O-LevelBusiness StudiesExternal influences on business activity7115/21 · May/June 2015 · Q420 Marks

Identify and explain four factors DD should consider when packaging cakes if they are exported.

(a)Identify and explain four factors DD should consider when packaging cakes if they are exported.[8]
(b)External factors can affect the profitability of a company. For each of the following changes consider how it might affect DD’s profit. Which change is likely to have the greatest effect on DD’s profit? Justify your answer. Increasing GDP in country X: Reduced supply of the raw materials used to make cakes: Television programme highlighting the effects on health of eating too many cakes: Conclusion:[12]

Mark scheme

Marking points from the official mark scheme (May/June 2015). The mark or mark type is shown in brackets.

[4] Analysis [4 × 1] - award one mark for each factor (maximum of 4)
[4] Application [4 × 1] – award one mark for an explanation in context of each factor (maximum of 4)
Award one mark for each relevant factor (maximum of four), such as: protect the product; easy to transport the product; contains correct information about the product for that country; promotes the brand image for the product; is culturally sensitive; appropriate language; recyclable packaging; cost of packaging
Award a maximum of one additional mark for each explanation of the factor in context.
Indicative response for (a): Contains the correct information about the cakes for that country it is being exported to [ap] because without the correct information the company could be charged with misleading information. [an]
Possible application marks for (a): transporting over long distances; constantly develops a new range of cakes; food; labelling; ingredients; contamination; sell-by date; easily damaged/fragile; perishable; e-commerce; Figures from Appendix 2; new markets abroad; large supermarkets; small food shops.
There may be other examples in context which have not been included here.
Relevant points for (b) might include: Increasing GDP in country x: higher incomes – increased demand; higher sales of luxury products – increased demand; may eat other products to cakes – so demand falls.
Reduced supply of the raw materials used to make cakes: less ingredients available – increased costs; higher prices – decreased demand; Prices same but lower profits.
Television programme highlighting the effects on health of eating too many cakes: Negative publicity – lower demand; Not many see the programme – little effect on sales; Consumers loyal and ignore the advice.
Knowledge/Analysis/Evaluation – award up to 10 marks using the levels-based mark scheme below.
Level 3: At least 2 x Level 2 + 9-10 marks for well justified conclusion as which change has the greatest effect on profit compared to the other changes. NB must be explicit reference to the effect on profit.
Level 2: 7-8 marks for some limited judgement shown in conclusion as to which change has the greatest effect on profit.
Level 2: 4-6 marks Detailed discussion of the changes and how they affect profits.
Level 1: 1-3 marks Outline of the changes and how they affect profits.
Level 1: 1 mark for each L1 statement (max of 3 marks), e.g. Increasing GDP means more people have jobs and incomes are higher.
Level 2: One L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks), e.g. increasing GDP means more people have jobs and incomes are higher. Higher incomes means more luxury products are bought and therefore people may buy more cakes to treat their family leading to increased demand for DD's cakes. (4 marks for L2 answer + 1 application mark for mentioning more cakes being bought.)
Level 3: For L3 to be awarded there needs to be at least two L2 marks awarded and then a recommendation which justifies which change has the greatest effect on profits e.g. higher GDP will probably have the greatest effect on profits as it will lead to higher demand for the cakes. (L3) The television programme may have little effect as it depends on how many people watched it and how many people believed what they were being told. (L3) The rising cost of ingredients could be passed on to the customer and therefore there will be little effect on profits. (L3) It depends on how bad the harvest is and how big an increase there is in the costs of the ingredients. So overall increasing GDP is likely to have the greatest effect on profits. (L3)
Award up to 2 additional marks for relevant application.
Possible application marks for (b): constantly develops a new range of cakes; ingredients; food; increased production workers; $8m investment; perishable products; luxury products; e-commerce; Figures from Appendix 2; new markets abroad; large supermarkets; small food shops.