AP produces and sells high quality pies. Aashna set up AP five years ago when she spotted a gap in the market. AP is a private limited company and Aashna is the majority shareholder. All of the pies use the AP branding which is growing in popularity. AP owns a factory where all the pies are produced. Pies are packaged and sold individually. The range of pies produced by AP is shown in Table 1.1. Table 1.1: AP's product portfolio The pastry case of each pie is exactly the same no matter what filling is used. All of AP's pastry is made using flow production. However each filling is made by specialist workers who use batch production. Aashna is concerned about the sales of Vegetarian Victory pies and she is considering stopping production of this pie. However, the Operations Director has pointed out that AP might lose its economies of scale if the business reduces the total number of pies produced. The Marketing Director would like Aashna to read his report about developing products in the future. He has done some market research (see Fig. 1.1). Fig. 1.1: Market research to aid developing products in the future

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

1. [2] A correct definition
2. [1] A partial, vague or unfocused definition
3. [0] No creditable content
4. Content: A correct definition should include the following elements (allow one mark for each element): • Owns part/a percentage • ...of a company/limited liability business
5. Exemplar: Owns a part of a limited company [2] All elements met
6. Exemplar: Owns a percentage of a limited liability business [2] All elements met
7. Exemplar: Owner of a limited company [1] Needs 'PART' owner
8. Exemplar: Has share in/invests capital in a company [1] Shares is taut/all business structures require investment
9. Exemplar: Control and ownership are not the same thing [0] Do not award for control
10. [1] Award one mark for each point of explanation: Rationale: C - Example or some other way of showing good understanding
11. [1] Award one mark for each point of explanation: Rationale: B - An understanding of it being a production process
12. [1] Award one mark for each point of explanation: Rationale: A - An understanding of flow
13. Content: Flow – a large number of standardised products / constantly produced. Production process – the fact it is a process.
14. [3] Correct answer with or without correct working or $
15. [3] Formula (can be implied) and correct calculation of 2019 sales
16. [1] Formula (can be implied) or correct calculation of 2019 sales
17. [0] No creditable content
18. Note: any relevant figure multiplied by the price implies the correct formula (i.e.5000 x $2.50)
19. Content: TR = Price × quantity. 5000 – 10% = 4500. 4500 × $2.50 = $11 250. Answer = $11250
20. OFR: Common answers: 11 250 [3] Correct answer does not need $
21. OFR: Common answers: (-) $1250 with calculations [2] Worked out -10%, used the correct formula but wrong final answer
22. OFR: Common answers: 1250 with no calculations [0] Wrong answer
23. Level 2b: Explanation of a way AP could use product portfolio analysis in context [3]
24. Level 2a: Explanation of a way a business could use product portfolio analysis [2]
25. Level 1: Identification of a way a business could use product portfolio analysis [1]
26. Content: • To identify when to discontinue products – VV is in decline • To identify when to market products – FF is growing • To identify when to develop new products – what happens when FF reaches maturity? • To identify when to extend the PLC of products – MM or VV
27. Examples: Identification of a use: Identify stage of product life cycle. Explanation: Shows how well the product is doing. Possible context: Such as meaty marvel in maturity
28. Examples: Identification of a use: Identify which product is mature. Explanation: So can plan a replacement. Possible context: E.g. meaty marvel
29. Level 2b: Shows understanding of two (or more) economies of scale in context [4] / Good analysis of losing two (or more) economies of scale in context [4]
30. Level 2a: Shows understanding of one economy of scale in context [3] / Good analysis of losing one economy of scale in context [3]
31. Level 1b: Shows knowledge of two (or more) economies of scale [2] / Limited analysis of two (or more) economies of scale [2]
32. Level 1a: Shows knowledge of one economy of scale [1] / Limited analysis of one economy of scale [1]
33. Content: • Technical - capital intensive mass production • Specialisation/managerial – specialist workers make the fillings • Marketing - AP brand is growing in popularity • Purchasing - AP can bulk buy certain ingredients – pastry is shared across all pies and cheese is also used in FF • Financial - AP brand may make it easier/cheaper to fund any new product development/expansion. Allow external economies of scale.
34. Example: Specialisation. Application/context: Each filling e.g. VV made by specialists. Analysis: Lose knowledge of flavour profiles which may change the taste and lose custom
35. Example: Purchasing. Application/context: Vegetables for Vegetarian Victory. Analysis: Miss out on bulk buy deals which increases the variable costs of the pie
36. Justified recommendation based on argument(s) in context [7]
37. Developed recommendation based on argument(s) in context [6]
38. An evaluative statement/recommendation based on argument(s) in context [5]
39. Shows understanding of two or more elements of product development in context [4] / Two or more arguments based on how AP could develop its products in the future [4]
40. Shows understanding of one element of product development in context [3] / One argument based on how AP could develop its products in the future [3]
41. Shows two or more pieces of knowledge of product development [2] / Limited analysis of two or more impacts of product development on a business [2]
42. Shows one piece of knowledge of product development [1] / Limited analysis of one impact of product development on a business [1]
43. Content: • Reduce the meat in the MM to meet concerns over health risks. • Pies could be sold into sets of three pies to suit families. • Pies could be sold in variety packs so that it suits a family's tastes and those who do not eat meat. • Could the pies be developed to have a longer 'best before' date or frozen to allow for a longer shelf life? • The price could be increased to allow for the development of a new product or to fund the redevelopment of an existing product. • The data suggests that the MM should be redeveloped to extend the PLC - could it have less meat to meet health concerns? • VV could be redeveloped now that it is in decline, to increase sales – or a new vegetarian product could be developed to replace the VV – importance of non-meat alternatives.
44. Examples: K: Longer shelf life. APP: Short BB date - eat within 2 days. AN: Could be stored for longer. DEV: Improve transport economies of scale. EVAL: Most important element is to increase shelf life as this reduces wastage / increases range of outlets, which leads to increased total sales
45. Examples: K: Increase number of vegetarian pies. APP: As consumers worried about health risks of meat. AN: Attract new customer base. DEV: Increase revenue/profits.