QCH is a multinational company which makes a range of luxury cars. Last year it made a profit of $700m. One of QCH's objectives is to enter new markets. QCH wants to start producing cars in country C, a fast growing economy. The Finance Director said: 'Meeting customer needs is important. We could form a joint venture or set up our own factory. Both options will be expensive, costing $800m. I think QCH's expansion into country C could be good for other businesses there.'

Mark scheme

Marking points from the official mark scheme (May/June 2017). The mark or mark type is shown in brackets.

1. [2] Clear understanding: when two or more businesses agree to start a (new) project together so share risks OR capital OR profits OR resources.
2. [1] Some understanding: two business agree to work together (on a project).
3. [1] Have an aim OR target to work towards
4. [1] Provide a sense of direction OR know what you have to do
5. [1] Measure of success (to judge performance)
6. [1] Help budgeting OR planning OR decision making
7. [1] Motivate
8. [1] Spread risk [k] of selling cars [app]
9. [1] Economies of scale [k] buying factory stock [app]
10. [1] Increase sales OR market share OR target market [k] as it is a fast growing economy [app]
11. [1] Home market saturated [k]
12. [1] Greater recognition OR brand awareness [k]
13. [1] Access to cheaper labour OR resources [k]
14. [1] Fewer trade restrictions [k]
15. [1] Demand / customers [k] in the new market [app] so generate revenue [an]
16. [1] Amount of rent [k] if expensive fixed costs increase [an] using up its $800m budget [app]
17. [1] Lower cost of labour OR availability of labour OR access to suitable employees [k] which would decrease variable costs [an]
18. [1] Lower raw materials cost OR availability of materials [k] so can get materials when needed [app]
19. [1] Access to transport networks OR access to water OR power [k] or production will stop [an]
20. [1] Access to subsidies or grants [k] which would reduce costs [an]
21. [1] Possible external economies of scale [k] if they locate near to other factories [an]
22. [1] Enough space [k] as need a large area [an]
23. [1] Environmental considerations [k] therefore must be away from housing [an]
24. [1] Legal considerations [k]
25. [1] Increased competition [k] can lead to lower prices [an] which could mean some car makers [app] go out of business [an]
26. [1] Suppliers (local) may gain orders [k] leading to increased revenue [an]
27. [1] Lose skilled employees [k] as attracted to work for the multinational [app] so become less competitive [an]
28. [1] Gain new ideas [k]
29. [1] Increased sales (for local businesses) [k] as more people are employed [an]