2 (a) Explain one likely advantage and one likely disadvantage for Tandeep if he decides to import the pushchairs (strollers) he sells. Advantage: Explanation:. Disadvantage: Explanation:.

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [1] Advantage: Have a wider range of pushchairs in the shop / better quality.
2. [1] Explanation of advantage: Meet the needs of more customers – sell more pushchairs – higher revenue.
3. [1] Advantage: Fill a gap in the market for foreign branded products.
4. [1] Explanation of advantage: Satisfy those customer needs – higher-income customers may prefer these brands.
5. [1] Advantage: May be purchased at lower cost price.
6. [1] Explanation of advantage: Lower selling price in the shop – increase demand/sales.
7. [1] Advantage: These pushchairs may not be manufactured locally.
8. [1] Disadvantage: May have to pay higher prices if tariffs are imposed.
9. [1] Explanation of disadvantage: Raises the cost of inventory for TT – may lead to higher prices in the shop.
10. [1] Disadvantage: May have quotas that limit the quantity imported.
11. [1] Explanation of disadvantage: Restricts the supply/availability of products in the shop – may lead to higher prices as a result of the shortages.
12. [1] Disadvantage: Increased costs of finding foreign suppliers.
13. [1] Explanation of disadvantage: Have to contact many suppliers in other countries to order inventory – takes Tandeep time to do this when he could be doing other tasks.
14. [1] Disadvantage: Increased delivery time.
15. [1] Explanation of disadvantage: As the inventory has further to travel than if produced in country Z – may delay goods ordered by customers.
16. [1] Disadvantage: Imported pushchairs may not meet the same standards as locally produced pushchairs.
17. [1] Explanation of disadvantage: May lead to pushchairs breaking – leading to a poor reputation for TT – lose customers to competitors.
18. [1] Disadvantage: Possibly more damaged goods.
19. [1] Explanation of disadvantage: Higher costs as have to replace damaged goods – reduces profit.
20. [1] Disadvantage: Risk of exchange rate fluctuations affecting cost price of inventories.
21. [1] Explanation of disadvantage: Lower exchange rate will lead to higher import costs.
22. [1] Wholesaler in country Z (Advantage): Can buy toy cars in smaller quantities of 10 units.
23. [1] Wholesaler in country Z (Advantage): Reduced need for storage - reduced warehouse/storage costs.
24. [1] Wholesaler in country Z (Advantage): Less working capital tied up in inventory.
25. [1] Wholesaler in country Z (Advantage): Quicker to respond to changing customer demand.
26. [1] Wholesaler in country Z (Advantage): Provides advice on which toy cars sell well.
27. [1] Wholesaler in country Z (Disadvantage): Higher cost price of $15 each as wholesaler mark-up added to the price of each toy car – may have to charge a higher price than competitors - lower sales.
28. [1] Wholesaler in country Z (Disadvantage): Full range of toy cars may not be available.
29. [1] Wholesaler in country Z (Disadvantage): No direct link to toy manufacturers – less advice / after sales service.
30. [1] Manufacturer in country Z (Advantage): Cheaper cost price at $5 each – so lower costs.
31. [1] Manufacturer in country Z (Advantage): Long time period for trade credit given at 3 months – so may improve cash flow position.
32. [1] Manufacturer in country Z (Disadvantage): Must buy in larger quantities of at least 1000 units.
33. [1] Manufacturer in country Z (Disadvantage): May not have the storage space.
34. [1] Manufacturer in country Z (Disadvantage): Longer delivery time of 4 weeks.
35. [1] Manufacturer in country Z (Disadvantage): May not be able to respond to customer demand quickly.
36. [1] Recommendation (Wholesaler): Buy from the wholesaler as this means that a large order of 1000 units does not have to be made if he bought from the manufacturer. TT may not be able to sell such a large quantity of a particular toy car.
37. [1] Recommendation (Wholesaler): Hence this does not tie up working capital in inventory which does not sell quickly.
38. [1] Recommendation (Wholesaler): Also, the wholesaler can give advice on which toy cars are selling well making it more likely that the TT shop will satisfy customer demand.
39. [1] Recommendation (Manufacturer): Buy from manufacturer as the unit cost is only $5 which is $10 cheaper and so Tandeep can keep down the price of toy cars sold in his shop leading to much higher sales.