Identify and explain two opportunities and two threats for businesses in country Z from globalisation.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. [4] Award one mark for each opportunity/threat (max 4) plus one additional mark for an explanation of each opportunity/threat
2. [0] Opportunities: New markets - increased revenue
3. [0] Opportunities: Increased brand awareness
4. [0] Opportunities: Increased sales -higher profit
5. [0] Opportunities: Saturated home markets – new markets to develop
6. [0] Opportunities: Spread risks – over more markets/products
7. [0] Opportunities: New products developed – for new markets with different tastes
8. [0] Opportunities: Higher incomes in growing economies – increased disposable income leading to higher sales
9. [0] Opportunities: Free trade agreements – may allow domestic companies easier access to overseas market/Easier to export
10. [0] Opportunities: Access to cheaper supplies/cheaper labour – lowers costs
11. [0] Threats: Increased competition in the home market – lose market share – may need to reduce prices
12. [0] Threats: Free trade agreements – may allow foreign companies easier access to domestic market
13. [0] Threats: Jobs lost in industries that cannot compete with cheaper foreign competition
14. [0] Threats: Workers may choose to work for MNC which pays better wages – losing workers
15. [0] Threats: Pressure to increase wage rates due to match MNC pay
16. [0] Threats: Easier for exploitation by MNCs e.g. labour/natural resources
17. [0] Threats: May be more vulnerable to external shocks e.g. recession in main export markets
18. [0] Indicative response for (a): Country Z has signed a trade agreement (1) which provides opportunities for businesses in country Z to sell in new markets abroad and increase revenue (1).
19. [0] Relevant points for (b) L2 Liquidity ratios/L2 points: Current ratio = 3:1 (3) in 2018
20. [0] Relevant points for (b) L2 Liquidity ratios/L2 points: Acid test ratio = 1:1 (1) in 2018
21. [0] Relevant points for (b) L2 Liquidity ratios/L2 points: Acid test ratio has stayed the same
22. [0] Relevant points for (b) L2 Liquidity ratios/L2 points: Explanation that shows understanding of the meaning/significance of the ratio figures in 2017 and/or 2018
23. [0] Relevant points for (b) L1 Basic statements: Inventory has increased by $5m between 2017–18
24. [0] Relevant points for (b) L1 Basic statements: Bank loan has increased by $10m between 2017–18
25. [0] Relevant points for (b) L1 Basic statements: Liquidity formulas
26. [0] Relevant points for (b) L1 Basic statements: Non-current assets has remained the same
27. [0] Relevant points for (b) L1 Basic statements: Simple calculations e.g. current assets in 2018 = $15m
28. [0] Relevant points for (b) L1 Basic statements: Revenue in 2018 for low priced soap is $60m
29. [0] Award up to ten marks using the levels-based mark scheme below.
30. [0] Level 3 Knowledge/Analysis/ Evaluation: At least 2 x Level 2 + 9–10 marks for well justified recommendation whether or not the bank manager should give a loan to SA for the new factory 7–8 marks for some limited judgement shown in recommendation as to whether the bank manager should give a loan to SA for the new factory
31. [0] Level 2: 4–6 marks Liquidity ratios correctly calculated. Explanation of meaning and significance of liquidity ratios.
32. [0] Level 1: 1–3 marks Outline of financial position without liquidity ratios calculated. Identifies the change in the figures from Appendix 3 Formula for liquidity ratios Makes financial calculation from figures in Appendix 1
33. [0] Level 1 - 1 mark for each L1 statement (max of 3 marks) e.g. The inventory has increased by $5m (L1) as the inventory was $5m in 2017 and $10m in 2018 (1 x Ap).
34. [0] Level 2 - 1 x L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks) e.g. The acid test ratio in 2018 is 1:1. (L2)
35. [0] Level 3 - For L3 to be awarded there needs to be at least two correct L2 liquidity calculations and then a recommendation as to whether or not the bank manager should give a loan to SA for the new factory.
36. [2] Award up to 2 additional marks for relevant application for (b).
37. [0] Possible application marks for (b): 2017 current ratio was 2:1; 2017 acid test ratio was 1:1; any other relevant use of financial data from Appendix 3 e.g. bank loan is now $20m; produces soap; new factory and equipment that will cost $15m; 50 workers in the new factory; country Z is a growing economy.