Tresum Ltd is a manufacturer of motor vehicle parts. Most of its products are exported. Last year the value of the total sales of the company was $210m, of which export sales were $180m. [Figure 3] Use the information in Fig. 3 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2013). The mark or mark type is shown in brackets.

1. [1] (a) (i) One mark for European Union
2. [2] (a) (ii) 25/100 × $180m (1 mark) = $45m (1 mark) OFR applies (Accept correct answer without working for full marks)
3. [2] (a) (iii) $210m - $180m (1 mark) = $30m (1 mark) OFR applies (Accept correct answer without working for full marks)
4. [2] (b) Any two points × 1 mark each (including one mark max for definition) – Balance of Trade is the difference between exported goods and imported goods; Tresum Ltd exports motor vehicle parts so adds to the total exported goods of the country; any other relevant point
5. [3] (c) Any three points × 1 mark each and up to two marks for a well-developed point – quotas are limits on the quantity of a particular product allowed into a country (1 mark); it may have no effect as Tresum Ltd may not be exporting enough to that particular country; it may mean a loss of sales for Tresum Ltd as it cannot sell as many motor vehicle parts as it has done to that country; it may mean that Tresum Ltd has to look at other markets to sell motor vehicle parts; any other relevant point
6. [4] (d) Any two benefits explained × 2 marks – the motor vehicle parts can be grouped together in one container so avoiding many packages; the container offers protection against damage/theft/deterioration/weather; the container can be packed at the factory, cleared for customs and not unpacked until it reaches its destination; the container can act as a storage facility for the parts until they are required; the container can be transhipped between kinds of transport without being unpacked; using containers reduces handling and transport costs; the parts are likely to be shipped more quickly as mechanised handling can be used; any other relevant benefit
7. [6] (e) Level 2 (4-6 marks) Has given a reasoned opinion looking at both methods of finding buyers. (If a candidate has considered only one of the methods of finding buyers, award 4 marks maximum.) Finding overseas buyers may have been successful in the past but the company now wants to expand into other markets. Finding overseas buyers is time consuming and can be difficult – problems of language, different currencies, different methods of payment, distance. By using intermediaries such as factors and brokers, the company is able to concentrate on other aspects of the business. Factors and brokers bring buyers and sellers together. Factors take possession of the goods. Brokers do not. These intermediaries are experts in foreign trade and should be able to find buyers for the motor vehicle parts. Using intermediaries may, however, have drawbacks. These intermediaries may not be as interested in the success of the business as people in the company are. They will charge commission for their services. They will need to be monitored. On balance it may be better to use intermediaries who know particular markets but also to continue to sell direct to buyers the company has dealt with in the past. Level 1 (1-3 marks) Has commented on finding overseas buyers itself and/or using intermediaries with/ without an opinion. It may be a good thing to sell through intermediaries. There will be less work. They charge commission. They may cheat the company. They may help to solve some of the company's problems.