YMG is a private limited company. It is the largest manufacturer of soft drinks in country V. YMG produces 1 billion litres a year using flow production. The Managing Director wants YMG to expand. He said: 'I plan to increase production to 3 billion litres over the next 5 years. This will allow us to start selling our products in new markets in other countries. I know import quotas and lack of local knowledge can cause problems but there are ways we can overcome them.' The Managing Director also plans to invest $60m in new technology to improve efficiency.

Mark scheme

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

1. [2] Award 2 marks for a full definition. Award 1 mark for a partial definition.
2. [2] Where large quantities of a product are produced in a continuous process
3. [2] Mass production using a production line
4. [1] Partial definition e.g. 'Makes lots of the same thing'
5. [1] Large quantities of a standardized product
6. [1] Large-scale production/large volumes, continuous production
7. [2] Award 1 mark per method.
8. Reorganise layout/reduce waste/Kaizen/JIT/lean production
9. Training/improve employee skills/employ more skilled workers
10. Improve motivation/communication
11. Specialisation
12. [4] Award 1 mark for each relevant source of finance.
13. Award 1 mark for each relevant reference to this business.
14. Sell shares/owners capital [k] as a private limited company [app]
15. Bank loan [k] as need $60m [app]
16. (Retained) profits [k] as likely to have funds as it is the largest manufacturer [app]
17. Leasing [k] as move into new markets overseas may not be successful [app]
18. Hire purchase [k]
19. Owners savings [k]
20. Sell unwanted assets [k]
21. Crowdfunding [k]
22. [6] Award 1 mark for identification of each relevant problem (max 2).
23. Award 1 mark for each relevant reference made to this business (max 2).
24. Award 1 mark for each relevant explanation (max 2).
25. Lack of local knowledge: May not be aware of competitors actions [k] leading to fewer sales /lower revenue [an] of soft drinks [app]
26. May not understand customer buying habits [k] so must spend more money developing new products [an] rather than investing $60m in new technology [app]
27. Customers may not like [K] the soft drinks [App]
28. Import quotas: This limits the number of items that can be brought into the country [k] so fewer litres needed [app] which could lead to higher prices[an]
29. [6] Award up to 2 marks for identification of relevant points.
30. Award up to 2 marks for relevant development of points.
31. Award 2 marks for justified decision as to whether a joint venture is the best way for a business to enter a new market in another country.
32. Joint venture: Allows the business to gain important local information about customers [k] so better able to meet customer requirements [an] ensuring sales [an]
33. Wider range of contacts/better access to resources [k] so may be able to obtain cheaper resources [an] reducing production costs [an]
34. Less competition [k] as working with local business [an] helping to increase its market share [an]
35. Can provide access to other specialist staff and technology [k]
36. Clash of management styles [k] lead to conflict/problems with decision making [an]
37. Must share profits [k]
38. Justification might include: A joint venture allows the business to gain important local information about customers [k] so they are better able to meet customer requirements [an] ensuring sales [an]. Expanding on their own would require them to raise more capital [k]. If they are happy to share control a joint venture is the best way as it helps reduce the risks of setting up in a new country[eval]. Since expanding on their own maybe too expensive. [eval]