Identify and explain two advantages to ACE of being a public limited company.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2014). The mark or mark type is shown in brackets.

1. [8] (a) Content: Limited liability; Access to more sources of capital; Sell shares to the public; Continuity; Separate legal identity. The marks available for this question are as follows: 2 marks for knowledge; 4 marks for analysis and 2 marks for application. 1 mark for each advantage identified plus 2 explanation marks and 1 application mark. (4 marks x 2 advantages) Advantage: Limited liability (1 knowledge mark). Explanation: Limited liability (1) means the shareholders cannot lose any of their personal belongings only the capital invested in the business (1). This will encourage people to become shareholders in ACE as sales revenue is increasing indicating that the business is successful (1). Application: Plus 1 application mark because the answer is in the context of increasing sales revenue for this business. Possible application marks: ovens; financial information from Appendix 1; 200 production workers; purchase production machinery; want to be efficient to remain competitive; export products to different countries; sales revenue increasing; profit increasing. There may be other examples in context which have not been included here.
2. [12] (b) Content: Just-in-time; Kaizen; Waste reduction; Kanban; Cell production. Level 1: 1 mark for each statement, e.g. the directors could introduce just-in-time methods into the manufacturing of ovens. (1 mark) Level 2: 5 marks for the first level 2 answer and then one extra mark for each additional level 2 answer, up to maximum of 8 marks, e.g. the directors could introduce just-in-time methods into the manufacturing of ovens. This would mean that ACE would not hold stocks of electrical components or rubber components. The stock would be ordered and arrive at the production line just as it is required to manufacture the ovens. This will reduce storage space required and save costs. 5 marks for level 2 answer plus 1 application mark for answering in the context of the manufacturing of ovens. Level 3: Detailed discussion of at least two level 2 answers and then a recommendation at the end which justifies which is the best method compared to the other method. Possible application marks: ovens; components; rubber seals; electrical components; metal components; financial information from Appendix 1; restaurants and hotels; 200 production workers; low motivation and unhappy workers; can be dismissed if do not follow orders. There may be other examples in context which have not been included here. Application Level 3: 2 marks, Well applied to case. At least two examples of reference to, or use of, the case. Level 2: 2 marks, Well applied to case. At least two examples of reference to, or use of, the case. Level 1: 1 mark, Limited application to the case. At least one example of reference to, or use of, case. Knowledge/Analysis/Evaluation Level 3: 9–10 marks, At least 2 x Level 2 + Well justified recommendation as to which is the best method compared to the other method. Level 2: 5–8 marks, Good discussion of each method to introduce lean production OR explained balanced argument. Some limited judgement shown in recommendation about which is the best method. Level 1: 1–4 marks, Name of each method to introduce lean production. Outline of each method to introduce lean production.