Identify and explain the possible effects on Rafael's business of each of the following.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2015). The mark or mark type is shown in brackets.

1. [8] Knowledge [2 × 1] - award one mark for each relevant effect
2. [8] Analysis [2 × 1] - award one mark for a relevant explanation for each effect
3. [8] Application [2 × 2] – award two application marks for each effect
4. [8] Award one mark for each possible effect (maximum of two), plus up to three additional marks for the explanation of each effect – 2 of which must be applied to this context.
5. [4] (i) Import quota on motorbikes – fixed quantity allowed to be imported (k) – leads to a shortage of imported motorbikes (ap) which leads to higher prices of imported higher quality (ap) motorbikes and so the motorbikes sold by RRM which are domestically produced will increase (an).
6. [4] (ii) An appreciation of country X's currency – imports become cheaper (K) leading to imported motorbikes and motorbike parts becoming cheaper for Rafael to buy (ap). The price of repairs and bikes could be reduced (an) leading to higher sales and making it easier to expand the business (ap).
7. [8] Do NOT award application for motorbikes alone and country X as they are in the question.
8. [8] Possible application marks: sole trader; repair, sell and deliver motorbikes; customers are mainly young men; imports high quality motor bikes; wants to expand and open a new showroom; statistics from appendix 1; financial information from appendix 2; planning to expand the business; locally produced motorbikes of lower quality.
9. [8] There may be other examples in context which have not been included here.
10. [12] Relevant points might include:
11. [12] Option A - near Main City: Advantages: (Low rent) = low fixed cost; (Housing nearby) = workers/customers live nearby; (No other shops nearby) = no competition in the area – easier to make sales; (Grants available) = contribute to start-up costs; (High unemployment) = easy to recruit workers – wages kept lower. Disadvantages: (High unemployment) = means incomes low leading to low demand; (High crime rate) = leading to high security costs – deters customers from visiting the area.
12. [12] Option B - in the centre of Main City: Advantages: (Near to other shops including competitors) = high footfall – high demand in the area; (Good transport links) = easy access encourages customers to visit area; (Free car parking nearby) = encourages customers to visit the area; (Good security/low crime) = lower security costs – less likely to have damage/theft. Disadvantages: (High rent) = high expenses; (Centre of city) = not easy access to delivery lorries.
13. [12] Knowledge/Analysis/Evaluation – award up to 10 marks using the levels-based mark scheme below.
14. [12] Level 3: At least 2 × Level 2 + 9-10 marks for well justified recommendation as to the best location to choose compared to the alternative.
15. [12] Level 2: 7-8 marks for some limited judgement shown in recommendation as to the best location to choose. 4-6 marks Detailed discussion of advantages and/or disadvantages of each option.
16. [12] Level 1: 1-3 marks Outline of advantages and/or disadvantages of each option. 1 mark for each L1 statement (max of 3 marks) e.g. Rent is high which leads to high costs.
17. [12] 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. Rent is high which leads to high costs. This might mean the price of motorbikes has to be higher and so less competitive. However, the shop is in the centre of the city which will have a high footfall and therefore higher sales. (4 marks for L2 answer + 1 application mark for referring to motorbikes).
18. [12] Level 3 - For L3 to be awarded there needs to be at least two L2 marks awarded and then a recommendation which justifies which is the best option to choose.
19. [12] Award up to 2 additional marks for relevant application.
20. [12] Do NOT reward showroom in Main City as it is in the question
21. [12] Possible application marks: sole trader; motorbikes; started 15 years ago; located 100 km from Main City; repair, sell and deliver motorbikes; customers are mainly young men; imports high quality motor bikes; financial information from appendix 2; location information from appendix 3.
22. [12] There may be other examples in context which have not been included here.