Saltan makes a range of cars. The level of inventory is too high so it plans to decrease production at its factory. Employees were told the business needs to reduce the size of its workforce as competition is increasing. The trade union is not happy that 360 of the 1200 skilled full time employees at Saltan will be made redundant. A trade union spokeswoman said: 'Saltan should reduce the number of hours of every employee rather than reduce the number of jobs.' Saltan's Operations Director is considering ways to increase efficiency in the factory.

Mark scheme

Marking points from the official mark scheme (May/June 2016). The mark or mark type is shown in brackets.

1. [2] Good knowledge – e.g. Group of workers who join together to ensure their interests are protected;
2. OR organisation represents the workers and fight for improvements to pay and conditions.
3. [1] Some knowledge – e.g. Group of workers who join together OR fight for workers' rights.
4. [1] Knowledge – award 1 mark per situation. Points might include: Introduction of automation/new technology
5. [1] Redesign work space/layout
6. [1] Demand factors e.g. Fall in demand/fall in sales/change in tastes, at end of product life cycle, recession/economic slump
7. [1] Financial problems e.g. Lack of income, increase in costs, cash flow issues
8. [1] Factory/shop closure
9. [1] Relocation overseas
10. [1] Business taken over
11. [1] Change in law e.g. Increase in minimum wage
12. [1] Over-manning/unnecessary workers.
13. [1] Knowledge [2 × 1] - award 1 mark for each relevant problem [max 2].
14. [1] Application [2 × 1] - award 1 mark for each explanation in context.
15. [1] Relevant points might include: Cash flow/liquidity problems/tie up working capital [k]
16. [1] Additional storage costs [k] as need more factory space for storing vehicles [app]
17. [1] Additional security costs/risk of theft [k] to protect valuable engine/car parts [app]
18. [1] Risk of wastage/damage [k] as might want to bring out a new model [app]
19. [1] Opportunity cost [k] resources could be used elsewhere to become more efficient [app]
20. [1] Lack of space for production [k]
21. [1] Insurance costs [k].
22. [1] Knowledge [2 × 1] - identification of relevant way [max 2].
23. [1] Application [2 × 1] – award 1 mark for relevant reference to this business.
24. [1] Analysis [2 × 1] – award 1 mark for each relevant explanation. Relevant points might include: Increase in capital intensity OR automation OR introduce new technology [k] so can benefit from economies of scale [an] when making cars [app]
25. [1] Introduce just-in-time [k] helps reduce inventory [app] lowering cost [an]
26. [1] Kaizen [k]
27. [1] Improve layout of machines [k]
28. [1] Improve quality control/assurance [k] to reduce level of waste [an]
29. [1] Training [k] so remaining 840 workers [app] can work faster [an]
30. [1] Specialisation [k] as have skilled workers [app] prevents the need for rework [an]
31. [1] Improve communication [k]
32. [1] Better management [k]
33. [1] Improve motivation (or identifies possible ways to do this such as performance related pay) accept only once.
34. [1] Knowledge [1] – award 1 mark for identification of relevant issue(s) [max 1].
35. [1] Application [1] – award 1 mark if relevant reference made to this business.
36. [2] Analysis [2] – award up to 2 marks for relevant development of point(s).
37. [2] Evaluation [2] – justified decision made as to whether Saltan should reduce the number of working hours rather than reduce the number of jobs.
38. [1] Relevant points might include: Reduce jobs: May be difficult to recruit new workers in future [k] if not easy to find skilled employees [app] reducing Saltan's competitiveness [an]
39. [1] Redundancy [k] leading to increased costs [an] so less funds to develop new models [app]
40. [1] Loss of skills [k]
41. [1] Less supervision needed/fewer workers to manage [k]
42. [1] Reduce hours: Less hours would impact more employees [k] as more than 360 employees will have to work part-time [app] reducing loyalty [an]
43. [1] Could be easier to change [k] especially if there is a reduction in competition [app]
44. [1] Part-time employees can be more productive [k] than full-time employees [app] so output is maintained [an].
45. [1] General points: Reaction of trade union/bad image/reputation/not seen as caring employer [k] may reduce demand [an] for cars [app]
46. [1] Impact on other employees (positive or negative points) e.g. If they fear job losses [k] efficiency may fall [app] as workers demotivated [an] leading to higher average costs [an].