Custom motorcycles (CM) CM is a private limited company. It was set up by Joyce, who identified a gap in the market for specialist motorcycle components. CM's engineers make the components using job production. The engineers are highly skilled, trained and motivated and very proud of their high-quality products which are sold using price skimming. CM was featured in a popular motorcycle magazine in autumn 2022, which has increased CM's reputation for quality unique products. This led to an increase in CM's sales as shown in Fig. 2.1. [Figure 2.1] showing: Total market sales (000 units): Summer 2022 (5), Autumn 2022 (5.5), Winter 2022 (6), Spring 2023 (6.25), Summer 2023 (7.5) CM sales (000 units): Summer 2022 (0.5), Autumn 2022 (0.6), Winter 2022 (1), Spring 2023 (1.05), Summer 2023 (1.5) Fig. 2.1: CM's sales data 2022–2023 Lead times for CM's products have increased from 4 weeks to 10 weeks. This has put additional pressure onto CM's engineers, who are salaried employees. They often have to work evenings and weekends. Harry, the Sales Manager, thinks demand is going to continue to increase. He wants CM to employ more skilled engineers and continue to use job production. However, Joyce wants CM to invest in new technology and change from using job production to batch production.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. [1] job rotation/enlargement/enrichment
2. [1] job redesign
3. [1] training and development
4. [1] promotion, status and empowerment
5. [1] teamworking
6. [1] quality circles
7. [1] Accept all valid responses.
8. [1] the number of consumers willing to pay at a given price
9. [1] the quantity of a product that consumers are willing/(and able) to buy at a given price (in a specific time period)
10. [1] Can change as a result of a change in any of the following factors: consumer incomes / prices of substitute goods and complementary goods / population size and structure / fashion and taste / advertising and promotion
11. [1] Can affect: pricing / production
12. Formula: (present value – past value) / past value × 100
13. [1] Correct formula: ((7.5 - 5) / 5) × 100
14. [1] Correct use of figures: (2.5 / 5) × 100
15. [1] Correct answer: 50 (%)
16. [3] Correct answer (3): 50 OR 150 (%)
17. [1] Knowledge of a benefit of using price skimming: High (selling) price / High profit margin / Maximises short run profits before competition enters the market / Creates an exclusive image / Covers high development costs
18. [1] Application: (related to CM context once, e.g., specialist motorcycle components, high quality products)
19. [1] Developed application: (two specific elements from case study linking to the benefit)
20. A01 Knowledge and understanding: Definition of poor work-life balance (minimisation of work-related stress, establishing stable and sustainable way to work, maintaining health and general well-being, maintaining harmonious relationship between work and personal life, allocating right amount of time and effort)
21. A01 Knowledge and understanding: Knowledge of two impacts of poor work life balance (max 2 points): tired employees / lack of motivation / increased staff turnover / increased training costs / longer lead/production times / reputation of the business
22. AO2 Application: private limited company / specialist motorcycle components / specialist engineers / job production / high quality products / quality unique products / highly skilled, trained and motivated and very proud of their high-quality products / lead times increased from 4 to 10 weeks / additional pressure onto CM's engineers who are salaried employees / often have to work evenings and weekends
23. AO3 Analysis (Developed analysis - identifies connections between causes, impacts and/or consequences of two points): a lack of motivation from pressurised workforce may reduce the current output – further increase the production times / poor work-life balance may lead to mistakes – reduce the USP/reputation used to justify price skimming approach / increased staff turnover – may lead to increased production times – may reduce demand/sales
24. A01 Knowledge and understanding: Knowledge of methods of production (max 2 points): job/batch/flow/mass customisation / factors of production / the nature of economic activity / the dynamic business environment / business risk and uncertainty / business growth
25. AO2 Application: CM uses job production / current reputation for CM of handmade, quality products / highly skilled, trained and motivated mechanic/engineers (has to be explicit, not e.g. well trained workforce) / employees proud of high quality motorcycle products/components / Joyce wants batch and Harry wants more job production / sales have increased by 1.5x in one year / specialist products allow for price skimming / lead times for have increased from 4 weeks to 10 weeks / salaried employees often work evenings and weekends / employ more skilled engineers / invest in new technology for batch production
26. AO3 Analysis (Continue with job production): retain reputation – keep using price skimming – increases profit per unit / customers are happy with 10 week lead times – future demand guaranteed / job production will not allow for economies of scales – profit may be below target / increased pressure on engineers – may leave for a less stressful job – increases training/recruitment costs or lose valuable skills
27. AO3 Analysis (Invest in batch): increase rates of production – reduce production times/increased sales / reduce pressure on high skilled employees which may increase motivation / allow for economies of scale – will reduce the cost per unit - increase profit margins / may damage CM reputation/USP as no longer hand made products – may reduce demand / machine made products may not be as popular – may reduce ability to use price skimming methods – would reduce selling price and profit margin
28. AO4 Evaluation (Developed evaluation in context): the feasibility and risk of investing into each option / the likely impact on profit/profit margin / weighing up of objectives and risks / the potential consequences of not investing into the future / a judgement on whether or not CM should invest in any or all of the options / an attempt to advise CM on investment decisions and the short and long term impacts on CM