demand
111. [1] Member considerations – CT should consider the impact on member motivation and find ways to mitigate the negative effects of repetitive tasks.
112. [1] In conclusion, flow production is advantageous for large-scale, standardised production with high demand and sufficient investment capacity. However, CT must weigh these benefits against the potential drawbacks, such as high setup costs and low member motivation, to determine if it aligns with their specific needs and goals.