Analyse two impacts on HCC of the increase in competition in country E.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2024). The mark or mark type is shown in brackets.

1. [K] Customers will have greater choice.
2. [K] Competition may reduce sales.
3. [K] Competition may impact pricing decisions.
4. [K] HCC may need to reduce costs.
5. [K] Encourage HCC to innovate to differentiate its product.
6. [K] HCC may need to increase promotion.
7. [K] Reduction in profit.
8. [K] Reduction in market share.
9. [K] Could threaten HCC's survival.
10. [APP] CA benefits from greater economies of scale – potentially lower prices than HCC.
11. [APP] HCC customers have low incomes.
12. [APP] Profit has decreased in 2023/24.
13. [APP] Sales are increasing.
14. [APP] HCC is a social enterprise – this could impact how HCC responds to competition.
15. [APP] HCC's expenses have increased in 2023.
16. [AN] Greater choice for customers may lead to reduced sales volume for HCC and therefore reduce revenue and profits.
17. [AN] As CA has economies of scale, its prices can be lower which will attract customers from HCC as customers are on low incomes, thus reducing market share.
18. [AN] Market will become more saturated slowing possible growth of HCC sales.
19. [AN] HCC may need to change policies by looking to new markets or increasing promotion to maintain sales in the future.
20. [AN] HCC may need to reduce costs to compete and therefore be forced to reduce benefits given to employees resulting in higher labour turnover.