Assess the extent to which any two of the forecast changes in Table 3 could influence DLR's future decision-making.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [Examiner note] If only consider one forecast change then limit to L1 AN & EVAL
2. [Examiner note] If no link made to decision making then limit to L1 AN & EVAL
3. [Examiner note] Candidates may treat the different economic factors as being one forecast change or separate changes
4. [Examiner note] If choose factors from three different sections of the table then AN/EVAL to be awarded to the two best. Therefore, annotation may need to be adjusted to reflect mark given.
5. [Examiner note] Repeating changes from Table 3 is neither K nor APP
6. [Knowledge] Understanding of relevant terms and/or impact on DLR:
7. [Knowledge] GDP growth. Output of economy rising
8. [Knowledge] Interest rates – cost of borrowing
9. [Knowledge] Exchange rate affects price of imports exports
10. [Knowledge] Infrastructure – enables business to operate
11. [Knowledge] Ageing population – demographics impact demand
12. [Knowledge] Minimum wage – legal requirement for firms to pay
13. [Knowledge] Internet affects how goods/services are purchased
14. [Knowledge] Increasing competition – more alternatives for customers to choose from.
15. [Application] Improvements in infrastructure, for example, road and rail links may improve the outlook for firms. DLR depends on customers being able to travel
16. [Application] Ageing population with more leisure time so more time to take holidays
17. [Application] Increase in minimum wage will increase costs of DLR as currently average FTE at DLR is only $7600
18. [Application] Depreciation of exchange rate may lead to increase in DLR's demand from tourists in other countries
19. [Application] Clear linking of different changes in the table e.g. market leader's plans to open three new holiday parks is making market conditions increasingly competitive
20. [Analysis] Improved infrastructure will make it easier for customers to travel in country Z. This could boost demand.
21. [Analysis] GDP growth of 3.5% will boost household incomes resulting in an increase in demand for normal goods – income elasticity of demand for holiday parks will be important.
22. [Analysis] Interest rates increasing will increase financial costs for DLR. DLR is also investing in IT and refurbishment. Will DLR have to borrow money to complete these projects?
23. [Analysis] Exchange rate depreciation may benefit DLR as one of its market segments is from international tourists. Can DLR take advantage of this change and attract more customers. The effectiveness of its IT investments may be important.
24. [Analysis] An ageing population can affect demand as an increase in the number of retired households have leisure time to fill.
25. [Analysis] Millennials could be highly significant. Technology is changing consumer behaviour. Competing in the market will require DLR to have up to date systems and an effective website. Social networking is changing the way business interact with customers. DLR will need to develop a presence in promotional forms on social networks.
26. [Analysis] This is a competitive market and the decision of a competitor to build three new holiday parks will make it more difficult to achieve a market share of 10%. This will influence marketing e.g. pricing, etc.
27. [Evaluation] Significance of income elasticity of demand
28. [Evaluation] The impact of these and other external factors will depend on DLR's ability to adapt to and anticipate change effectively.