Additional sample material

1b) outline one benefit to a business of rewarding workers using a piece rate method of payment. 3 Paying piece rate will lead to higher productivity. This is because the workers will want to work harder and faster. This is because the more work they do, the more overall pay they get.

1 c) effective communication within a business is important to success. Identify one barrier to effective communication within a business 1 Poor explanation by the sender Too much jargon Communication structure to complex Poor equipment eg IT failure Too much information or insufficient

1 d) explain one possible impact that poor communication might have for a business. 3 Poor communication can lead to mistakes being made. This will upset customers and lead to fewer repeat purchases. Eg. Not dealing with a complaint because the letter is not passed on.

2c describe one reason why it is important to Subway to differentiate its product. 3 Product differentiation through focussing on healthy sandwiches will make Subway stand out amongst its competitors. This will help it to build a strong brand.

2dii) describe one extension strategy a business might use to extend the product life cycle. 3 The product life cycle could be extended by launching new varieties of a product. This makes the product more attractive to new market segments. Eg Nestle releasing KitKat Caramel will increase sales.

3 ii) explain why strong cash flow is important to a supermarket such as Lidl. 3 Strong cash flow will allow Lidl to pay bills to suppliers when they are due. This will ensure that suppliers will keep delivering groceries to the store on time. This will ensure Lidl will have enough food for their customers.

3c ii) explain one reason why having a strong brand might benefit Lidl. 3 A strong brand makes Lidl more easily recognised by the consumer. They are then more likely to shop at Lidl than other supermarkets such as Tesco. This will increase repeat purchase as Lidl.

4b) explain one effect on fisherman of having to use different fishing methods. 3 If they have to use different methods, fishermen may catch less tuna. If the price of tuna does not change this may reduce the fishermen’s revenue. Some fishermen may only just be breaking even and could go out of business.

4d) in response to the work of the WWF retailers of tuna could respond in one of the following ways: do nothing or sell only tuna caught in an environmentally friendly way. In your opinion which one of these tow options should retailers adopt, and why? 6 Option 1 Will not increase costs Assumes consumers do not care Assumes revenue will not fall Assumes profits will largely remain unaffected It depends on what other retailers do There is no right answer, you can argue that either policy is better – you have to make a judgement on which option would be most appropriate for a retailer. Option 2 Will increase costs of buying tuna Could be a source of added value Could improve branding Could gain customers from other retailers Profits could fall if consumers want cheap prices To be evaluative and support the judgement made, suggest that it depends on the reaction of the consumer and the amount of media interest. It might also be depend on the size of the retailer. It could also be argued that the reaction by each retailer depend on the target market.

5b ii Calculate the level of profit or loss Sony would have made if it had sole playstation 3 consoles at £300. Show your workings and the formula used. 3 Profit = revenue – total costs Therefore Fixed costs = £2,400,00 x £300 = £6,000,000 Total costs = (£20,000 x £140) + £2,400,000 = £5,200,000 Therefore Profit = £6,000,000 - £5,200,000 = £800,000

5c Identify two problems Sony could face as a result of reducing the price of the Playstation 3 to £250. for each problem explain how it would affect Sony. 8 Eg falling profits By lowering prices, the profit on PlayStation 3 will fall. If the amount of Playstation 3 consoles sold does not increase by a lot because they still have competition from Nintendo and Xbox, revenue will be lower than before the price cut.

5c Identify two problems Sony could face as a result of reducing the price of the Playstation 3 to £250. for each problem explain how it would affect Sony. 8 Eg falling profits By lowering prices, the profit on PlayStation 3 will fall. If the amount of Playstation 3 consoles sold does not increase by a lot because they still have competition from Nintendo and Xbox, revenue will be lower than before the price cut. Possible answers Rivals might also lower prices Demand may not increase much Profit may fall Damage to brand Might move further away from breakeven

6c Explain one benefit to Sony of improving its productivity. 3 Increasing productivity means Sony can make more Playstation consoles in an hour. This will reduced the cost of making each console allowing Sony to lower prices. Possible answers Higher profits Lower unit costs Increased competitiveness Out-compete rivals Lower break even

6c Explain one benefit to Sony of improving its productivity. 3 Increasing productivity means Sony can make more Playstation consoles in an hour. This will reduced the cost of making each console allowing Sony to lower prices. Possible answers Higher profits Lower unit costs Increased competitiveness Out-compete rivals Lower break even