A company makes children's toys. It has been successful in its home market. It is now considering exporting its products.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2012). The mark or mark type is shown in brackets.

1. [3] (a) Any three difficulties x 1 mark each:
2. • finding a market/buyers
3. • language problems
4. • conforming to different laws/customs/standards
5. • distances
6. • risk of non-payment by importer
7. • transport problems
8. • producing in the quantities required
9. • increased risk of damage/theft
10. • paying duties
11. • different currencies
12. • problems with exchange rates
13. • lack of experience.
14. [6] (b) Level 2 (4-6 marks) Has discussed the advantages and/or disadvantages of moving toys abroad in containers and has shown to what extent the use of containers is a good way of moving toys. (If a candidate has discussed containerisation but has not shown how good a method for moving toys containerisation is, award 4 marks max.)
15. The use of containers may depend upon the kind of transport used. Small containers of many different kinds are used when moving goods by air freight. Standard sized containers are used when moving goods by sea. Containers have speeded up the movement of goods because they can be packed at the factory and unpacked at the final destination and do not have to unpacked when changing from one form of transport to another. At the same time they can be cleared by customs. Containers provide storage for the toys and protect them from theft, damage and weather. Also mixed cargo can be placed on one container.
16. Containers are not without their disadvantages. Many containers are lost overboard from ships each year. It may difficult to obtain return loads and many container ships often travel with empty containers. It is also thought that they may assist smuggling e.g. of weapons as they are packed away from the docks.
17. There has been a great increase in the use of containers for moving goods – the Container Revolution and it is, obviously a very important way of moving goods economically.
18. Level 1 (1-3 marks) Has commented on the use of containers for moving goods abroad with/without an opinion.
19. Many goods are moved using containers. Containers provide protection for goods. Goods are packed at the factory. They are moved from one kind of transport to another without unpacking. Containerisation has speeded up the transport of goods. It is a good way of moving goods.
20. [4] (c) Any four points x 1 mark each or two well explained points x 2 marks:
21. • handle the logistics of moving the toys from the exporter to the importer
22. • organise the transport of the toys
23. • arrange documentation
24. • arrange customs clearance leading to less delays
25. • organise storage
26. • pack toys into containers
27. • organise the movement of containers
28. • arrange insurance of the toys.
29. [3] (d)(i) Any three risks relating to business and international trading x 1 mark each:
30. • marine insurance for the cargoes
31. • allow export credit insurance
32. • allow aviation insurance
33. • product liability
34. • public liability
35. • premises insurance – fire
36. • goods in transit
37. • cash in transit
38. • employer's liability
39. • motor vehicle
40. • fidelity guarantee
41. • consequential loss
42. • credit insurance
43. • damage/theft/natural disaster = 1 mark only.
44. [4] (d)(ii) Any four points x 1 mark each:
45. • it is a non-insurable risk
46. • for which there are no statistical/past records
47. • on which to assess the risk
48. • and so set a premium
49. • might deliberately cause the business to fail in order to make a claim
50. • could be the fault of the company
51. • may not make a profit from a loss.