The pie chart in Fig. 2 shows the number of service stations Galaxy Petroleum owns and the number of service stations that it operates as franchises. 25% Franchise service stations Total Number of Service Stations = 300 75% Owned service stations Fig. 2 Use the pie chart in Fig. 2 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (May/June 2010). The mark or mark type is shown in brackets.

1. [2] (a) 300 × 0.25 (1 mark) = 75 (1 mark); OFR applies Award full marks for the correct answer without working
2. [2] (b)(i) Any two advantages × 1 mark each – Less risk; Capital for expansion comes from others; May be quicker way of expanding than opening own outlets; Royalties paid by the franchisee; If a franchisee proves to be unsatisfactory, the franchise may not be renewed; Control over what is sold; Any other relevant point
3. [2] (b)(ii) Any two advantages × 1 mark each – Consistent quality; Consistent standard of service; Wide spread of branches available; Guaranteed deliveries so constant supply; Convenient opening hours; No need to travel long distance; Any other relevant point
4. [2] (c) Any two ways × 1 mark each – National advertising; Training; Help with location; Help with finance; Help with setting up the service station; Guaranteed supplies; Provides well-known product; Advice; Provision of machinery/equipment; Any other relevant way
5. [6] (d) Any two factors in context × 1 mark each + two explained reasons × 2 marks each or 2 reasons x 1 mark each – Availability of each form of transport; Railways are not available everywhere and would be suitable for moving petroleum from refineries to depots. Road transport would be suitable for making deliveries to service stations as there are roads nearly everywhere. Galaxy is likely to own its own fleet of tankers.; Distances involved; Railways are often used for long distances and roads for short distances. Road transport is more flexible and Galaxy will want to make deliveries to service stations when they require supplies, not necessarily on a regular basis.; Cost of each form of transport; This may not be so important as both will be used in particular circumstances. Galaxy will have to make sure each journey is economic.; Safety issues relating to each form of transport; Petroleum is dangerous and might catch fire. A tanker explosion might result in heavy claims for damages.; Nature of goods carried; Quantity required; Any other relevant factor; Factors not in context = 2 marks max
6. [6] (e) Level 2 (4-6 marks) Has discussed the importance of both importing and exporting to the country in which Galaxy Petroleum is located and has shown, with reasons, whether or not its trading activities are important. L2 4 marks max for importing OR exporting. Galaxy Petroleum both exports and imports. Its exports contribute to the Balance of Trade and add to the visible exports of the country. Its imports of crude oil are visible imports and subtract from the Balance of Trade. If the company exports more in value than it imports it will help the country's Balance of Trade. Galaxy Petroleum's activities are likely to help the country's industry. It will probably be supplying fuel to help the country's industries and petrol to enable people to travel around the country. It is also a manufacturer in its own right as it must be making the petroleum products it exports. It is therefore likely to be important to the economy of the country in which it is located. We do not know the size of the company so it is difficult to judge the importance of the company's trading activities to the country. Level 1 (1-3 marks) Has made some comment on Galaxy Petroleum's trading activities and their importance to the country in which it is located with little or no reasoning. Galaxy imports crude oil and exports petroleum products, so it is trading. It earns foreign currency by exporting. It may help the country and its Balance of Trade. It may not. The country needs petrol and oil. Galaxy helps to provide these products. It is important to the country.