Fig. 1.1 shows seven activities in the chain of distribution for a banana grown in one country and sold in another country. Each banana sells for $1. The percentage is the share of the selling price given to each of the activities. [Figure 1.1] Use Fig. 1.1 to help you answer the following questions.

Mark scheme

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

1. [1] Someone who provides / makes / manufactures / grows / supplies goods / converts raw materials into goods / produces goods by using raw materials / produces goods into finished goods / creates products to satisfy customer needs / wants
2. [1] Answer = $0.34 OR 34% or 34
3. [1] Agent
4. [1] Broker
5. [1] Factor
6. [1] Forwarding agent / freight forwarder
7. [1] Merchant / export merchant
8. [1] Del credere agent
9. [3] Answer: $20 800
10. [2] Method: 400 000 × 5.2%
11. [1] If idea of correct method used but with wrong figures e.g. 5.2 × 4,000,000 or 5.2 × 400 000 = 2 080 000
12. [1] Many countries do not have the right climate (1) e.g. warm weather to grow bananas (1)
13. [1] There is no production (1) some countries do not have the land / resources (1) to plant/grow bananas (1)
14. [1] It may be cheaper to buy / not cost-effective (1) than could be produced in their own country / not cost-effective to invest in (1) e.g. low wages/labour costs in other countries (1)
15. [1] They are not self-sufficient in their own banana production / not enough supply (1) need to import bananas to meet demand / satisfy consumer needs (1)
16. [1] Quality/taste of bananas imported is better (1) than producing their own (1)
17. [1] To give consumers a greater variety of fruit (1) to choose from / increase standard of living (1) to feed their population (1)
18. [1] Seasonal (1) may not be able to grow bananas at certain times of year (1)
19. [1] Entrepot trade (1) to re-export (1)
20. [1] Need to import to create other fruit products (1) e.g. banana juice (1)
21. [1] Country focuses on tertiary production (1) resulting in a lack of primary goods (1)
22. [1] Bananas may be destroyed (1) due to natural disasters (1)
23. [2] The inventory turnover for bananas sold by retailers is high.
24. [2] To prevent ripening, bananas are often stored in cold storage warehouses.
25. [8] Destination - is important because landlocked countries cannot use sea transport, mountainous regions are often only accessed by air transport and roads can be poor / difficult terrain in some countries and some countries may be far away / does the ship call at the port the company wants.
26. [8] Duration/length of time – bananas are perishable goods that can go bad
27. [8] Weather - bad weather can cause delays, lost loads
28. [8] Type of goods – e.g. if goods have a short shelf life or need fragile handling, it would be better to choose air transport.
29. [8] Cold storage/refrigeration – need to be temperature controlled or bananas could perish/rot
30. [8] Distance - longer distances can mean greater risk of damage.
31. [8] Trans-shipment of goods between different forms of transport at ports/airports – adds to costs / delays.
32. [8] Security - When transporting valuable goods and resources, there are sometimes attempts at the local level to steal these goods from vessels.
33. [8] Laws/regulations/duty – may increase costs / delays at ports.
34. [8] Reliability / efficiency of transport method – will the cargo arrive in the time required.
35. [8] Currency fluctuations – changes in exchange rates can affect final sea freight rates.
36. [8] Quantity of goods – unlimited amount of goods can be carried by sea / a company will often have paid for the whole container shipped, whether full or not, so it is advantageous to completely fill the container.
37. [8] Documents/paperwork – e.g. license, bill of lading, certificate of origin otherwise transporting cannot take place
38. [8] Packaging - e.g. in cardboard boxes, containers so that the goods are safe
39. [8] Insurance - in case of damage, lost goods so to reduce risk
40. [8] Urgency - do the goods need to arrive quickly
41. [8] Speed - as sea transport is slow, the quality of bananas maybe affected
42. [8] Warehousing – need to be stored at port for safety
43. [8] Communication – need to transfer information or e.g. between ship and port
44. [8] Evaluation: Generally, in using sea transport, much depends on the distance and the type of goods to be transported between countries because the longer the distance the greater the costs and more possible risks. However, bananas are not expensive products or likely to be stolen so the destination, which could affect the time when the bananas get to market, will be a more important factor to a banana producer.