Analyse two ways the external influences referred to in lines 8-12 may impact on WCP.

Mark scheme

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

1. [K1] External influences are outside the control of the business and act as both a constraint and an enabler for WCP's activities.
2. [K1] Definition of external influences such as inflation, economic growth, interest rates and social trends.
3. [K2] Increased running costs
4. [K2] WCP may have to increase prices
5. [K2] Increased borrowing costs
6. [K2] Increased consumer interest in ethically produced products
7. [K2] Decreased sales of premium priced products
8. [K2] Cost of living increase impacting low and middle income consumers
9. [APP] WCP products are premium/high priced due to ethical sourcing and production. Cheaper substitutes available.
10. [APP] Cost of sustainable resources likely to increase.
11. [APP] High income earners less impacted by inflation and interest rates and these are the target market.
12. [APP] WCP products; toilet paper is an 'essential'.
13. [APP] Ethical/environmentally consumers' interest in support for improving sanitation in low-income countries.
14. [APP] Use of data on price elasticity of demand and income elasticity of demand.
15. [AN] High inflation leading to increased production costs may reduce profit margins resulting in reduced profit.
16. [AN] Increased interest rates will lead to higher borrowing costs and may constrain lending and firms willingness to borrow thus leading to lower growth of WCP.
17. [AN] Ethical production and support for sanitation in developing countries may lead to price inelastic demand and therefore demand would be relatively unaffected by increased prices which may limit impact on profits of WCP.
18. [AN] Higher income earners will be less affected by 'cost of living' pressures, so sales may not decrease.
19. [AN] WCP products are 'essentials' and they have a loyal customer base so sales may not decrease but even high-income customers may ‘trade down' to cheaper paper products (two-sided analysis).