Explain two benefits of PH's employees becoming members of a trade union.

Mark scheme

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

1. [1] Benefit: More likely to be listened to as strength in numbers.
2. [1] Explanation: Employee's views are represented in grievances with managers – so more likely to get their demands actioned.
3. [1] Benefit: Provides advice to members.
4. [1] Explanation: Such as if they feel they have been dismissed unfairly/unfairly treated by the business – then employees will know if they have a case against the business/whether to take action.
5. [1] Benefit: The communication between employers and employees is better.
6. [1] Explanation: As there is a channel through which points from employees can be raised – it is more likely that problems are sorted without causing disputes between employers and employees.
7. [1] Benefit: Possibly improved pay.
8. [1] Explanation: As there is strength in numbers to make wage demands for a pay rise more likely to be successful – employees more satisfied with work/happier.
9. [1] Benefit: Improved working conditions.
10. [1] Explanation: As trade union can put forward a case to the employer if conditions are not good.
11. [1] Benefit: Provides services to members.
12. [1] Explanation: Reduced rates of insurance making it more affordable.
13. [1] Benefit: Helps to protect legal rights of employees.
14. [1] Explanation: May improve job security.
15. [1] Benefit: Produce goods in countries with low costs.
16. [1] Explanation: Low rents will reduce the total costs of producing goods - may lead to lower prices – increases sales as more competitive.
17. [1] Explanation: Low production costs may allow higher profit margins than 16% in 2022 if prices remain the same.
18. [1] Explanation: May produce protective hats in countries with low labour costs – leading to lower unit costs – may be able to reduce prices – become more competitive in other markets/increases sales in other markets.
19. [1] Benefit: Easier access to raw material source.
20. [1] Explanation: Reduced transport costs in other countries – lower total costs.
21. [1] Explanation: Quicker delivery of raw materials to produce construction hats - reduces the time from development to the market.
22. [1] Explanation: Access to raw materials that stops/reduces competitors access to these supplies.
23. [1] Benefit: Produce nearer the market.
24. [1] Explanation: Reduces transport costs and quicker delivery to customer - improves customer satisfaction.
25. [1] Explanation: Nearer to the market for protective hats may be more familiar with customer needs in that market – therefore more likely to meet customer needs – increasing revenue.
26. [1] Explanation: Markets may be quite spread out across the globe as there may not be mines in all countries however, near to one market may not be near to other markets – limiting the advantage from lower transport cost.
27. [1] Benefit: Avoid trade barriers.
28. [1] Explanation: Do not pay tariffs – reduces price of goods to customers.
29. [1] Explanation: Do not have quotas – no restrictions on quantity of goods supplied to the market – increases sales.
30. [1] Benefit: Increase market share.
31. [1] Explanation: Able to expand into more markets in the mining and construction industries more easily in other countries – increases revenue/encourages growth of the business.
32. [1] Explanation: Spreads risk of selling protective headwear – if demand falling in one market can be compensated for by increasing demand in other countries.
33. [1] Benefit: Receive government grants.
34. [1] Explanation: Reduces investment required to set up the factory to produce protective hats – less borrowing required – lower interest payments/lower expenses.
35. [1] Explanation: The government may require the business to undertake certain activities such as locating in an area of high unemployment – may not always be the best location for the hat factory as other areas may have more factors to attract the business - may not lead to lower costs.
36. [1] Benefit: Remain competitive.
37. [1] Explanation: Competitors producing safety equipment are expanding into more markets abroad - may lead to falling sales of protective hats – needs to compete in all markets to retain sales.
38. [1] Benefit: Benefit from economies of scale.
39. [1] Explanation: Selling protective hats on a larger scale may allow for reduced average costs – for example marketing economies when advertising globally and products ordered through its website.
40. [1] Benefit: May be able to raise prices.
41. [1] Explanation: A globally recognised brand may give a better reputation to the already leading supplier of protective products – leading to higher prices being charged and increased revenue.
42. [1] Justification: Reduced production costs are likely to be the most important as unit costs can be reduced which will make the hats cheaper to produce and can be sold at a lower price. They will be more competitive, and it will be easier to increase sales in many countries. It may be that competitors are also locating in low-cost countries and so if PH doesn't do this then it may not be able to compete. As PH is a multinational it will produce and sell in many countries around the world and so locating near to just one market will not have significant savings in transport costs. Government grants are a one-off payment when setting up in a country and are not likely to have much impact on the business in future years.
43. [1] Justification: Producing protective hats nearer to the market is likely to be most important as not only will transport costs be reduced, helping to increase profit, but improved knowledge of the market will help to increase sales and hence revenue will increase. Increased revenue and lower transport costs together could lead to a higher profit.
44. [1] Justification: Government grants could be substantial which means a much smaller bank loan is required. This will lower borrowing costs by reducing interest payments and therefore costs may be reduced significantly and profit from the manufacture of hats to protect employees' heads whilst working will increase for many years whilst the smaller loan is being paid off.