TYA is a limited company which manufactures 300000 cars a year. It has 600 employees. TYA has high fixed costs. The Managing Director wants to improve efficiency in the factory. He said: 'Globalisation is changing how businesses operate. Many manufacturing businesses are considering whether to relocate their operations to other countries.'

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2022). The mark or mark type is shown in brackets.

1. Award 2 marks for a full definition. Award 1 mark for a partial definition.
2. [2] Increase in worldwide trade and movement of people and capital between countries
3. OR [2] Increasing trend for businesses to trade across international boundaries and for people to live/travel to countries that are not their own
4. OR [2] The process by which countries are connected with each other because of the trade of goods and services
5. Partial definition e.g. (increase in) trade of goods and service [1]
6. Award 1 mark per example (max 2).
7. Rent/rates
8. Electricity / gas / heating and lighting / water
9. Insurance
10. Loan repayments/interest payments
11. Storage costs
12. Marketing costs
13. Salaries
14. Other appropriate responses should also be credited.
15. Award 1 mark for a relevant point (max 1).
16. Award 1 mark for outlining the difference between the two types of business organisation (max 1).
17. Award 1 mark for each relevant reference to this business (max 2).
18. A limited company has separate legal identity [k] so assets such as the factory [app] and the 600 cars [app] are owned by the business rather than the individual, whereas the owners and the business are the same for an unincorporated business [k]
19. An unincorporated business has unlimited liability [k] whereas the risk for shareholders/owners of a limited company is limited to the amount invested [k] in the car business [app] so they may be less concerned about the high fixed costs [app]
20. A limited company can sell shares [k] whereas for an unincorporated business it can be difficult to raise a large amount of finance [k]
21. A limited company has continuity [k]
22. Other appropriate responses should also be credited.
23. Award 1 mark for identification of each relevant method (max 2).
24. Award 1 mark for each relevant reference to this business (max 2).
25. Award 1 mark for each relevant explanation (max 2).
26. Increase in capital intensity / automation / introduce new technology [k] increasing output / faster production [an] of cars [app]
27. Training [k] its 600 employees [app] so they can work faster / make fewer mistakes / better quality [an]
28. Introduce just-in-time inventory control [k] to reduce amount of space needed [an] in the factory [app]
29. Kaizen [k] helps reduce waste (of resources) [an] may help lower high fixed costs [app]
30. Improve layout of machines [k] so saves time moving between areas [an]
31. Improve motivation or examples e.g. bonuses [k]
32. Cell production [k]
33. Improve quality / quality assurance [k]
34. Other appropriate responses should also be credited.
35. Award up to 2 marks for identification of relevant points.
36. Award up to 2 marks for relevant development of points.
37. Award up to 2 marks for a justified decision as to whether legal controls are the most important factor for a manufacturing business to consider when deciding which country to locate its operations in.
38. May restrict/not able to locate in certain places [k] so no output [an]
39. Business may have to change its production methods [k] which would increase costs [an]
40. May restrict amount of goods they can export/import [k] reducing potential sales [an]
41. Access to suppliers / cheaper sources of materials [k] would increase transport costs [an] decreasing profit margin [an]
42. Access to/cost of labour [k] which could lower variable costs [an]
43. Access to/cost of land [k] as may need a large space [an] increasing fixed costs [an]
44. Access to transport networks / access to power [k] as poor transport links could delay deliveries / so production can be delayed/stopped [an]
45. Availability of government grants/subsidies [k]
46. Other appropriate responses should also be credited.
47. Justification might include: Legal controls could mean the business may not be able to locate in certain places [k] which means no output [an]. Another factor is access to labour [k] helping lower variable costs [an]. However, legal controls are likely to be most important as the law will stop the factory being built whereas there are ways to overcome problems caused by access to employees [eval] which may increase costs but will still ensure that production can take place. [eval]