BMT is a business partnership owned by 2 brothers. The brothers received government support when they started BMT 6 years ago. BMT now has 30 employees who make high quality watches. The business tries to achieve lean production. Demand has increased each year and in 2019 BMT sold 8000 watches. BMT makes some parts for watches and all the other parts are imported. BMT had to consider a number of factors, including exchange rates, when deciding whether to import parts for watches.

Mark scheme

Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.

1. [1] reduce unemployment
2. [1] increase competition
3. [1] increase output
4. [1] benefit society
5. [1] small businesses can grow
6. [1] sole trader
7. [1] private limited company
8. [1] public limited company
9. [1] franchise
10. [1] social enterprise
11. [1] charity
12. [1] public corporation
13. [1] Unlimited liability/ each responsible for debts of other [k]
14. [1] so if business cannot pay its debts there is risk to the personal assets of each brother [app]
15. [1] Fewer sources of finance (than limited company) [k]
16. [1] restricting plans to expand the watch business [app]
17. [1] Possible disagreements/slower decision making [k]
18. [1] such as whether to import parts [app]
19. [1] Have to share profits [k]
20. [1] Just in Time [k] ordering parts as and when needed for the watches [app]
21. [1] which reduces storage costs [an]
22. [1] Kaizen [k] helps to eliminate mistakes and errors [an]
23. [1] when making these high-quality products [app]
24. [1] Cell production/team working [k] of its 30 employees [app]
25. [1] Kanban [k]
26. [1] Appreciation in own exchange rates would mean have to pay less to import materials [k]
27. [1] which lowers costs [an] so may be able to lower prices or improve profit margin [an]
28. [1] Changing rates are difficult to plan for [k]
29. [1] may result in having much higher costs than budget [an]
30. [1] Exchange rate depreciate [k] lead to higher cost of imported materials [an]
31. [1] could mean have to increase prices which could lower sales [an]
32. [1] The quality of parts/materials [k]
33. [1] as it may not be possible to obtain the resources locally [an]
34. [1] Import tariffs [k]
35. [1] this would increase the price [an]
36. [1] Import quotas [k]
37. [1] this could limit the amount of parts that can be brought into the country [an]
38. [2] As it is for a high-quality product, exchange rate is not as important as the materials because customers may be willing to pay the higher price to get the right quality which could cover the financial impact of any changes in the exchange rate. [eval] [eval]