O-LevelCommerceRetail trade7100/22 · May/June 2013 · Q320 Marks

A large food retailing company plans to build a new hypermarket on the outskirts of a town on either Site A or Site B. A map of the town is shown in Fig. 1. [Figure 1.0] Use Fig. 1 to help you to answer the following questions.

(a)State four features of a hypermarket.[4]
(b)Discuss the advantages of Site A and of Site B for the new hypermarket. Which site would you recommend to the company? Give reasons for your choice.[6]
(c)Although there is a railway station in the town, why will the owners of the hypermarket use road transport to supply goods to the hypermarket?[4]
(d)State and explain two sources of finance suitable for financing the building of the new hypermarket.[6]

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 (May/June 2013). The mark or mark type is shown in brackets.

[4] (a) Any four features × 1 mark each –
very large shop (floor area of over 5000 sq m) (larger than a supermarket)
selling a wide variety of goods/everything under one roof
on an out of town site
with large car parks
sell fast moving lines
competitive prices
located in populated areas/between centres of population
long opening hours
often have satellite shops within the premises
restaurants, crèche, petrol station
everything on one floor
any other distinctive feature
NB self service, very large shop, home delivery service, store cards = 0 marks
[6] (b) Level 2 (4-6 marks) Has discussed the advantages of both sites and has given a reasoned response recommending one of the sites. (If a candidate has discussed only one of the sites, award 4 marks max.) The hypermarket could choose either Site A or Site B. Both are on the edge of the town from which the bulk of customers are likely to come and both sites look as if there is plenty of land. Both sites are close to the outer ring road but there does not appear to be any access at present from the outer ring road to either site. Site A is close to a route to the motorway from which it is likely that the hypermarket will be supplied. It is close to a route to a major city with possibly a good road. It is also close to an area where new housing is planned – more potential customers. Site B is close to a route to several small towns from which customers are likely to come if there is no other hypermarket close by. It is also close to the railway station but customers are unlikely to travel by rail to visit the hypermarket. The proximity to the factories may indicate that there is room to develop. Otherwise the factories are unlikely to make any impact on the location of the hypermarket. On balance, I would recommend Site A as it is close to the town and to new housing, it would be easy to supply it and customers could use the outer ring road to gain access. Level 1 (1-3 marks) Has commented on one or both sites and may/may not have given a recommendation. Site B is on the outer ring road. It is close to the town. The railway station is not far away. There are several towns close by. I recommend Site B.
[4] (c) Any four points × 1 mark each or two well explained points × 2 marks in context –
they may have a regional distribution centre close to a motorway that supplies their other hypermarkets
they have their own fleet of delivery trucks so its cheaper
if they used the railway, it would be difficult to deliver the goods from the station to the hypermarket – road transport would be needed
there are good road links to both the sites and one is close to access to a motorway
they have chosen Site A which is not near the railway station
road transport is more flexible
will need refrigerated trucks
many road routes being developed e.g. express routes
any other relevant point
[6] (d) Any two sources of long term finance × 1 mark each + 2 marks for comment on each –
bank loan - fixed sum, interest repayable on the whole amount, loan account opened, repaid by instalments, requires collateral security
share issue - not repayable, large capital sum available, dividends paid from profits, transfer of ownership to shareholders
debentures fixed interest, bought on stock exchanges, may be mortgaged against company assets, holders are creditors of the company
government assistance – if in depressed area may qualify for grant, no interest paid, takes a long time to arrange
venture capital – may be a large sum available, usually suited to high risk projects
retained profit – no interest, no repayment, readily available, may be insufficient for the whole project.
any other relevant source of long-term finance