GDC is a transport delivery business in country Z. It operates in a competitive market. GDC has 5000 employees and 1000 delivery vehicles. GDC's organisational structure has many levels of hierarchy with a long chain of command. The managers use an autocratic leadership style. Last year GDC delivered 2 billion parcels for businesses. The Managing Director said: 'Having a good reputation is important. We have also benefited from economies of scale'. GDC wants to expand its operations to another country, but cannot decide the best way to do this.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [2] Clear understanding: [2] factors that lead to lower average costs asa business increases in size.
2. Some understanding:[1] benefit of increasing in size
3. [2] Clear understanding: [2] managers expect to be in charge of business and expect their orders to be followed OR managers make decisions without consulting workers [2]
4. Some understanding: [1] workers have no say in decisions OR decisions made by managers [1]
5. [4] Knowledge [2 × 1] award 1 mark for one advantage and one disadvantage identified
6. Application [2 × 1] award 1 mark for each explanation in context
7. Advantages: Employees have a clearly defined role [k] so know where they fit into delivery process [app]; Clear chain of command OR know their manager [k] so know who to ask for help if problem with a parcel [app]; Employees have a clear career structure [k] so can see how to progress from driver [app]; Specialists can be employed [k]
8. Disadvantages: Slow communication [k] due to many number of levels [app]; Heavy workload for managers [k] so do they have time to focus on expansion [app]; Communication between departments can be difficult [k] which could damage its good reputation [app]; Can create rivalry between departments [k]; Workers can feel isolated [k]
9. [6] Knowledge [2 × 1] award one mark for each reason
10. Application [2 × 1] award one mark for each relevant reference to this business
11. Analysis [2 × 1] award one mark for each relevant explanation
12. Points might include: Build trust OR loyalty [k] so customers want to use their delivery services [app] and keep purchasing from them [an]; Attract new customers [k] and therefore sales will increase [an]; Easier to raise finance [k] which could help growth plans [app]; Way to attract OR retain employees [k] so able to offer a good service [an]; Can charge higher prices [k] for each delivery [app] helping it increase revenue per unit [an]; Create brand awareness [k] so customers do not buy from competitors [an] in this competitive market [app]; Word of mouth promotion [k]
13. [6] Knowledge [1] – award 1 mark for identification of relevant points (s)
14. Application [1] – award 1 mark for relevant reference made to this business
15. Analysis [2] – award up to 2 marks for relevant development of point(s)
16. Evaluation [2] award up to two marks for justified decision regards to the most suitable way for GDC to expand.
17. Relevant points might include: Joint venture [k] with a local delivery business [app] you share the risks of expansion [an]; Merger/takeover [k] they will benefit from local expertise [an]; Franchise [k] they will receive a license fee [an]; Set up own operations [k] they will keep control [an] however this is an expensive way [an]