Fig. 1 is a diagram showing how goods are made. [Figure 1.0]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2014). The mark or mark type is shown in brackets.

1. [1] (a) (i) One mark for primary industry.
2. [2] (ii) Any two ways × 1 mark each Manufacturing or making/processing/adding components/welding/stitching/ assembling/cutting/packaging/canning/branding/dyeing Allow specific examples related to a particular industry e.g. adding zips to clothing. Any other relevant example. No marks for costs e.g. labour, price, distribution, storage, transport, advertising.
3. [4] (iii) Any two aids × 1 mark each and 1 mark each for explanation – Transport - enables goods to reach their markets/extends the markets for goods Banking/finance – enables payments for goods to be handled/provides loans to carry out trade Warehousing/storage – enables storage of goods before sale/transport/ protects goods Advertising - makes goods known to consumers/persuades consumers to buy Communication – enables buyers and sellers to keep in touch/informs buyers of when goods may arrive Insurance – protects traders against financial loss/provides compensation against loss when trading or example. Any other relevant point.
4. [4] (b) Any two advantages explained × 2 marks each – Enables the manufacturer to take advantage of division of labour so that the work is divided into processes Increases output of standardised products so the manufacturer can take advantage of economies of scale Enables the manufacturer to make greater use of machinery/technology and the use of robotics so saving labour costs May lead to greater efficiency as new techniques are used Tasks are often simple so less skilled labour may be employed. Any other relevant point.
5. [6] (c) Level 2 (4-6 marks) Has discussed whether or not it is more difficult to sell in the global market than in the home market and has given a reasoned opinion. (If a candidate has considered only the home or global market, award 4 marks max) Distributing goods in any market may have problems. Manufacturers will need to make use of commercial services in order to trade whether it is at home or globally. They will need transport, banking, finance, advertising, warehousing, insurance and communication. They are, however, likely to encounter more problems in the global market largely because of distance and perhaps unfamiliarity with the markets in which they wish to operate. They may need different forms of transport such as air or ship. They may make greater use of warehousing, such as bonded warehousing, because duties may be imposed. They will use different methods of payment. They are, however, likely to insure against the same risks e.g. loss of goods in transit but the premiums may be higher. They will need to advertise and communicate and the use of the Internet and email will enable them reach customers both at home and in other countries. When trading in the home market, it is possible that manufacturers may find trading conditions difficult. They may be operating in competitive markets where there is strong foreign competition. The economic climate of the country may not encourage trade. It is also possible that manufacturers may be trading with neighbouring countries or countries within the same trading bloc. The difficulties may, therefore, be reduced. But there may still be problems with different languages, different currencies (unless there is a common currency) and the risks of non-payment. It is therefore likely to be more difficult to sell in the global market than in the home market. Level 1 (1-3 marks) Has commented on difficulties encountered when selling in the home/global market with/without an opinion. It will be more difficult to trade in the global market. There may be different languages. Trade may be in larger quantities. There will be different methods of transport. It is likely to cost more. Distances will be greater. There will be different currencies and methods of payment. There will be greater risks.
6. [3] (d) 1 mark for the means of payment and 2 marks for the description Electronic transfer (cable/telegraphic)/online transfer – fast computerised transfer of funds between banks, involves minimum paperwork, reduced risk of theft as takes place between banks, works on current exchange rates Bill of exchange – promise to pay a debt at a future fixed time, guaranteed by the bank, gives period of credit to the buyer, can be discounted (sold at less than face value before date due) Letter of credit/documentary credit – letters of undertaking issued by the importer's bank and sent to the exporter to guarantee payment for the goods. On presentation of the letter of credit and other documents the exporter can receive payment. Bank draft - draft drawn on a bank on payment of the sum owed so safer than payment by an individual. On presentation of the draft, payment is made. Allow PayPal. Any other relevant point. N.B. do not accept credit card/Western Union/money transfer/bill of lading/money order/remittances/money gram/cash on deliver/bank transfer/Internet banking.