Explain two possible effects on SA of the increase in the rate of inflation in country X.

Mark scheme

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

1. Award 1 mark for each effect (max 2).
2. Award a maximum of 3 additional marks for each explanation of an effect on SA of an increase in the rate of inflation in country X – one of which must be applied to this context.
3. Relevant answers might include:
4. • Likely rise in prices for safari tours – decreased demand / harder to attract tourists to country X – decreased revenue for SA if demand is price elastic - possible decrease in profits if costs rise more than revenue
5. • Increase in costs for SA – may need to spend time sourcing lower cost inputs / updating the brochures - keep recalculating prices / need to keep printing brochures with new prices
6. • More pressure to increase wages for SA employees – prices of basic goods may be increasing significantly in country X – as employees cannot maintain their standard of living without a wage increase – increases costs
7. • Increased cost of investment / equipment – may mean expansion is delayed
8. For example: Prices of basic goods may be increasing significantly in country X (1) as the inflation rate is now 4% (app). This will mean there is more pressure on SA to increase the wages of employees (1) because employees cannot maintain their standard of living without a wage increase (1).
9. Application could include: safari holidays; increase in tourists from other countries; high income tourists; luxury safari holidays; 5 employees; only been operating for 2 years; sole trader; game reserve; camping / tent; wild animals; 4 safari guides; 4 safari vehicles; accommodation in local / luxury hotels; fuel.
10. Level 3: Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of both methods. Well-justified recommendation. Candidates discussing both methods in detail, in context and with a well-justified recommendation including why the alternative method was rejected should be rewarded with the top marks in the band.
11. Level 2: Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one method. Judgement with some justification / some evaluation of choice made. Candidates discussing both methods in detail and applying it to the case should be rewarded with the top marks in the band.
12. Level 1: Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the methods with little / no explanation. Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining both methods in context should be rewarded with the top marks in the band.
13. Relevant points might include:
14. On-the-job training (Advantages)
15. • Individual training given on the safari tours – leads to training specific to SA
16. • There will be some output from the trainee as training is provided while a safari tour is being given
17. • Usually costs less than off-the-job training – as it will be provided by existing employees
18. On-the-job training (Disadvantages)
19. • Some output will be lost by the trainer as they would usually be working instead of training
20. • The trainer may pass on bad habits to the trainee - and these may lead to bad reputation with tourists / lower productivity
21. Off-the-job training (Advantages)
22. • Provided by experts – more knowledge of the different animals seen in the game reserve – better techniques taught
23. • The courses may be taught in the evening – so no tours are lost in the normal working day
24. • Employee may be taught a range of new skills that current employees may not know about – improves productivity
25. Off-the-job training (Disadvantages)
26. • Costs are usually higher – as tourist guides will usually be sent away to college or other training institution
27. • Employees are paid a wage, but no safari tours are being taken for the business whilst training
28. • Qualification gained by employees may make it easier for them to leave – may be attracted by another tourist business that will not then need to pay for training
29. Recommendation Justification might include:
30. • On-the-job training is the best method to use because the employees will develop skills specific to the safari tours Tokumbo wants them to provide. If they undertake off-the-job training then it will not only cost more but it may not provide the training specific to SA, making it more expensive but less effective
31. • Off-the-job training is the best method to use because it will be delivered by experts who will have the most up-to-date knowledge of the wild animals in the game reserve leading to better trained employees and they may be better than the employees of competitors. This may give SA a competitive edge and lead to higher sales that will more than cover the additional costs of the training