Hesdene is a wholesale company that distributes its goods by road using its own trucks. It is privately owned. Some of its customers are public sector organisations.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2015). The mark or mark type is shown in brackets.

1. [4] Any two advantages explained × 2 marks each
2. it can transport its goods to anywhere (1) where there are roads available and make door-to-door deliveries (1)
3. no other form of transport is needed compared with air/rail (1)
4. it is able to make different sized deliveries (1) including small-scale deliveries (1)
5. it can distribute goods that need special handling (1) e.g. perishables in refrigerated lorries (1)
6. flexible - it does not have to adhere to a timetable – alter the route as necessary (1)
7. there are many different kinds of road transport available (1) although the wholesaler is likely to use trucks and vans (1)
8. it may be financially worthwhile to own its own road transport – flexibility, savings in costs, advertising on sides of vehicles (candidates may interpret the question as meaning owning transport – award up to full marks for this approach)
9. quicker over shorter distances (1)
10. Any other relevant point.
11. [3] One mark for the example and two points × 1 mark each for the explanation –
12. Sole trader/private limited company/partnership
13. a business that is owned by private individuals
14. either singly/groups/families
15. within the private sector / government have no say
16. Any other relevant point.
17. [1] Any one characteristic × 1 mark
18. an organisation owned by the state/taxpayer/government
19. the service is usually essential to most people
20. Any other relevant point.
21. [2] Any one advantage explained × 2 marks
22. Equal access (1)
23. operated in the public interest (1) so may not be concentrating on profit (1)
24. may provide a free service to consumers (1) e.g. health service (1)
25. may put the consumer first (1) instead of e.g. shareholder interests (1)
26. can provide subsidised service to the needy (1)
27. Any other relevant point.
28. [4] Any two insurance principles described when making a claim × 2 marks
29. indemnity - not allowed to make a profit from a loss so may not over-claim for the loss (1+1)
30. utmost good faith – must tell the truth when completing the claim form (1+1)
31. insurable interest – must have a financial interest in what is claimed e.g. own the truck (1+1)
32. subrogation – no one can be compensated and then retain ownership of the property that has been compensated for, e.g. if the truck is recovered (1+1)
33. contribution - cannot claim from more than one insurance company for the same claim (1+1)
34. proximate cause the loss must be directly related to the incident that is insured and for which a claim is made (1+1)
35. Any other relevant point.
36. [6] Level 2 (4-6 marks) Has discussed whether or not Hesdene is able stop the trend of customers buying directly from suppliers and has given a reasoned opinion. (If a candidate has given a one-sided argument award 4 marks max).
37. Some of Hesdene's customers are likely to be buying directly from producers because they are able to buy at lower prices in the quantities they require. These producers may be offering a better service e.g. fresher produce or may be close to their customers. Hesdene's customers may feel that they no longer require the services that Hesdene offers such as bulk breaking, delivery and storage because the customers are able to provide these services themselves. This would certainly be true of large-scale retailers with their regional distribution centres.
38. Hesdene may be able to stop this trend by concentrating on certain aspects of its business and certain of its customers. There may be many small-scale manufacturers who do not have the time or money to sell directly to customers and prefer to use the services of a wholesaler. Hesdene should try very hard to provide these services to these manufacturers. There are also many small-scale retailers who require small quantities of a variety of goods. Hesdene should provide them cash and carry facilities, special promotions, information on new products and credit to encourage them to remain loyal. Hesdene may also form a voluntary chain with several small-scale retailers. This will improve the buying power of the small-scale retailers and so retain their custom.
39. Many retailers with sufficient buying power do buy directly from producers. There are still many businesses that required wholesaling services and cannot provide them themselves. Hesdene should concentrate on these customers and provide a quality service to them in order to survive.
40. Level 1 (1-3 marks) Has commented on the trend of customers buying directly from producers rather than through wholesalers with/without an opinion.