O-LevelCommerceProduction7100/21 · Oct/Nov 2017 · Q420 Marks

T Toys Ltd makes toys. It has outgrown its factory and is looking for a new one.

(a)Which factor do you think is the most important to T Toys Ltd when choosing the location of its new factory? Give reasons for your answer.[3]
(b)Explain two sources of long-term finance that would be suitable for the purchase of the new factory.[4]
(c)(i)State two features of a multiple chain.[2]
(c)(ii)Discuss which two sales promotions you think would be the best for the multiple chain to use. Give reasons for your choices. [Figure 1 shows four sales promotions used by the multiple chain. Free gift with every teddy bear purchased 10% discount for purchases over $100 Spend $10 and enter a free prize draw for a holiday Spend $5 and earn 500 loyalty points][6]
(d)Suggest one device that a multiple chain selling toys might use in its advertising.[1]
(e)A customer has returned a faulty toy to one of the stores. Explain how the customer might make a successful complaint.[4]

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

[3] Labour (1) to make their products (1) Skilled labour to make toys (1) of good quality (1) Land (1) for expansion (1) space to keep stock (1) Near to suppliers (1) for raw materials (1) to be transported quickly when required (1) Good infrastructure/network (1) for ease of access (1), e.g. road/rail links (1) so there are no delays (1) Utilities (1) like electricity needed (1) so that production is not stopped (1) Nearness to market (1), e.g. near toy shops/customers (1) to purchase the toys (1) which reduces transport costs (1)
[4] Shares (1) - to sell to new shareholders / types of shares, e.g. preference (1) Debentures (1) - loan / fixed rate of interest / for a specific time (1) Mortgage (1) – loan / interest / secured against the property (1) Loan (1) - fixed term or long period of time / fixed amount / fixed interest / collateral (1) Leasing (1) - renting the factory / paying monthly (1) Government grants (1) - no interest /open to government inspection (1) Venture capital (1) - loans /share capital: agreed percentage of shares given to lenders / shareholders (1)
[2] Centralised/Head Office control/operations/e.g. bulk buying from Head Office More than 10 branches Can be a specialist/variety chain It is a large-scale retailer Located in town centres All branches have the same prices All branches have the same decoration/displays All branches have the same goods/standardised Supplies come from central warehouse or regional distribution centre
[6] Level 2 (4-6 marks) Has discussed two sales promotions and given reasoning. Level 1 (1-3 marks) Has commented on the statement If a candidate has discussed only one sales promotion award 4 marks max. The free gift is very specific to sales of Teddy Bears and will not help other sales The 10% discount is attractive and may encourage customers to spend over $100 The prize draw is also attractive to those only spending $10 or more The loyalty points will be collected by everyone spending more than $5 and may not be attractive to everyone Overall the 10% discount and the free draw are possibly the most attractive because both will encourage customers to spend more
[1] Music Movement Humour Romance Colour Emotional Masculine/feminine Love of children Caring for animals Durability Family life Colour Hero worship/celebrity Nostalgia
[4] Look for a warranty/guarantee Go to the store/see the store manager Go within a reasonable time Be polite/remain calm Take receipt with you Take photograph of faulty toy Ask for replacement/repair/refund/credit note If not satisfied, ask whether there is a complaints procedure Find name of person to write to/telephone Provide details of what has happened Report matter to Trade Association/Consumers Association if not satisfied