EDEXCEL GCSE BUSINESS · PAPER 2
Exam Practice: Business and Globalisation
Business and globalisation · Growing the business · Lesson 3 of 4 · 15 marks · 20 minutes
Name Date
Answer all questions. Use the context of the business in the question where one is given.
Question 1 DEFINE [1 mark]
Define the term 'tariff'.
Question 2 OUTLINE [2 marks]
Outline one benefit to a business of exporting its products.
Question 3 EXPLAIN [3 marks]
Explain one impact on a UK business of a tariff being placed on the materials it imports.
Question 4 JUSTIFY [9 marks]
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SOURCE Highland Knitwear Ltd makes wool jumpers in Scotland. Its UK sales are falling. Option 1: Start exporting to Japan, where there is strong demand for Scottish wool, selling through its website and a Japanese department store. Option 2: Move production to a factory in Asia, where wages are much lower, to cut its prices in the UK. |
Justify which one of these two options Highland Knitwear Ltd should choose.
Answers
Check your answer only once you have written one.
Question 1 [1 mark]
A tax placed on imported goods.
▸ A tax on imports 1 mark
Question 2 [2 marks]
It can reach a much larger market (1), increasing its sales beyond what it could achieve in the UK alone (1).
▸ A benefit identified, e.g. bigger market / more sales / spread risk 1 mark
▸ Developed 1 mark
Question 3 [3 marks]
Its costs would rise (1). The tariff makes each imported material more expensive (1). The business must either raise its prices, which could reduce sales, or accept a lower profit on each product (1).
▸ An impact identified, e.g. higher costs / higher prices / lower profit / switch suppliers 1 mark
▸ First linked point of explanation 1 mark
▸ Second linked point of explanation 1 mark
Question 4 [9 marks]
Option 1 would give Highland Knitwear access to a new market with strong demand, replacing its falling UK sales. Its Scottish origin is part of the product's appeal in Japan, so it could charge a premium price. However, it would need to adapt its marketing mix, and changes in the exchange rate could make its jumpers more expensive for Japanese customers. Option 2 would cut costs sharply, letting it compete on price in the UK. But moving production would mean its jumpers are no longer made in Scotland, which could destroy its brand's appeal, and Scottish workers would lose their jobs, damaging its reputation. On balance Highland Knitwear should choose Option 1, because its "made in Scotland" heritage is its unique selling point, and Option 2 would throw it away. This depends on the Japanese department store agreement giving it enough sales to make exporting worthwhile.
▸ AO2 (Application, 3 marks): uses the context - Scottish wool, Japan, the department store, Asian production Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning about each option Level 1-3
▸ AO3b (Evaluation, 3 marks): a justified choice with a supported judgement Level 1-3