Explain two reasons why training is important to PH.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. [1] Reason: To introduce a new process or equipment.
2. [1] Explanation: So that employees know how to use the new equipment without damaging it/operate it safely – or not being sure how to operate it and become less productive.
3. [1] Reason: To improve the efficiency/productivity of employees.
4. [1] Explanation: As they will be skilled in operating equipment – and output will increase.
5. [1] Reason: To train unskilled workers to perform a wider range of tasks.
6. [1] Explanation: So they may be moved to other areas of the factory – which makes production more flexible when increased output of a particular product is required.
7. [1] Reason: To decrease the chances of faulty products being produced/fewer mistakes.
8. [1] Explanation: To ensure high quality products are manufactured – so the reputation of PH does not fall.
9. [1] Reason: To decrease the chance of accidents.
10. [1] Reason: To provide opportunities to internally recruit.
11. [1] Reason: To improve the motivation of employees.
12. [1] Reason: To provide induction training to introduce new employees to the business.
13. [1] Reason: Less supervision of workers may be required.
14. [1] PH's employees - Usage: Whether to ask for a pay rise - may use the profit to indicate if PH can afford to increase its wages from just paying the minimum wage.
15. [1] PH's employees - Usage: $20m profit in 2022 indicates that PH may have sufficient profit to increase wages the following year.
16. [1] PH's employees - Usage: Whether to look for another job - revenue has increased 25% from $100m to $125m - may indicate that their jobs are secure as the business is doing well.
17. [1] PH's employees - Usage: Whether there is sufficient revenue to improve working conditions.
18. [1] PH's shareholders - Usage: Whether to sell shares - profit margin has fallen from 20% to 16% which is a fall of 4%. May indicate losing control of expenses or costs are rising.
19. [1] PH's shareholders - Usage: The level of profit has remained the same at $20m so dividend payments may remain the same.
20. [1] PH's shareholders - Usage: Whether to buy more shares - business has made more revenue as it has increased by $25m which may indicate the business is successful and growing - buy more shares or keep existing shares.
21. [1] Competitor - Usage: Whether to take over PH as revenue has increased by $25m from $100m so may be taking market share away from the competitor – may indicate the competitor should take over PH – although profit margin is falling and needs to have greater control of expenses - may indicate higher profit and profit margin possible if better managed.
22. [1] Competitor - Usage: Comparison with own revenue and profit to see if PH is doing better than competitor – may learn how to improve its own competitiveness - gross profit margin has increased indicating that the cost of sales is lower - may be due to cheaper materials being purchased - may lead to lower quality products and may not want to take over the business.
23. [1] Justification: PH's employees will find the financial information in Appendix 3 most useful as it will show if PH can afford to increase the wages of the 100 production employees higher than the minimum wage. Profit has remained at $20m and so PH should be able to afford higher wages. Without knowledge of the revenue increasing and profit it would be harder for employees to argue for an increase in their pay. Shareholders may find this information less important as they would want to know the dividends that were going to be paid out of the profit rather than just the profit figure. Competitors would also want to see the share price if they were considering taking over PH as well as the profit made so this information is less useful to them.
24. [1] Justification: PH's shareholders would find the financial information most useful as they want to know if profit has increased to indicate whether they are likely to receive a dividend. The profit margin of 16% would indicate that PH is still relatively successful, and their shares may remain at the same value.
25. [1] Justification: PH's competitors would find the financial information most useful as they want to know if PH is worth taking over. If the profit margin has fallen to 16%, then there may be room to increase the profit margin if the business is better managed after a takeover. This would allow a comparison with their own profit margin to see if it is higher than theirs and hence worth taking over.